AWS continued their expansion the other day by announcing a new Japan region, hosted in Tokyo.
What I don’t quite understand is some of the pricing differences. I can understand that bandwidth might be different in different territories, and maybe the price of hardware (local taxes maybe? different shipping and local labour costs etc?), but if you compare the EC2 EU region with the new APAC-Tokyo region, you can see that whilst the Windows costs are the same, the Linux costs are higher in Tokyo.
As there should be no software license cost for the Linux instances, this seems a bit weird. All I can think of is that the Microsoft SPLA (Services Provider Licenses Agreement) that AWS have managed to negotiate with Microsoft happens to be cheaper than the EU region and exactly offsets the other higher costs.
March 3, 2011 at 1:30 pm
Remember that often have nothing to do with cost, and everything to do with perceived value.
With that in mind, there is an alternative hypothesis: That AWS for some reason thinks that there will be higher demand for Linux instances than Windows instances in Tokyo than in the EU.
Whether that’s actually the cause or not, I have no idea…
March 3, 2011 at 4:20 pm
Fair point. I guess it depends on what the competitive landscape is in that specific territory, and I was just assuming that both Windows and non-Windows instances would be equally affected by that landscape. But as you say, maybe it’s a supply and demand thing – i.e. they know by setting a certain price point they can tune demand to fit supply. It also depends on how the Tokyo price is pitched relative to the Singapore region price, as that’s the nearest likely alternative EC2 region.
March 3, 2011 at 7:20 pm
I think the key thing here pointed out is “perceived value”. Remember when Linux was released n-years ago. People thought businesses would move over from Windows to Linux as Linux was free and Windows isn’t.
But what happended is that businesses didn’t move to Linux – or more correctly, few companies did even know they would potentially save a lot of money doing so. So what is important is value to organizations. Perhaps Amazon has built a case study and figured out the business benefits to their target audience in Asia, who knows.
Simon