Are you comparing EC2's hourly rate with dedicated hardware? If so, you're comparing apples and oranges.
With EC2, the hourly rate is outrageous for an always-on server. You really need to buy reserved instances for it to be cost-effective. In my case I found I really needed to buy the 3-year heavy utilization reserved instances.
The hourly rate is best just for occasional spikes or when you're experimenting with different hardware configurations.
And yes, they were massively overcharging for dedicated instances, as they charged $7300 per month just for the privilege of being able to use dedicated instances (that doesn't include the cost of the instance itself.) I always assumed they were doing so just to reserve that feature for their big customers.
This is a common misrepresentation. Given a unit, reserved instances might be price competitive, but that unit won't be performance competitive. Even with reserved instances, you're talking about 2-4x worse price/performance at the minimum (much, much worse if SSDs are involved). Not to mention the upfront cost...
Using reserved instances is the exact opposite of what anyone should be doing. The only way to get price competitive with EC2 is to go the absolute other direction: establish a baseline with dedicated/colo and use spot instances for tasks or to handle peaks.
Speaking of misrepresentation, 'Not to mention the upfront cost'? What are you talking about? All the pricing proposals by AWS include clear references to it, and amortise the cost over the life of the plan. It's not a hidden cost. It's not an 'extra' cost on top of 'the monthly payment you thought you were making'.
I'm not, in any way, suggesting that the pricing structure isn't 100% transparent. I'm pointing out that there's an upfront component (say $1614 for a m3.2xlarge) to the reserved instance pricing - which is likely of interest to startups. Amazon calls this an "upfront payment"...I don't think "upfront cost" is a misrepresentation.
This cost tends to be better than buying hardware, but it's much higher than what you pay for dedicated (often $0 upfront...or $25-$200).
Of course he is comparing apples and oranges, yet it is how a substantial number of people actually use AWS. Dedicated instances goes some way towards mitigating it, but for a lot of people the short term billing makes AWS look cheap, and their dedicated servers were definitively still not cheap prior to this even just looking at the cost of the instances.
A lot of people are completely blinkered when it comes to the cost of using AWS.
With EC2, the hourly rate is outrageous for an always-on server. You really need to buy reserved instances for it to be cost-effective. In my case I found I really needed to buy the 3-year heavy utilization reserved instances.
The hourly rate is best just for occasional spikes or when you're experimenting with different hardware configurations.
And yes, they were massively overcharging for dedicated instances, as they charged $7300 per month just for the privilege of being able to use dedicated instances (that doesn't include the cost of the instance itself.) I always assumed they were doing so just to reserve that feature for their big customers.