Windows & Red Hat pricing on Amazon EC2 vs. on-premise

After my previous post “Cloud to boost proprietary software use?”, Tim Bray questioned whether the pricing comparison of “WebSphere/SUSE vs. JBoss/RHEL on EC2 was a transient anomaly”. JBoss’ Rich Sharples commented that I was comparing apples and oranges.  That was not my intention.  I simply picked the only two application server Amazon Machine Images (AMIs) that I could easily find pricing for.  And in retrospect, my intention was not to compare proprietary versus open source pricing in the cloud.  But rather to compare the price differential of proprietary versus open source products in the cloud versus on-premise.

Let me try again with Windows versus Linux.  Specifically, I looked at the price of Windows Server 2008 R2 versus Red Hat Enterprise Linux (RHEL) on-premise and on Amazon’s Elastic Compute Cloud (EC2).  I wanted to evaluate how, if at all, the Windows price premium differs on-premise versus in the Amazon cloud.  One can argue that “you need 2 Windows servers to do the work of a RHEL server.” Such an argument has no impact on this analysis.  If you do in fact need 2, or a higher number of Windows servers per RHEL server, this ratio would hold equally well on-premise or on Amazon EC2.

Here’s what I found:

On-premise license:
Windows Server 2008 R2 Datacenter Edition: $2,999
Windows Server 2008 R2 Enterprise with 25 Client Access Licenses: $3,999
Red Hat Enterprise Linux Premium Subscription for 1 year: $1,299
Windows price premium: 130% to 208% [See UPDATE below]

Amazon EC2 license on Standard-Small AMI:
Windows Server 2008 R2:  $0.12/hr
Red Hat Enterprise Linux: $0.21/hr plus $19/month per customer
Windows Price premium: -43% [See UPDATE below]

If you’re surprised that the Windows Server AMI is 43 percent less expensive per hour than the RHEL AMI raise you hand [See UPDATE below].

Maybe you think I’ve missed some important or potentially hidden costs for the Windows AMI.  I may have. I’m by no means an operating systems licensing expert.  However, it’s difficult to accept that these costs would add up to Windows being 130% to 208% premium priced versus RHEL on EC2.  Even if I’ve missed a pricing component that doubles the “true” price of a Windows AMI in a production setting, that would roughly put Windows and RHEL at par in terms of EC2 per hour pricing.  That’s a far cry from the 130 percent to 208 percent premium for Windows over RHEL in an on-premise environment.

Hat tip to William Vambenepe for astutely pointing out that the license cost differential between proprietary and open source products narrows in the cloud.

[UPDATE:  2009-12-11 @ 5:45p EST -- PLEASE Read]

Based on public & private comments here is some new information for readers:

1] The version of RHEL on EC2 is supported by Red Hat at the Red Hat “Basic Subscription Web support” level.  This includes  2 business day response, and unlimited incidents.  Red Hat charges $349/year for this license.  As previously mentioned the equivalent RHEL AMI (with an equivalent level of support) is $0.21/hr plus $19/month.

2] The version of Windows 2008 offered on EC2 is Microsoft Windows 2008 Datacenter R1 SP2 64-bit. The AMI is not supported as part of the $0.12/hr AMI fee.  However, to receive an equivalent level of support for this AMI as Red Hat offers for the RHEL AMI, customers can purchase the AWS Premium Support at the Silver level.  The AWS Silver Premium level support is $100/month, or the equivalent of $0.14/hr. Alternatively, to receive 24×7 support for this Windows AMI, customers could purchase the AWS Gold Premium level of support for $400/month, or the equivalent of $0.55/hr.

3] The price comparison now becomes:

On-premise license:
Windows Server 2008 R2 Datacenter Edition: $2,999
Red Hat Enterprise Linux Basic Subscription for 1 year: $349
Windows price premium: 759%

Amazon EC2 license on Standard-Small AMI:
Windows Server 2008 R2 ($0.12/hr) with AWS Silver Premium support ($0.14/hr):  $0.26/hr
Windows Server 2008 R2 ($0.12/hr) with AWS Gold Premium support ($0.55/hr):  $0.67/hr
Red Hat Enterprise Linux with Basic Subscription: $0.21/hr plus $19/month per customer
Windows Price premium: 23% to 219%

Key point to take away:
Holding the product version and support level constant across an on-premise license and Amazon EC2 instance, the price premium of Windows vs. RHEL, if X% for on-premise, will be less than X% on the Amazon cloud.  Said differently, the license cost differential between proprietary and open source products narrows in the cloud.

[ /UPDATE]

Follow me on twitter at: SavioRodrigues

PS: I should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies or opinions.”

See update at the bottom of this post.Based on public & private comments here is some new information for readers:

1] The version of RHEL on EC2 is supported by Red Hat.  The support level is: “Basic Subscription Web support, 2 business day response, and unlimited incidents”.  Red Hat charges $349/year for this license.  As previously mentioned the equivalent RHEL AMI is $0.21/hr plus $19/month.

2] The version of Windows 2008 offered on EC2 is Microsoft Windows 2008 Datacenter R1 SP2 64-bit. The AMI is not supported as part of the $0.12/hr AMI fee.  However, to receive an equivalent level of support for this AMI as Red Hat offers for the RHEL AMI, customers can purchase the AWS Premium Support at the Silver level.  The Silver level support is $100/month, or $0.14/hr.

3] The price comparison now becomes:

On-premise license:
Windows Server 2008 R2 Datacenter Edition: $2,999
Red Hat Enterprise Linux Basic Subscription for 1 year: $349
Windows price premium: 759%

Amazon EC2 license on Standard-Small AMI:

Windows Server 2008 R2 ($0.12/hr) with AWS Silver Premium support ($0.14/hr):  $0.26/hr
Red Hat Enterprise Linux with Basic Subscription: $0.21/hr plus $19/month per customer
Windows Price premium: 23%

 

Xen continues to defend its Cloud turf against VMware

While VMware is the market leader in desktop and server virtualization, open source Xen has enjoyed a similar position in the Cloud service provider market.

Service providers growing beyond traditional hosting to Cloud infrastructure as a service have typically chosen Xen as the basis of their offering. For instance, Amazon’s EC2 is based on the Xen hypervisor, as is the Rackspace Cloud offering. Simon Crosby, CTO at Citrix Systems, the vendor behind Xen.org, explains why the Xen hypervisor has the traction it does:

“Free is not enough for some Cloud providers. Some companies need to be able to hack the software.”

Up until today, service providers had to take the open source Xen hypervisor and create their own Cloud platform around it. That changed yesterday with the announcement of the Xen Cloud Platform which goes beyond the hypervisor to deliver a platform for virtualizing storage, server and network resources. Citrix’s Crosby uses the analogy that this move takes Xen from producing a car engine to producing a car.

For customers, the most intriguing feature of the Xen Cloud Platform is the ability to move their deployments across Clouds created using the Xen Cloud Platform. The platform will adhere to the Distributed Management Task Force’s Open Virtualization Format (OVF) for virtual machine images, a standard which VMware helped create. Going backing to the analogy of starting with a car, versus starting with an engine with the hopes of building a car, the Xen Cloud Platform makes it vastly easier for vendors to create a Cloud offering. This will help drive down prices while at the same time giving customers the guard against vendor lock-in that they seek.

This recent Xen announcement seems like it could throw a wrench into VMware’s plans to grow its footprint in the Cloud service provider market. It should be noted that OpSource just recently announced a Cloud offering built on the VMware hypervisor. But one has to wonder if OpSource would have made the same decision in 6-12 months when the Xen Cloud Platform has had time to mature.  And when you consider service providers in emerging markets, the Xen Cloud Platform looks to be much more appealing than anything VMware has announced…yet.

All this competition in the Cloud market is great news for customers.  Onward.

Follow me on twitter at: SavioRodrigues

PS: I should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies or opinions.”

 

Why Oracle won’t lose the SaaS/Cloud competition

Really, I’m not obsessed with cloud computing! I’ll try to write about something else next.  However, I wanted to reply to a post from Chris Keene, titled: “Larry Whistles Past the (Cloud) Graveyard”.  Chris writes:

“Larry’s rant is an extraordinary example of whistling past the graveyard. Oracle’s huge transformation over the last 10 years has been from an infrastructure company (databases & middleware) to an applications company (ERP, CRM, SFA ect). Now, just as this transformation is completed, along comes an infrastructure that will obsolete all the applications Oracle just got done rolling up.”

I agree that Larry’s rants sometimes distract from the real discussion.  However, I don’t agree that SaaS/Cloud is a magic bullet, let alone the only answer for customers.

A point that Chris doesn’t make explicitly, but I’m sure he has considered is what it would take for Oracle to become a SaaS/Cloud player.  It would be extremely expensive for a vendor like Oracle to build new SaaS-based apps alongside their current apps.  But Oracle has an ace up its sleeve, namely, the average customer’s willingness to migrate core business applications.  Hint: willingness is very low, considering how painful migrations are.

Over the next decade Oracle will have to balance spending R&D dollars on their current applications (i.e. non SaaS-based) and on new applications designed from the ground for a Cloud/SaaS environment.  What portion of their R&D will Oracle invest in the latter?  Play a game with me.  Imagine Larry et al. trying to explain missing quarterly targets because “we are investing in the right products for 5 yrs from now, that won’t drive substantial revenue anytime soon”.  What would happen to their stock?  A more realistic option is for Oracle to follow a BAU approach with their R&D and products. Then, as SaaS/Cloud really begins to negatively impact revenue, Oracle will acquire SaaS/Cloud vendors.

When this occurs, Oracle will offer significant customer choice.  If a customer isn’t happy with traditional Oracle Apps, and wants to migrate to a SaaS platform, Oracle will have an answer.  The “Customer Choice” card is not a new strategy, I’ve written about it in the past.  It works.  Customers are a lot more nuanced than the black and white, for-vs-against SaaS, open source, maple syrup etc., figures we like to paint.

If you take this thesis to be true, then vendors that win, will have to offer both choices to customers.  Sorry to say, but in these types of games, the incumbent tends to win.  On the other hand, incumbents tend to win via acquisition. Incumbetnts acquire startup competitors that took the different approach to serving the customer.  To me, this seems like a win-win game.

What do you think?

 

Cloud computing is over hyped

It seems that Cloud computing is already scaling its way down Gartner’s trough of disillusionment?  For those not familiar with the Gartner Hype Cycle, the trough of disillusionment begins right after a technology has hit the “Peak of Inflated Expectations”.

Dan Lyons starts things off by agreeing with Richard Stallman about the risks surrounding cloud computing. Dan says:

“Just think of all the little hooks and Velcro straps a cloud service provider can create to keep you locked in. For one thing, they’ve got your data. But think also of all the business logic, the customized apps created uniquely for you. Just look at what Facebook does to make it extremely painful for users to move. That’s a tiny taste of the cloud.”

Stallman tells the Guardian:

“It’s stupidity. It’s worse than stupidity: it’s a marketing hype campaign….Somebody is saying this is inevitable – and whenever you hear somebody saying that, it’s very likely to be a set of businesses campaigning to make it true.”

The Guardian also has a quote from Larry Ellison on cloud computing:

“The computer industry is the only industry that is more fashion-driven than women’s fashion. Maybe I’m an idiot, but I have no idea what anyone is talking about. What is it? It’s complete gibberish. It’s insane. When is this idiocy going to stop?”

On the other side of the debate is Geir Magnusson:

“I think that notions of privacy and user control aren’t intrinsically at odds with the big spectrum of technologies that are called ‘cloud computing’. Rather, like any other computing technology used by humans, there are options, and we can choose to use and create tech that is secure and open, both in the implementation (as in open source), but maybe more importantly in terms of portability and data freedom, being able to move one’s data to where one chooses.”

Like many other technologies purported to completely reshape the vendor landscape, cloud computing won’t deliver.  However, cloud computing definitely has a role to play in the future of the IT marketplace.  Some applications are well aligned with the cloud.  Others, especially really important business-critical apps, aren’t.  Will this change over time? Maybe, but how many companies still do the majority of their business critical transactions on a mainframe-based system?  Hint, a lot.  Also, as more customers start making noise about data portability and freedom, expect vendors to respond with support for related open standards.

In the end, cloud computing will become a valuable part of every company’s IT strategy.  However, cloud computing simply won’t be the foundation upon which an average company’s IT strategy is built.

What do you think?