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.
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.
I actually was at one point pushed hard by the CEO at a company I worked at to use EC2 because it "had to" be cheap, despite the fact I had put together numbers for him that clearly demonstrated it was between twice as expensive (purely managed servers with enough headroom to handle short term spikes) to three times expensive (managed servers loaded at 80%-90% of typical daily peak loads plus set up to use EC2 to handle peaks in emergencies). Amazon has done an amazing job in marketing and PR for AWS.
The latter is what EC2 is most useful for for me: You can cut costs of your dedicated hosting by going much closer to the wire with the knowledge you can spin up instances at EC2 (and/or other cloud providers) if you should happen to hit the front page somewhere that can drive massive traffic faster / on more transient basis than you can or want to scale up your dedicated setup.
Hetzner is great, but fully integrated providers like Softlayer is another growing threat - many providers now offer a sliding scale of some or all from colo, to managed bare metal, to "dedicated virtual" (single VM per physical server, automatically deployed in minutes or hours as a "halfway house" to cloud setups), to cloud images billed similarly to EC2. It'll be interesting to see what IBM tries to do with Softlayer...
There is a tremendous value add from the whole AWS package, so naturally you are going to overpay a lot if you compare on raw power alone. AWS allows you to not purchase backup hardware, it allows you to shape your stack to your load profile on demand rather than purchasing hardware and potentially making a long-term commitment that is wrong, it allows you to handle load spikes very easily and inexpensively, and it allows you control everything from a robust API, and it's big and stable enough where you don't usually have to fight for and be disappointed by support: problems tend to be large and affecting everyone, or small and you just boot a new instance.
So what if you're spending $25k a year where a colo'd rack would be only $5k, that's not your major cost center in a startup (or any business for that matter). If you are utilizing the benefits of AWS it could well tip the scales in terms of not needing to have a $150k systems engineer.
Are you comparing EC2's hourly rate with dedicated hardware? If so, you're comparing apples and oranges.
With EC2, the hourly rate is outrageous for an always-on server. You really need to buy reserved instances for it to be cost-effective. In my case I found I really needed to buy the 3-year heavy utilization reserved instances.
The hourly rate is best just for occasional spikes or when you're experimenting with different hardware configurations.
And yes, they were massively overcharging for dedicated instances, as they charged $7300 per month just for the privilege of being able to use dedicated instances (that doesn't include the cost of the instance itself.) I always assumed they were doing so just to reserve that feature for their big customers.
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.
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.
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.
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!
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.
Wow. That's a lot of bandwidth. I re-wrote the downloaders for siteadvisor a few years ago (hosted) and they didn't need anything close to that. They were just downloading EXEs and other content from pages the crawlers had already seen, but still.
Yep. Many businesses should (and a lot don't...) make this cost comparison. Also, 256GB of memory in a server is surprisingly not that impressive (even for a 1U server) these days! Crazy to think there are 1U machines you can cram 1TB of memory into now.
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.
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.
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.
I think you mean uncorrelated with the underlying cost of the service. If the price were uncorrelated with the value, people wouldn't have subscribed to AWS in the first place?
I highly doubt Heroku pays list price for their servers. Any public EC2 price change is probably mostly irrelevant to them, other than as a baseline for their negotiations.
Have been on Heroku for about two years and can't recall a single price reduction in anything. I think it's pretty clear that pocketing the difference in the steady AWS price reductions is exactly what Heroku does.
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?
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.
There's no guarantee that CC2.8xlarge will own the whole box. It might be that way today, but not if Amazon runs virts on even larger boxes in the future.
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.
That was my first thought. DO gives SSD drives. That's a pretty enticing offer, in and of itself. The only downside is that it appears that a lot of SaaS providers are already on Amazon, meaning your network times more than likely benefit. Would love to hear about more people on both.
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.
We're going to update 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.
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.
[+] [-] Udo|12 years ago|reply
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|12 years ago|reply
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.
[+] [-] vidarh|12 years ago|reply
The latter is what EC2 is most useful for for me: You can cut costs of your dedicated hosting by going much closer to the wire with the knowledge you can spin up instances at EC2 (and/or other cloud providers) if you should happen to hit the front page somewhere that can drive massive traffic faster / on more transient basis than you can or want to scale up your dedicated setup.
Hetzner is great, but fully integrated providers like Softlayer is another growing threat - many providers now offer a sliding scale of some or all from colo, to managed bare metal, to "dedicated virtual" (single VM per physical server, automatically deployed in minutes or hours as a "halfway house" to cloud setups), to cloud images billed similarly to EC2. It'll be interesting to see what IBM tries to do with Softlayer...
[+] [-] dasil003|12 years ago|reply
So what if you're spending $25k a year where a colo'd rack would be only $5k, that's not your major cost center in a startup (or any business for that matter). If you are utilizing the benefits of AWS it could well tip the scales in terms of not needing to have a $150k systems engineer.
[+] [-] Fizzer|12 years ago|reply
With EC2, the hourly rate is outrageous for an always-on server. You really need to buy reserved instances for it to be cost-effective. In my case I found I really needed to buy the 3-year heavy utilization reserved instances.
The hourly rate is best just for occasional spikes or when you're experimenting with different hardware configurations.
And yes, they were massively overcharging for dedicated instances, as they charged $7300 per month just for the privilege of being able to use dedicated instances (that doesn't include the cost of the instance itself.) I always assumed they were doing so just to reserve that feature for their big customers.
[+] [-] crb|12 years ago|reply
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...
[+] [-] thezilch|12 years ago|reply
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|12 years ago|reply
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|12 years ago|reply
[+] [-] _delirium|12 years ago|reply
[+] [-] _stephan|12 years ago|reply
[+] [-] unknown|12 years ago|reply
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[+] [-] LogicX|12 years ago|reply
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.
[+] [-] Create|12 years ago|reply
The FedRAMP program has also established a Joint Accreditation Board (JAB) consisting of Chief Information Officers from DoD, DHS and GSA.
[+] [-] adamseabrook|12 years ago|reply
[+] [-] MagicWishMonkey|12 years ago|reply
We're planning to (eventually) utilize Amazon to temporarily add capacity when necessary, but it will never be our primary hosting solution.
[+] [-] darkarmani|12 years ago|reply
[+] [-] druiid|12 years ago|reply
[+] [-] beachstartup|12 years ago|reply
[+] [-] benmccann|12 years ago|reply
[+] [-] VeejayRampay|12 years ago|reply
People who were paying full price prior to this rebate must feel pretty annoyed right now.
[+] [-] steveklabnik|12 years ago|reply
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.
[+] [-] hkmurakami|12 years ago|reply
I think you mean uncorrelated with the underlying cost of the service. If the price were uncorrelated with the value, people wouldn't have subscribed to AWS in the first place?
[+] [-] Vitaly|12 years ago|reply
[+] [-] rschmitty|12 years ago|reply
Dedicated being different from 100% utilization reserved servers
http://aws.amazon.com/dedicated-instances/ vs http://aws.amazon.com/ec2/pricing/ (which did not get 80% cuts)
[+] [-] cowsandmilk|12 years ago|reply
[+] [-] fomb|12 years ago|reply
[+] [-] wilfra|12 years ago|reply
[+] [-] darkarmani|12 years ago|reply
"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|12 years ago|reply
[+] [-] leef|12 years ago|reply
[+] [-] forlorn|12 years ago|reply
[+] [-] AndyKelley|12 years ago|reply
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.
[+] [-] wheaties|12 years ago|reply
[+] [-] amorphid|12 years ago|reply
[+] [-] mikiem|12 years ago|reply
[+] [-] manojlds|12 years ago|reply
[+] [-] manishsharan|12 years ago|reply
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[+] [-] a-priori|12 years ago|reply
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[+] [-] rch|12 years ago|reply
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[+] [-] thomaslangston|12 years ago|reply
[+] [-] lsiebert|12 years ago|reply
Anyone else do something similar? If not, you are going to see people stick with the vendor they know best.
[+] [-] jdmitch|12 years ago|reply
[+] [-] wmf|12 years ago|reply
[+] [-] unknown|12 years ago|reply
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