
Amazon Drops Price Of EC2 Dedicated Instances By Up To 80% - cdvonstinkpot
http://techcrunch.com/2013/07/10/amazon-drops-price-of-ec2-dedicated-instances-by-up-to-80/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Techcrunch+%28TechCrunch%29
======
Udo
Choosing EC2 and other Amazon offerings means a lot of freedom for startups,
it's easy to just create a whole infrastructure at the push of a button.
However, this comes at a high cost. Amazon is really expensive and once you're
locked into their way of doing things, migrating away can be a near-impossible
task. I think for some years, companies didn't realize how high the cost of
running on EC2/S3 actually is compared to, say, a dedicated rack colocated
somewhere - that's kind of a compliment to Amazon tech and marketing.

It's still not uncommon to talk to a random startup person and they'll tell
you they have hosting costs in the tens of thousands of dollars per year. When
you then compare this to what they're actually doing with their servers, it
seems to me they're overpaying by several orders of magnitude.

I was using EC2 for years and kind of grew to accept (and ignore) its
limitations. It was only when I reviewed some dedicated server plans at other
providers I (re-)discovered how much raw power you can get elsewhere for the
same money. Additionally, I became very frustrated with the lack of pricing
transparency and inability to forecast costs - at first glance the Amazon
cloud is as open as it gets but the real surprises come when you're running it
for a while.

No doubt Amazon has caught on to this trend and is fighting to squeeze out
some competitors that have sprung up. This pricing change is most likely
directly aimed at Hetzner and other inexpensive-but-powerful hosting
providers. It means they were either massively overcharging the whole time or
they are using profits from other plans to offer Dedicated EC2 at a loss until
the competition folds.

~~~
cstejerean
After all the talk about how much cheaper dedicated hosting can be compared to
AWS, I looked into dedicated hosting recently. It didn't seem as great as the
comments here led me to believe. Rackspace for example starts at $499/month
for a server with 4GB of RAM. On AWS I can get a c1.xlarge instance with 7GB
of RAM for $435/month, and that's with paying the on-demand price 24x7.

Ok, that doesn't include EBS and bandwidth. So let's throw in 1TB of outbound
data (less than the 2TB that Rackspace includes, but still more than I'd ever
use in a month) and a 150GB EBS volume with 1000 provision IOPS. Let's also
use the 1 year heavy utilization price while we're at it. Now I'm looking
$342/month with $1800 upfront, which amortizes to $492/month.

With AWS I also don't need to stick with paying 24x7 for infrastructure. I
don't need to keep my CI infrastructure running on nights and weekends for
example, and with AWS I have the flexibility to turn that into cost savings.

So I don't see the order of magnitude price difference. So maybe I shouldn't
be looking at Rackspace? Hetzner keeps coming up on here, but I don't need a
server in Europe. Maybe OVH? Hmm, the comments on Hacker News don't exactly
inspire confidence in OVH for something more than a personal server to screw
around with. I need to run infrastructure for my business. Do I start hunting
for bargain hosting providers on WebHostingTalk?

Ok, back to AWS it is for me.

EDIT: Thanks for the suggestions to look at Softlayer. A server with 1 CPU and
8GB of RAM starts at $399, which is better than Rackspace, but not exactly
orders of magnitude cheaper than the c1.xlarge I mentioned above.

~~~
Udo
I think you picked the most expensive dedicated hosting provider in existence.
Have a look at SoftLayer, Hetzner, Incero, or one of the other alternatives.
Also, at these prices, it's not unreasonable to just order any old Dell server
for $600 and put it into a colo rack somewhere.

For reference, the dedicated server I rent for my private projects comes in at
€49/month and it has these specs:

    
    
      Intel® Core™ i7-2600 Quad-Core
      16 GB DDR 3 RAM
      2 x 3 TB SATA 6 Gb/s HDD; 7200 rpm
    

Support is extremely fast and competent, I'm really happy. To try and mirror
that package with any kind of Amazon (or Rackspace it seems) offering would be
prohibitively costly.

~~~
cstejerean
I did look at SoftLayer and it's still not significantly cheaper than AWS.
Hetzner doesn't seem to have servers in the US, so I've already ruled them
out.

Incero seems cheap, but that's the only thing I've seen about Incero. I
consider Incero to be in the bargain hunting on WebHostingTalk category of
providers. I'm not entirely comfortable hosting mission critical
infrastructure there yet.

~~~
corresation
An issue with virtually all dedicated server vendors is the tendency to
grossly under-equip servers with memory: My Mac Mini has 16GB (a $100
upgrade), and it is simply ridiculous that going above 4GB on a server is
considered some extravagant feature the requires significant, expensive
upgrades of every other component.

~~~
dan1234
16GB of ECC memory for servers is a lot more expensive than your Mac Mini's
memory. I recently spent £250 on 2x 4GB DIMMs for a Dell Poweredge server[1]
(ok DDR2 is older and therefore more expensive, but still). The same
configuration for my Mac Mini came in at around £50[2]

[1][http://www.crucial.com/uk/store/mpartspecs.aspx?mtbpoid=36C1...](http://www.crucial.com/uk/store/mpartspecs.aspx?mtbpoid=36C1FA30A5CA7304)

[2][http://www.crucial.com/uk/store/mpartspecs.aspx?mtbpoid=9137...](http://www.crucial.com/uk/store/mpartspecs.aspx?mtbpoid=9137AB4EA5CA7304)

~~~
p1esk
Actually prices for ECC memory are comparable with regular desktop RAM - both
are around $300 for 32GB (4x8GB) sets:

ECC memory:
[http://www.newegg.com/Product/ProductList.aspx?Submit=ENE&N=...](http://www.newegg.com/Product/ProductList.aspx?Submit=ENE&N=100007952%20600083963&IsNodeId=1&name=32GB%20%284%20x%208GB%29)

Regular memory:
[http://www.newegg.com/Product/ProductList.aspx?Submit=ENE&N=...](http://www.newegg.com/Product/ProductList.aspx?Submit=ENE&N=100007611%20600083963%204802&IsNodeId=1&name=Top%20Sellers)

------
crb
The 80% number was for a "dedicated instance". A dedicated instance is not the
same as a reserved instance.

Dedicated instances, charged on top of the regular price, are where you are
guaranteed not to have anyone else on the same host server as you. Dedicated
instances already cost 10% more than their regular counterparts
(small/dedicated/on-demand costs 6.6/c hr vs 6c/hr.)

At any point, the most you could be "wasting", was the leftover capacity on a
host that only had one small server on it (they didn't do micro). Imagine a
simplified version of EC2 as per [1], which fits 12 small instances on one
physical host, and you could therefore be wasting 11 slots that you could run
a m1.small in. They can't sell these to any other customer. If you buy a
second instance, they put that on your first host; you are now wasting 10
slots. Carry on down to when you fill up your first host and spill over onto a
second, back to wasting 11 slots.

Previously they were charging $10/hour for those wasted 11 slots, which you
could have filled by paying 72.6c/hr. Now, they're only charging $2.

[1] [http://perfcap.blogspot.co.uk/2011/03/understanding-and-
usin...](http://perfcap.blogspot.co.uk/2011/03/understanding-and-using-amazon-
ebs.html)

------
thezilch
Source: [http://aws.amazon.com/about-aws/whats-
new/2013/07/09/price-r...](http://aws.amazon.com/about-aws/whats-
new/2013/07/09/price-reductions-on-amazon-ec2-dedicated-instances/)

Not to detract from the conversation, but I've pointed out numerous times
about techcrunch / this author -- FREDERIC LARDINOIS -- nearly plagiarizing
the the entirety of his sources in the many articles, of his, posted here.
Maybe it's not strictly plagiarism, but there is almost NEVER value added by
his regurgitation. It has got to be etiquette to link to the best source, and
Techcrunch has really gone south with the AOL/HuffPo relations -- cheap
content rewrites and not a source.

------
_jmar777
There are a lot of comments about EC2's pricing competitiveness with dedicated
hardware. These are fair discussions and should be had, but I figure it's
worth commenting that EC2 (and AWS in general) is about much more than cheap
metal.

The company that I am a developer at has aggressively adopted AWS with
applications using it at both the PaaS and IaaS levels. At the end of the day
what we've received the greatest value from isn't an impressive "cost per
compute unit", but rather a flexibility that would be incredibly painful to
let go of. For example, our QA team can spin up or tear down entire
environments by chatting with our Campfire bot. Our developers can do likewise
using a simple CLI we built.

Granted, this isn't exactly bleeding edge stuff here... it's simply "the
cloud" (apologies) delivering on the promise of dynamic, elastic environments.
But it's a really, really nice promise, and at risk of sounding like an
advertisement, I'll still say that AWS/EC2 has delivered quite nicely on it.

~~~
druiid
In all honesty you can get these same benefits from dedicated hardware. Throw
openstack or similar on a set of Hetzner or similar machines and have at!

------
_delirium
Direct link: [http://aws.amazon.com/about-aws/whats-
new/2013/07/09/price-r...](http://aws.amazon.com/about-aws/whats-
new/2013/07/09/price-reductions-on-amazon-ec2-dedicated-instances/)

------
_stephan
Hourly billed "bare-metal" cloud servers from Softlayer seem to be cheaper
still:
[http://www.softlayer.com/cloudlayer/computing](http://www.softlayer.com/cloudlayer/computing)

~~~
LogicX
and softlayer is at the high end of the market.

Check out incero.com or securedservers.com for some perspective.

also serverbear.com is always great to check for price-performance
comparisons, especially taking into account SSD performance.

~~~
_stephan
incero and securedservers don't seem to offer hourly billed dedicated servers.
Monthly billed dedicated servers are a different market.

~~~
LogicX
Agreed - and yet thats half the problem; is people aren't using EC2 for just a
few hours... they use it all month, and then complain about it being
expensive.

------
Create
Amazon Web Services has achieved compliance with the Federal Risk
Authorization Management Program (FedRAMP).

The FedRAMP program has also established a Joint Accreditation Board (JAB)
consisting of Chief Information Officers from DoD, DHS and GSA.

------
adamseabrook
My company runs a largish crawling infrastructure. We evaluated Amazon
extensively but just could not make the price/performance calculation stack
up. If you have lots of "always on" gear dedicated works out significantly
cheaper. We have boxes with 256GB of RAM, 300mbps network pipes for under $330
per month and we don't have to share any CPU or Disk I/O.

~~~
MagicWishMonkey
Likewise. My company decided to lease a rack at a colo, unlimited bandwidth
(practically speaking) and we can add capacity as necessary.

We're planning to (eventually) utilize Amazon to temporarily add capacity when
necessary, but it will never be our primary hosting solution.

~~~
adamseabrook
That is the one thing we do miss. Elastically scaling dedicated boxes that can
often take 12 hours from order to go live means we end up with a few hot
spares laying about just in case but overall it is still cheaper.

------
VeejayRampay
I always wonder how a company can offer such a rebate without giving direct
insight about how exactly their prices were absolutely outrageous and
completely uncorrelated with the offered value to begin with.

People who were paying full price prior to this rebate must feel pretty
annoyed right now.

~~~
steveklabnik
First rule of pricing: price to value, not to cost.

People are used to the prices of things going down as economies of scale kick
in. That doesn't mean it actually _happened_ here, but if you were already a
happy customer at $100/month, when next month comes around and it's $20,
you're just more happy.

~~~
toyg
It's weird how people still struggle to understand that one should always
price _according to what a customer is willing to pay_ , rather than some sort
of magic formula "price = cost + socially-acceptable-profit". I thought Apple
and Starbucks had made it so brazenly obvious even to the layman.

~~~
dragonwriter
> It's weird how people still struggle to understand that one should always
> price according to what a customer is willing to pay, rather than some sort
> of magic formula "price = cost + socially-acceptable-profit".

What one should do depends on one's goals. To maximize profits, and ignoring
the costs involved in doing so, one should charge each customer what that
individual customer is willing to pay. Approximating this is a big motivation
most market segmentation schemes.

Of course, doing so naively can maximize _short-term_ profits while negatively
affecting goodwill, which can then hurt long term profits.

Also, even ignoring goodwill, pricing to maximize returns from the _current_
market for a good or service can limit the ability to develop new markets for
it.

~~~
tsotha
>What one should do depends on one's goals. To maximize profits, and ignoring
the costs involved in doing so, one should charge each customer what that
individual customer is willing to pay.

There you have the American university system in a nutshell, though you might
have to substitute "able" for "willing".

------
Vitaly
Now I wander if Heroku prices will follow or if they'll decide to just pocket
the difference themselves.

~~~
rschmitty
Does heroku run on the dedicated servers?

Dedicated being different from 100% utilization reserved servers

[http://aws.amazon.com/dedicated-instances/](http://aws.amazon.com/dedicated-
instances/) vs
[http://aws.amazon.com/ec2/pricing/](http://aws.amazon.com/ec2/pricing/)
(which did not get 80% cuts)

~~~
brentm
I'd think they would employ dedicated instances which they then subdivide to
keep their customers as isolated as possible.

~~~
the_mitsuhiko
Aren't dedicated instances only available in VPCs? In that case Heroku would
not use them as all Heroku machines are public.

~~~
flyt
You can easily make a VPC fully public, or have fully public subdivisions.

------
darkarmani
Why do they charge the $2/hour dedicated fee for the CC2.8xlarge? Isn't that
size already a dedicated instance if you just use it as an on-demand instance?
You get 32 virtual cores which makes sense for a dedicated instance, since you
get 16 physical cores (2x8) and the hyper-threading makes 32 virtual cores.

"CC2 and CR1 Instances are backed by 2 x Intel Xeon E5-2670 processors, eight-
cores with hyperthreading"

Am I missing anything or is there a benefit to doing a dedicated cc2.8xlarge
instance? Compliance maybe?

~~~
RyanGWU82
Compliance is the main reason to purchase Dedicated Instances -- maybe the
only reason at all. Amazon could always silently introduce better physical
hardware, at which point they could put 2+ cc2.8xlarge instances on a physical
server. I'm sure there are more m1.smalls on each 2013-era box than there were
in 2007.

------
forlorn
One would think why Digital Ocean is first to come to my mind.

~~~
AndyKelley
I saw this article in hacker news today, and noticed somebody mentioning
digital ocean. I switched one of my servers over to digital ocean to try it
out.

The process was smooth and enjoyable, and now I'm spending less than half as
much as I was with EC2.

I even got to try their recovery console after I mistakenly deleted the root
password without first giving myself sudo. Worked like a charm.

------
mikiem
These prices were ridiculous to start with. Now the are only 20% as
ridiculous.

~~~
manojlds
That number should be less than 20%, no?

------
manishsharan
Can someone please advise what is the most cost optimal way running MongoDB on
AWS ? I am bootstrapping/coding/testing and all these options make my head
spin. My web application would be running on AWS Elastic Beanstalk and they
would be using the MongoDB.

~~~
flyt
AWS recently released a whitepaper describing the best practices for doing
just this:
[http://media.amazonwebservices.com/AWS_NoSQL_MongoDB.pdf](http://media.amazonwebservices.com/AWS_NoSQL_MongoDB.pdf)
[PDF]

------
akh
We're going to update
[http://www.planforcloud.com](http://www.planforcloud.com) to include
dedicated instances to help people forecast and compare these to other
providers and EC2 purchase options. If you run enough instances, the
incremental cost of the regional fee gets diluted and your overall cost is not
that much higher than other purchase options.

------
rch
There is a colo in Boulder that will host a Mac mini server for around $75/mo
(negotiable). I haven't tried it yet, but I'd imagine that I could get 3-5
'servers' off of eBay and negotiate a nice monthly rate for hosting them.

~~~
driverdan
That doesn't seem like a very good deal. For $75/m you can get a dedicated
server with equal or better specs and not worry about owning the hardware.

~~~
rch
I rather like having a modest collection of hardware that I can call my own.
That aside though, is it possible to get a dedicated server with SSD-like disk
IO and 8-16 GB of memory for ~75 dollars a month? I admit that I only have
experience with Rackspace, and that a few years ago, but it seemed like the
pricing was more than twice that.

------
thomaslangston
Cool, I hope this helps startups that need HIPAA, PCI, and other compliance
requirements.

------
lsiebert
So for the first year, a micro instance is basically free, right? That makes
testing aws out super easy for new startups.

Anyone else do something similar? If not, you are going to see people stick
with the vendor they know best.

------
jdmitch
Amazon's response to higher demand (anticipated or real) for dedicated
instances outside of the US to avoid the NSA's prying eyes?

~~~
wmf
Aren't all those servers still owned and operated by a US company?

------
rorrr2
Prices are still ridiculous. Compare it with something like Hetzner:

[https://www.hetzner.de/en/hosting/produkte_rootserver/ex4](https://www.hetzner.de/en/hosting/produkte_rootserver/ex4)

[https://www.hetzner.de/en/hosting/produkte_rootserver/ex10](https://www.hetzner.de/en/hosting/produkte_rootserver/ex10)

~~~
noir_lord
I'm a recent Hetzner customer.

32Gb/i7.

I used them for 5 weeks, in that five week period I had 5 1-2 day blocks where
the machine was unreachable.

>A incoming attack influence the network for few minutes. The network
department has solved the issue.

 __few minutes was 31 hours __

our network-team told us, that there was again an attack which caused the
issues you mentioned.

 __27 hours __

currently we can 't see any issue, is this still given?

 __connection timed out (no idea how long as I 'd not installed monitoring at
that point).

etc etc.

I canceled shortly after.

I'm back on Linode for now (I actually changed the design of the product I'm
developing so that I can store files onto S3 so I can stay with Linode and
move easily in the future).

A fast server is a paperweight without reliable network access.

~~~
return0
i host a few sites with moderate traffic on an ex10 server. I can't remember
of any network issues. Current uptime:

12:13:14 up 183 days, 21:23, 2 users, load average: 0.51, 0.55, 0.49

The problem is unreliability of hardware. When one of the hard disks broke in
the previous server, it was faster to setup a new server to transfer
everything rather than waiting for the repair.

~~~
cmircea
You're telling me swapping HDDs and letting RAID rebuild is slower than
setting up the server again?!

A failed HDD should NEVER, EVER, bring a server down.

~~~
return0
i should have mentioned that both disks reporting errors. The DNS change
required less downtime than the downtime of backing up everything and setting
up the servers from the start.

------
Ihmahr
It chocks me that no one mentions that these instances run on dirty coal
plants.

~~~
tnuc
What should they run on? Unicorn sparkles?

~~~
Spiritus
There's plenty of alternatives to coal!

~~~
flyt
Not when you buy from the general purpose grid. You can eventually become big
enough to pressure the power companies to source from cleaner generation types
but that doesn't over night.

------
dschiptsov
_“are ideal for workloads where corporate policies or industry regulations
require that your EC2 instances be isolated from instances that belong to
other customers at the host hardware level.”_

What a hypocrisy. This should be read as "polices require that an adequate and
predictable I/O performance could be provided".

~~~
ceejayoz
This is usually a security requirement for big corporations with paranoid
legal departments, not a performance requirement.

