Last week Amazon Web Services announced that it was dropping its prices. According to a post on ZDNet, this was the 19th time in 6 years that Amazon agreed to drop its prices and it’s another case of the price of technology services going down — a trend that has to make any cash-strapped IT executive smile.
It’s probably a big contributing factor as well as to why Amazon is the number one cloud service provider in the world. How big? Very big. According to a post on GigaOm, analyst Huan Liu from Accenture estimates that the Amazon Elastic Cloud service encompasses an impressive 450,000 servers.
That doesn’t mean Amazon gets it right every time. Just last May in fact, Amazon had a data loss and some folks apparently never got it back. That’s an ugly outcome if it turned out they weren’t able to recover, but data loss happens in private data centers too, whether we want to admit or not.
One of the reasons that Amazon can afford to continue to drop prices is the economy of scale we have often heard about in cloud computing is being proven true. The bigger they get, the cheaper it becomes to run their data centers (as counter-intuitive as that might sound). They can take advantage of their size to build in efficiencies that perhaps you couldn’t do on your own in your smaller private data center.
It doesn’t necessarily mean that you can shut down your data center and go all Amazon all the time (although I’m sure they would love it if you did), but having an inexpensive option certainly helps for certain situations like holiday rushes or unanticipated traffic bursts.
That’s how Zynga uses Amazon services. They built their own data centers and when a game matures and has fairly stable traffic, it moves there, but before that when it’s new and unpredictable, Zynga uses Amazon EC2. As Liz Gannes wrote on GigaOm back in 2010:
“Now, within less than a day, Zynga can allocate a new game enough EC2 computing capacity to support 10 million daily active users. That pre-built environment should last even the wildest growing game at least five to eight weeks. Each game starts on EC2 and is watched for the next three to six months. If at any time growth goes flat or predictable, the game is transitioned off Amazon and into Zynga’s data centers where it can be optimized to work with those resources.”
And if Amazon can handle that kind of traffic, chances are it can handle the spikes of what most companies have to offer, and apparently at a reasonable cost.
As the price drops on Amazon web services, it’s going to put pressure on the competition to do the same, and as that happens, it will only benefit IT pros like you, who may need a helping hand and might not have a huge budget with which to find one.