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Comment by aaronsw | Hacker News Reader

Hmm, looks like they're competing directly on price:

1 virtual core, 1.7GB RAM, 160GB disk for $.055/hr (Google)

1 virtual core, 1.7GB RAM, 160GB disk for $.08/hr (Amazon)

Amazon is still much cheaper if you use reserved instances or spot pricing, though. And for these sorts of compute jobs, I'm not sure why you wouldn't use spot pricing.

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This is part of what I find amazing. Google and Amazon and every other 'EC' vendor looks to 'lock in' the price per 'equivalent compute unit'. What that means is that when Intel gets 50% more performance the EC vendor gets 50% more profit as they don't lower their price. For a user of cloud services it means that your cost to deliver your product will only go 'up' with features. In the past a large number of players have been able to deliver additional features at the same cost because they just upgraded to faster hardware.

The economics of this move starts pouring dollars into the EC providers and puts upward price pressure on web services. This 'price ratchet', if widely adopted, it going to put a huge kink in the productivity gains we've seen over the last 10 years as folks have ridden the commodity compute bandwagon. We've seen previews of that when people who used AppEngine got bit by the big price increases. Its like commuters who are forced to give up their income to the the gas pump, elastic compute resources are the 'gas' of the 21st century.

Hopefully competitive forces will sort that out. There will be an incentive for price per 'equivalent compute unit' to be lowered as the underlying infrastructure costs decrease.

I think the competitive forces will have some bearing here, although gas prices are an example of something which gets regulatory barriers put in place of expansion (you can't easily get approval to build a refinery). Given the 'cyber war' type mentality I am keeping a close eye on the regulatory environment growing up around providing 'cloud' services, be they compute, storage, or web front ends.

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