One of the main appeals of cloud computing services is the quantized flexibility of their billing schemes — you pay only for the computing resources you need, for the amount of time you need them. That means billing can usually be adjusted on two dimensions: resources required and duration of use.

Now Amazon, ever thinking out of the box, adds a third dimension to the billing flexibility of their cloud computing services: market demand. Amazon Elastic Compute Cloud (more popularly known as Amazon EC2) has launched a new service: Spot Instances. Now you can bid for Amazon’s spare computing resources as they fall within your price range in real time.

Here’s how it works, in a nutshell. Amazon EC2 Spot Instances carry a Spot Price based on current market demand. You can bid on those instances in an open market. Whenever your bid matches or exceeds the Spot Price, your instances start running. Whenever the Spot Price exceeds your bid, your instances are terminated. Persistent Spot Instances will automatically restart once the Spot Price equals or falls below your bid, whereas one-time Spot Instances will simply terminate without restart. Regardless of how high you bid, you never pay more than the actual Spot Price.

As you can imagine, this system results in your rented computing instances running whenever they meet your price, and stopping whenever they don’t. That’s fantastic for controlling costs, but it’s unusable for any application that needs to stay up and running for any fixed continuous amount of time. Unless you want to place ridiculously high bids, don’t expect to run any high-availability systems on EC2 Spot Instances: Web sites, game servers, healthcare systems, battlefield control systems, et cetera.

The silver lining on this ephemeral cloud, however, is that it’s great for any application that doesn’t need to stay up and running for any fixed continuous amount of time: image and video processing, scientific research data processing, financial modeling and analysis, pharmaceutical and life sciences simulations, et cetera.

This eBay-style bidding approach to selling cloud computing resources should prove to be a very interesting experiment. It’ll almost certainly save people a pretty penny on rented computing power, so long as their applications don’t have to be available on demand. If Amazon EC2’s Spot Instances model proves successful, expect other cloud computing providers to come up with their own bidding systems.

Originally posted on December 14, 2009 @ 6:34 am