Moore’s Law states that computer system performance/price ratio will double every two years. And that was very much my expectation when GoodData started using Amazon Web Services almost 2 years ago. But I had to wait until today to see Moore’s Law at work: Amazon announced 15% drop of EC2 prices. The price of the small Linux instance was constant at $0.10 per hour for the last two years – now it will be $0.085.
15% in 2 years – not exactly the exponential growth in the performance/price curve that I expected. And I started to wonder why. Here are my two explanations – I believe the second one is more likely:
- AWS prices were set way too low to attract developers two years ago. Moore’s Law helped the price to catch up with the real cost of running the cloud.
- AWS is a monopoly and Moore’s Law does not apply.
What? Cloud and monopoly? Isn’t utility computing a perfect example of fiercely competitive commodity where the price curve is shaped only by demand/supply? What would Nick Carr say? Unfortunately not. As much as we read about different cloud providers, AWS is the only real provider of “infrastructure as a service” in town. If you don’t want to be locked-in to proprietary Python or .Net libraries there is not that much choice.
Until we will see performance/price of AWS double every two years, we should still wonder about monopolistic pricing.