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%

News that Amazon Relational Database Service (RDS) provides a MySQL 5.1 relational database in the cloud has been met with a lot of interest.  On the surface this is good news for open source users and proponents.

When I read about RDS, I wondered if this was in fact good news for open source vendors.  I asked if Sun/MySQL was being compensated for Amazon’s use of MySQL in RDS.  Sun sources confirmed:

“The MySQL database that is used in Amazon’s RDS is based on the free, community version of MySQL.  However, for those Amazon Web Services customers that need MySQL technical support, Sun does offer that through our MySQL Enterprise subscription.”

At this point, it’s helpful to stop treating RDS as a competitive action against Sun/MySQL.  The rest of this post could apply equally to another open source project, the related open-core or dual licensed product and the related open source vendor. I fully expect to see Amazon continue to offer open source middleware components; RDS is the first step. I only mention Sun/MySQL below to help explain my thinking, not to draw any conclusions to its current or future market position.

Amazon’s decision to use the free version of MySQL to build RDS is completely sensible.  First, Amazon has the technical skills to support their usage of MySQL without having to acquire the MySQL Enterprise subscription. Second, this decision helps Amazon lower the cost of RDS, which makes RDS more attractive to customers.  This is clearly not good news for Sun/MySQL who is missing out on capturing some portion of the revenue from MySQL users spending on RDS.

Customers can still pay Sun/MySQL and Amazon to deploy MySQL Enterprise to the Amazon elastic compute cloud (EC2).  But with the introduction of RDS, Amazon is asking, why bother?  RDS reduces the need to manage, administer and support a MySQL environment. These are the key reasons one would purchase MySQL Enterprise.  RDS makes these three purchase drives less valuable to customers.

Until now, open source vendors have attempted to secure revenue by offering management and administration capabilities only through a for-fee product offering built around an open source core product.  Amazon has just thrown a major wrench into that strategy.  Why pay for the vendor’s “enterprise” product to obtain management, administration and support, when Amazon’s Cloud service minimizes the need for management and administration and includes support?

So what can open source vendors do?  Well, first, open source vendors have time to respond since the majority of workloads are not (yet?) in the cloud.  Second, proprietary features will be required in the “enterprise” version that are not available in the “free community” version of the product.  These features must not fall into the administration and management category.

Proprietary may just be an open source vendor best strategy against Amazon and other cloud providers.

Thoughts?

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.”

Very cool news from Amazon that they’ve released the source code used by the Kindle device.  The code is provided as is, off course.  There doesn’t appear to be a license file in the distribution.  But the folder is named “gplrelease” and they’re using Linux 2.6.22 so I suspect it’s GPLV2.  This means that competitors can utilize the Kindle software to build a competitive device.  But I think the more important news is that Kindle aims to become an application platform in the future.

I seriously doubt that a competitor will try and beat Amazon in the ebook reader device market by using the open source Kindle software.  Amazon would have access to any of the competitor modifications to the Kindle software.  Amazon gains little by open sourcing the Kindle software if there isn’t a value to the marketplace.  So, what is that value to the marketplace?

We Canadians can’t get Kindle devices so I don’t know what restrictions Amazon puts on running other software on the Kindle.  I see today’s news foreshadowing Amazon opening Kindle up as an application platform, akin to the iPhone/iPod.  Why else open up the Kindle code if not for helping developers get a better sense of the platform itself?  Clearly an SDK would be the next thing we should expect from Amazon.

What do you think?

Follow me on twitter at: SavioRodrigues

As much as I’d like to write about the rumored IBM acquisition of Sun, it’s probably best to leave that to others, for now.  I have no knowledge of any real or purported talks between the two companies.  I do know that if the deal goes through, I and many, many, many others will be impacted by it.  Hence, it’s best not to write something on the spur of the moment.

Instead, I’ll talk about Sun’s other reason for being in the news today; their Sun Cloud announcement at CommunityOne.  Aside from the catchy product name, how long did the marketing team work on that one ;-), I’m happy to see Sun move in this direction.  Sun is completely bang on with its vision of:

“a world of many clouds, both public and private, that are open and compatible.”

Sun Cloud won’t GA until later in the summer, so for now, we’re making predictions based on a marketing pitch, and arguably, a demo at CommunityOne (which I am not at).  Sun is promising to do much of what Amazon does today.  Sun believes that its Virtual Data Center (VDC) capabilities will differentiate it from Amazon. According to Sun:

“VDC offers developers a single management interface for staging an application running on OpenSolaris, Linux, and Windows. A drag-and-drop method is used for provisioning compute, storage, and networking resources via a Web browser.”

It’s also interesting that Sun chose to use a Creative Commons license for their Cloud APIs.  However, Glyn Moody tweets:

“Sun’s use of CC’d APIs to create an open ecosystem is interesting; doesn’t mean it’ll succeed, of course…”

I have to agree with Glyn.  With the future of Sun up in the air, it’s difficult for me to see a mass of developers or customers seeking Cloud services turning their back on AWS for Sun.  But, by the time the Sun Cloud becomes available, I suspect/hope Sun’s future as an independent company is more certain. Until then…

Follow me on twitter at: SavioRodrigues

Reading the headline that Adobe is putting its LiveCycle tools on Amazon’s EC2 reminded me that I wanted to blog about WaveMaker.

Back in December 2008, WaveMaker’s Chris Keene had written about offering the WaveMaker platform on EC2 so that developers could try it out without having to install anything.  And all for the price of snow in Canada, yes, free.  WaveMaker also offers the option to transition the developed application into production AMI’s with pricing starting at $0.30 per hour on Amazon.

I just read about Morph, another one of Winston Damarillo’s startups.  Winston’s past startup successes include Gluecode Software, acquired by IBM, and Logicblaze, acquired by Iona Technologies.  Based on his track record, Morph is definitely a vendor I’d be watching in the cloud space.

Yesterday’s news from Morph centers on adding support for Java and Grails apps on its platform as a service, Morph AppSpace.

According to Morph, “Each Morph AppSpace subscription is an end-to-end deployment, delivery and management system for web applications that combines technology, services and people into a low-cost managed service.”

Pricing starts at $1/day for an entry-level application to $4/day for a high-use application.  A developer account for testing and staging is free.

Puttering around their website, it seems that Morph is leveraging Amazon’s S3 under the covers.  It’s not clear if Morph is using EC2 or not.  Choosing to leverage S3 makes sense from a cost standpoint, but I wonder about tying Morph AppSpace directly to a competitor.

I’ll try to get more info on Morph and post another entry.

Very interesting post from Nick Carr re. eBay’s auctions vs. fixed price selling. In a nutshell, Carr, and BusinessWeek, state:

“…eBay’s auctions are “a dying breed.” Buyers and sellers are reverting to the traditional retailing model of fixed prices…”

BusinessWeek goes on to state:

“Sales at Amazon.com (AMZN), the leader in online sales of fixed-price goods, rose 37% in the first quarter of 2008. At eBay, where auctions make up 58% of the site’s sales, revenue rose 14%.”

Economic theory suggests that auction pricing results in the most efficient prices for a given product. Throw the auction on the Interweb and the price efficiency should benefit from more buyers and sellers and more transparent information. In eBay’s prime, the end of fixed price product sales was predicted more than once. (Readers on the ball may notice the parallels between this and the oss/software market.)

The fact that we’re seeing increased interest in fixed price auctions is a natural result of human nature. We want the best price, but most of us are able to make pricing trade-offs for some other benefits (i.e. the time saved via a fixed price sale). In certain situations, I’m willing to enter into an auction-based sale. In other situations, I just want to buy the widget and move on. Both forms of selling have their place (again, note the parallels to oss vs. proprietary software). To suggest that one form will (nearly) always win out over the other form ignores human behavior.