ANALYSIS

UK cloud pioneer scores world first with true utility pricing

Jim Mortleman

Global cloud services provider ElasticHosts has introduced a utility pricing model that is the first true use-based infrastructure as a service (IaaS) offering on the market.

The UK-based company's Elastic Containers will be billed on a pure consumption basis, rather than on capacity. Its auto-scaling container technology automatically expands and contracts according to customer demand, eliminating the need for any manual provisioning, infrastructure management or load balancing.

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The technology has been made possible by recent advances in the Linux kernel and is available to all Linux users from ElasticHosts’ nine global datacentres located in the UK, Europe, US, Canada, Asia and Australia.

Containers are an operating-system-level method of virtualisation that offer greater flexibility and a lower performance overhead than traditional hypervisor-based virtualisation.

Our containers offer true usage-based billing, based on actual CPU, memory, disk and bandwidth use

Richard Davies, ElasticHosts

Richard Davies, CEO of ElasticHosts, said: “The key technical advance with our containers is true usage-based billing, based on the actual CPU, memory, disk and bandwidth use inside a server, not on the size of the virtual machine. Elastic Containers are much more flexible and fine-grained, allowing us to measure how much compute and memory are used inside the server and scale automatically.”

Last month, Google signalled its intention to bring pricing closer to a utility model with aggressive price cuts and the introduction of automatic "sustained use" discounts, eliminating the need for customers to estimate in advance how much capacity they require.

However, Google’s billing is still currently based around the use of virtual machines rather than on actual use of resources. “If a customer provisions an 8GB server, they will be billed for 8GB even if the server is idle. By contrast, Elastic Containers are billed on actual server load – so if an 8GB server is only currently running 2GB of application software, we will only bill for 2GB,” said Davies.

ElasticHosts claimed its more finely-tuned pricing model would result in an average 50% savings for customers compared to its competitors’ IaaS offerings. Davies said: “Elastic Container pricing is benchmarked against major IaaS providers such as Google and Amazon, after their recent price cuts. For a customer whose servers have 100% CPU utilization 24/7 and 100% Memory utilization 24/7, our price is equivalent. In real use, customers will typically save 50% with Elastic Containers, since billing is based on actual server load and typical customer servers have varying utilisation.”

He added that the offering was backed up with a compelling service-level agreement (SLA).  “For any period of unavailability longer than 15 minutes, we will give customers free credit for 100 times that period, up to a full month. This is a very high level of financial compensation relative to other IaaS providers, and shows our confidence in the resilience of our service,” he said.

Will it woo customers away from US giants?

Owen Rogers, senior analyst for digital economics at 451 Research, said ElasticHosts’ new utility pricing model was “interesting and unique” in the marketplace. While he could not verify the company’s claim that customers would save an average of 50%, he said: “It does seem possible that by not paying for resources that are not consumed, the consumer may make an overall cost saving compared to other providers with smaller unit prices.”

Recent price cutting is just the beginning of a sustained period of pricing competition in the public cloud market

Owen Rogers, 451 Research

Rogers also believes it will take ElasticHosts’ competitors some time to bring similar offerings to market. “I don¹t think it will create a flurry of copycats. ElasticHosts’ ability to measure actual consumption is because of its use of containers, rather than virtual machines. The rest of the market is still based on virtual machines, and I can¹t see this changing overnight,” he said.

But with the gloves now off among the true global giants of public cloud – in particular Amazon Web Services (AWS), Google and Microsoft – it could be hard for ElasticHosts to maintain its claimed cost advantage.

Rogers said: “Recent price cutting by the likes of AWS, Microsoft and Google is just the beginning of a sustained period of pricing competition in the public cloud market. Will consumers really care about ElasticHosts’ more detailed – and arguably fairer – method of pricing, when its bigger competitors are slashing prices to hundredths of a cent?”


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