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Reduced Amazon EC2 Cloud Pricing – How it Impacts Hosting Cost Analysis

Reduced Amazon EC2 Cloud Pricing – How it Impacts Hosting Cost Analysis

by Patrick KennedyFebruary 3, 2013

As we have been highlighting in the Falling from the Sky series, Amazon’s cloud is expensive for hosting web sites. Of course, two days after we publish a Amazon v. Colo v. VPS v. Dedicated cost analysis, Amazon reduces pricing. We updated the spreadsheet. One thing that can be seen on the Amazon EC2 cloud pricing page is that 3- year reserved instances did not get the minor price decrease. As a result, the cost analysis ended up being very similar. Let’s look into what happened and the impact.

First a quick refresher on the original numbers regarding how much it is projected to cost to run STH on Amazon EC2.

STH Amazon EC2 AWS Hosting Summary

STH Amazon EC2 AWS Hosting Summary

To see the change to Amazon Web Services that most directly impacts this analysis, here is the snippet:

We are reducing Linux On Demand prices for First Generation Standard (M1) instances, Second Generation Standard (M3) instances, High Memory (M2) instances and High CPU (C1) instances in all regions. All prices are effective from February 1, 2013. These reductions vary by instance type and region, but typically average 10-20% price drops. For complete pricing details, please visit the Amazon EC2 pricing page.

As was mentioned in the introduction, the February 1, 2013 Amazon EC2 cloud price drop did not include reserved instances. It did include a reduction in regional data transfer, but the regional data transfer was not factored into the model to keep the comparison relatively close.

Here is the summary analysis of just the Amazon EC2 cloud hosting as compared to the 1/4 cabinet colocation option. This is now updated for the February 1, 2013 price changes.

STH Amazon EC2 AWS Updated Cost

STH Amazon EC2 AWS Updated Cost


The conclusion did not move much. Sure, $2.80 saved each month is great. However, the Amazon EC2 cloud solution is still a long way away from being close price wise as compared to colocating servers. Again, this must be qualified with the fact that the Amazon EC2 cloud does make it very easy and fast to deploy servers across geographies and there is an ability to scale built-into Amazon’s cloud solution. On the other hand, it is still $19,000 v. $8,200 over a 24 month term. All of that flexibility therefore comes at a 131% premium over colocation in this case.

About The Author
Patrick Kennedy
Patrick has been running ServeTheHome since 2009 and covers a wide variety of home and small business IT topics. For his day job, Patrick is a management consultant focused in the technology industry and has worked with numerous large hardware and storage vendors in the Silicon Valley. The goal of STH is simply to help users find some information about basic server building blocks. If you have any helpful information please feel free to post on the forums.

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