Rackspace CTO Blasts Amazon's Dedicated Instance Price Cuts

While Amazon Web Services (AWS) routinely reduces the pricing of its cloud services portfolio, last week's 80 percent slashing of its EC2 Dedicated Instances raised the ire of Rackspace CTO John Engates, who all but said, "You get what you pay for."

Amazon reduced the hourly price of EC2 Dedicated Instances from $10 to $2 per region. In a blog post Tuesday, Engates said not to underestimate the fact that the reductions apply to each region.

In a blog post Tuesday, Engates acknowledged Rackspace isn't looking to beat Amazon on price, but he also warned customers that they should read between the lines.

"A lower unit price doesn't always mean lower costs overall," Engates argued. "Nor does it always deliver value when one considers an apples-to-apples comparison of performance and support."

The way Amazon defines dedicated computing is "at odds" with how everyone else, including Rackspace, defines dedicated instances, according to Engates' missive. Amazon's EC2 Dedicated Instances run in single-tenant hardware dedicated to a single customer account that offer compliance advantages over multitenant instances, specifically for customers who don't want to share those instances with anyone else, Engates noted.

"But they do not provide the true isolation that customers get on dedicated, bare metal servers," he said. "True dedicated servers offer superior performance and customization. And, despite the recent price cuts on EC2 dedicated instances, they still cost more on a total-cost-for-performance basis than do true dedicated servers."

Taking that further, Engates said while Amazon's Dedicated EC2 Instances give customers their own hardware, they're still running in a "dedicated slice" of EC2 and not isolated from the public cloud. Plus, that doesn't apply to requirements for additional block storage. Engates also argued Amazon offers limited customization and its EC2 Dedicated Instances don't offer improved reliability because they're on the same class of servers as the multitenant offering.

The fact that Rackspace also doesn't charge a separate per-region fee can have a significant impact on cost and performance, Engates argued. For example, with Amazon's new pricing, it would cost $1,460 per month for a dedicated per-region fee to continuously run an instance, not including bandwidth and support. By comparison, a dedicated Rackspace server with eight CPU cores, 16 GB of RAM and 146 GB of capacity on two drives costs $538 per month for a managed server, with the option to scale up to 1.5 terabytes for 32 CPU cores.

"A Rackspace customer could get seven dedicated servers (managed with month-to-month pricing) for about $500 a month less than an AWS customer would pay for seven dedicated instances in one region," Engates explained. "In that scenario, Rackspace is $3,656 while AWS is $4,158. What's more, the performance on the dedicated servers would eclipse that of the AWS dedicated instances."

Engates' position notwithstanding, Amazon is still the cloud provider to beat, and its price reductions will undoubtedly give it a boost, making EC2 Dedicated Instances attractive to its existing customers and those looking for commodity services.

Posted by Jeffrey Schwartz on 07/18/2013 at 12:49 PM