Super interesting. If I did the math right, a 3year heavy reserved t2.micro instance comes out to $4.48/mo, which is cost competitive with Digital Ocean. The proof will come in the benchmarks, but this may become my preferred hosting solution.
DO was competitive with EC2 on price but not on features (and certainly not on security), now with the price advantage gone...
EDIT: corrected calculation
The price advantage is definitely not gone.
While 1 EC2 instance may not use more then 1 GB (which is a very low quota unless your CDNing everything), if you have a couple of instances your almost certainly going over that.
It would be better to do real speed tests of each service to determine average "CPU" speed. I'm sure both services are constantly optimizing for both shared hardware usage and speed, so the stats would have to be updated regularly.
To understand your billing, you need to understand what you're consuming, which you always should. These credits add a little wrinkle, but also make the service cheaper and more deterministic. If you have credits, you'll get the CPU you bought with them.
And even then, one still needs to factor in the 'other' costs like I/O or IOPs, disk (persistent/EBS), IPs, internet and inter-region data transfer… before you understand the real cost.
And then you need to compare to other instance types (which soon will cover the full alphabet -- c, cg, cr, g, h, i, m, r, t… ) and then other providers.
You still have several unresolved issue -
1. Are your assumption on usage (cpu, I/O, internet etc) correct? Will they change? 2. How do I compare performance across providers for a given VM specification. 3. Can I get support when I need it?
And I am sure there are others
It certainly means there is room for other players who just make it simple, whether they are infrastructure folk (like DO/Linode etc) or platform plays that make the pricing understandable by the audience they are trying to target (like Heroku/Ninefold)
[1] http://docs.aws.amazon.com/AWSEC2/latest/UserGuide/ri-modify...
It's not a huge deal, just something to take into account when projecting out costs: the 3-year reserved instances are locking in today's prices until 2017, in return for a discount over today's non-reserved prices. Whether this produces long term gains requires some assumptions about how the market will change over the next 3 years.
Just an observation. I'm not criticizing either way of doing things; obviously, lowering prices straight out is better for the customer, and keeping revenue stable while just upgrading hardware is better for the provider. Last time I lowered prices, I lowered prices directly, and just took the revenue hit. I'm planning my next upgrade now, and instead of lowering prices, I plan on giving everyone more ram/disk/ssd, while holding prices steady.
It is something I've thought about... the problem is that I'm going to have to go down by more than half, and it's way easier to lease enough hardware to more than double everyone's allocations than it is to double my customer base to make up for the lost revenue.
It reminds me of something I learned while working for Comcast years ago - never lower prices, just keep adding "value".
Yes, exactly. I'm saying that is the standard way to do it in the VPS market, in part because until D.O. most of us were self-funding, and it's way easier to pay for double the compute resources than to deal with a 50% cut in revenue.
In the "cloud" market where amazon is, the standard way to do it is to directly lower prices.
I do observe that there seems to be a price floor phenomena; for any customer, any price below $x is largely equivalent; they will go for the best thing they can get for $x, so providing a better product helps, but lowering the price below $x doesn't change the equation for that customer. Of course, $x is different for each person, so lowering your price does get you customers who had a lower value for $x.
I've already lost most of the customers that had a value for $x that was greater than what they were paying me at this point; I'm not losing customers nearly as quickly as I predicted. Right now, if I screw something up, of course, I lose the effected customers; I mean, it's really dramatic. You always lose some customers when you screw something up, but I lose way more now than when my prices were lower than the credible competition. But other than that, things have largely stabilized.
(Also, it doesn't help that the wiki is crufty and out of date, and boot menu, last time I rebooted, was still on CentOS 5.)
I think similar principles govern business spending, only $x for them is usually higher. I have a couple of business co-lo customers who have been customers for like half a decade; some of them are still using the hardware they came in on. They could save a lot of money by upgrading hardware (and thus reducing their footprint) or even moving to "the cloud" at this point, because while co-locating modern hardware is cheaper than "The Cloud" - co-locating ancient hardware is not.
The idea is that it works for them, so they aren't going to fuck with it. I'd bet money, though, that if I fucked something up and caused them a serious outage, they'd be gone pretty quick.
>(Also, it doesn't help that the wiki is crufty and out of date, and boot menu, last time I rebooted, was still on CentOS 5.)
I just want to acknowledge those problems. We only have vague plans for the wiki, but we're actively working on upgrading the rescue image and the hypervisor (which, I imagine, is the part of the boot menu you are complaining about.) - these changes will probably not be implemented until our switchover to the new ganeti-based system, but... that should be soonish.
Huh. In the VPS market, from what I've seen, the rule is "treat your existing customers as well as your new customers"
while, say, the co-location market is like the real-estate market. "Subsidize your new customers, and if they are still alive when the lease is up, take profits in the form of much higher renewal rent."
I guess what you describe with pre-pays is sort of inbetween. There's a difference in most minds, I think, between raising a price and just not lowering it when you perhaps could be expected to. Most people new to the real-estate market feel pretty bent out of shape when they find out that they have to pay significantly more in rent to renew their existing contract than they will pay if they move.
And of course Amazon has transparent disclosure for outages and security issues unlike say Linode.