Thursday, March 12, 2009

Back when Todd Mytkowitz and I were looking into the feasibility of using Amazon Web Services to run a not-for-profit scientific compute service, Todd explained the idea of the service to some scientists at a conference at the Santa Fe Institute. The most surprising part of their response was that a pay-as-you-go model doesn't always fit well with the way researchers spend money, since grant money comes with an expiration date; the money must be spent within some window of time. Since it's easy to justify the purchase of computing equipment, research money sometimes goes into a new, albeit small, compute cluster. Utility compute services like AWS are metered; using them doesn't require a large initial capital outlay. So it's not possible -- or at least hasn't been possible -- to park your money there. I think a similar dynamic is at work with corporate managers and directors, who are the marketing target of Amazon's push into the enterprise: the pay-as-you-go model just doesn't fit well with the budgeting practices of large institutions. Hence, ladies and gentelmen, Amazon's new pricing model.

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