> Across all AWS availability zones instances are mispriced by roughly $400/hr at any given time. This means that, with just a single instance of each type, Amazon is missing out on $200/hr or roughy $1.7 million each year. This is over roughly 15,000 pools of instances. Given Amazon controls roughly 100 million IPs, we can guess that each instance pool probably has on the order of 1000 instances (more for smaller instances, less for larger instances). Given this, the average mispriced pool might have hundreds of instances, meaning hundreds of millions each year in missed revenue due to mispriced spot instances. Because amazon keeps their number of instances a secret, it’s difficult to make a precise estimate from the outside, but the missed revenue probably falls somewhere in this range.

You are hypothesizing that the price differences produce "lost" revenues.

An alternative hypothesis can be that the price differences produce similar or higher level of revenues for AWS through price segmentation, with Amazon recognizing the lack of adoption of certain spot instance bidding features and auction markets reacting appropriately.

Unless you have the capacity and quantity demanded for each instance types, you can't prove your hypothesis. You are assuming scenario 3 (below) with no insights into price elasticity of the underlying customers.

Example:

  Baseline:

Instance types A and B are equivalent.

A is priced at $3, with capacity of 1000, quantity demanded of 800. B is priced at $2, with capacity of 1000, quantity demanded of 200. Total quantity demanded = 1,000.

Revenues from instance type A = $3 x 800 = $2,400 Revenues from instance type B = $2 x 200 = $ 400

Total revenues = $2,800

  Scenario 1: All customers purchase instance B instead due to better price discovery.

Revenues from instance type A = $3 x 0 = $0 Revenues from instance type B = $2 x 1,000 = $ $2,000 Total quantity demanded = 1,000.

Total revenues = $2,000

Amazon loses $800 in revenues, there are no "lost" revenues" recovered.

  Scenario 2: Amazon changes instance type B price to $3. Total quantity demand decreases to 900 due to price elasticity of instance type B customers.

Revenues from instance type A = $3 x 800 = $2,400 Revenues from instance type B = $3 x 100 = $300

Total revenues = $2,700

Amazon loses $100 in revenues, there are no "lost" revenues recovered.

  Scenario 3: Amazon changes instance type B price to $3. Total quantity demand remains at 1,000.

Revenues from instance type A = $3 x 800 = $2,400 Revenues from instance type B = $3 x 200 = $600

Total revenues = $3,000

Amazon recovers $200 in "lost" revenues.