A note in my inbox this morning announced that Amazon’s EC2 virtual computer hosting service now supports “micro instances” for $0.02/hour ($0.03/hour if you’re confused enough to want to host a web site using Windows):

Instances of this family provide a small amount of consistent CPU resources and allow you to burst CPU capacity when additional cycles are available. They are well suited for lower throughput applications and web sites that consume significant compute cycles periodically. Micro Instance 613 MB of memory, up to 2 ECUs (for short periodic bursts), EBS storage only, 32-bit or 64-bit platform.

Pricing

$0.02/hour = $0.48/day =~ $14.50/month.

A small standard on-demand EC2 instance is $0.085/hour (~$61.50/month), so this is a huge price drop for web sites that don’t really need much computing power, who make up a very long tail). The most obvious target is ISPs who offer shared hosting for low-traffic web sites for $10-20/month.

Competing with free

A less obvious, but perhaps more important target for Amazon EC2 micro instances is Google App Engine. As I explained in a previous posting (Costing out Google App Engine, July 2009), Google can afford to offer free hosting up to about 5 million pageviews/month — enough traffic to pay a modest salary from ad revenue — because they know that most sites will use Google AdWords, and Google will get a cut of the advertising revenue. Amazon EC2 can’t offer free cloud hosting the same way, because it would still be Google getting the advertising revenue.

Four other kinds of “free”

By offering such a low price tier, Amazon is probably gambling that people are willing to pay <$15/month for four freedoms that Google App Engine doesn’t deliver:

Freedom to use languages/environments other than Python and Java. Freedom to install out-of-the-box software like MySQL, Apache, PHP, Drupal, and WordPress, etc. Freedom from having to mess around in the App Engine sandbox with the data store, etc. Freedom to move the application to a different ISP without major modifications.

I suspect that for many users, the ability to just drop in an app without having to spend weeks messing around with JVM-limited language ports like JRuby will be outweigh the price of three beers each month. Of course, thousands of ISPs already offer that freedom through shared hosting accounts, often at a lower price and with decent personal technical support. What else does AWS offer this group that the ISPs don’t?