Amazon auctions EC2 Spot Instances

Amazon Web Services offers spare EC2 capacity to the highest bidder with new EC2 Spot Instances pricing.

Amazon updated its pricing model this week to offer users Spot Instances, a way to bid on unused Amazon EC2 capacity and run those instances for as long as their bid exceeds the current spot price.

"It's for relatively sophisticated AWS [Amazon Web Services] users," said Randy Bias, CEO and founder of Cloudscaling, a cloud consulting firm. "I don't think your average AWS consumer would know how to leverage this."

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AWS says the pricing scheme is for batching processing jobs like scientific research, financial modeling and analysis and video conversion and rendering; in other words, the typical EC2 use cases.

Amazon's goal, most likely, is to try and maximize its infrastructure usage and profit margins.

"You can't run a cloud at a 100% utilization rate, you have to build past expected capacity such that you can handle short term spikes," said Bias. Most of these cloud providers aim for 75-80% utilization, which means that as much as 25% of capacity is unused at any one time, he added.

 I don't think your average AWS consumer would know how to leverage this.
Randy Bias, CEO and founder of Cloudscaling,
"Spot instances give Amazon a way to sell this capacity, even if it's not necessarily at a profit or even at their normal margin. Without doing this, that 25% of capacity is essentially a drag on the gross margin of the EC2 service. Now, they can recoup a significant portion of that cost."

Amazon Virtual Private Cloud
Amazon also announced that its virtual private cloud service, called Amazon VPC, is now generally available. The VPC lets a company hook up internal virtual systems to AWS via a VPN connection, extending internal firewalls and intrusion detection systems to their AWS resources, Amazon said.

And finally, the company has added the ability to stream audio and video files from its CloudFront content delivery network.

Jo Maitland is the Executive Editor at Contact her at

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