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Amazon Announce EC2 Reserved Instances

Cloud computing provides a mechanism for companies to affordably scale their applications to support user demands. Amazon's EC2 is a cloud computing solution and with the announcement of reserved instances, Amazon has significantly reduced the cost.

Last week Amazon announced a new Reserved Instance program for its Elastic Cloud Compute (EC2) service. EC2 is a cloud computing implementation in which you pay for servers (and as many of them as you need) as you use them. For example, I might launch my web application to an EC2 instance (on any OS that you want) and as more users start using my application and I outgrow that server, I can just start another one and then another, and so forth. The point is that the entry point is very low for a company (ranging from as low as $0.10 per hour to $1.20 per hour and yet the environment can scale to support the type of load that Amazon receives - and your costs scale with your usage.

Anyway, Amazon's new reserved instances allow you to make a one-time payment for instances to reserve them and then receive "a significant discount" on the hourly usage charge for those instances. I have yet to convert over to reserved instances, but in my Facebook buzz I'm hearing about great savings. From Amazon's web site, if you reserve a "small" server (1.7 GB RAM, 160 GB HDD, 1 virtual core), which costs $0.10/hour running Linux, you can buy that $0.10/hour cost down to $0.03/hour for $325 for 1 year or $500 for 3 years. Considering approximately 720 hours per month, the usage cost goes down from $72 to $21.60. Or for a year (8760 hours) the price is reduced from $876 to $262.80.

Has anyone taken the plunge yet?

Here's what Amazon says about its Reserved Instances:

Reserved Instances give you the option to make a low, one-time payment for each instance you want to reserve and in turn receive a significant discount on the hourly usage charge for that instance. After the one-time payment for an instance, that instance is reserved for you, and you have no further obligation; you may choose to run that instance for the discounted usage rate for the duration of your term, or when you do not use the instance, you will not pay usage charges on it.

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