$1000 per hour Servers, Anyone?

Amazon’s spot market for computing power is set up as an open market for surplus servers. The price is dynamic and depends on demand. So when demand is low, you can get computing instances for rock bottom prices. When you do that you normally set a range of prices you’re willing to pay. If it goes over your top end, your instances get killed and re-provisioned for someone else. Obviously this wouldn’t work for all applications, like a website that has to be up all the time, but for computing power, say to run some huge hedge fund analytics, it might fit perfectly.

A recent post on SEO MOZ alerted us to an interesting story where spot instances spiked to $1000 per hour. Incredible as it seems, but the psychology of bidding can be rather perverse. Still, this kilo of a quote for mere server space is pretty outrageous. With Amazon’s usual price at around 50 cents per hour for these 2xlarge instances, they could have made some serious money during this short burst had a transaction actually took place. To the skeptics among us, this spike smells uncannily like a couple of algos gone crazy, incidentally also on Amazon.

But it also speaks of over reliance on one cloud provider, specifically Amazon’s continued dominance in the space. As an alternative to Amazon for computing power you could also go to a service like SpotCloud which sits on top of multiple clouds, so you’re less likely to experience this type of burst of demand. Then again, the spot instance volatility is baked in. Still the lesson is instructive, and will surely spell further growth for Amazon.