His decision was validated in April, when usage spiked from 50 EC2 servers to 5,000 in one week. Jefferson says he never could have anticipated such needs. Even if he had, it would have cost millions to build the type of infrastructure that could have handled that spike. And investing in that infrastructure would have been overkill, since that capacity isn't needed all the time, he says.
But paying by the drink might make less economic sense once an application is used at a consistent level, Willis says. In fact, Jefferson says he might consider a hybrid approach when he gets a better sense of Animoto's usage patterns. In-house servers could take care of Animoto's ongoing, persistent requirements, and anything over that could be handled by the cloud.
Costs, Part II: Cloud Storage Providers
Storage in the cloud is another hot topic, but it's important to closely evaluate the costs, says George Crump, founder of Storage Switzerland, an analyst firm that focuses on the virtualization and storage marketplaces.
At about 25 cents per gigabyte per month, cloud-based storage systems look like a huge bargain, Crump says. But although Crump is a proponent of cloud storage, the current cost models don't reflect how storage really works, he says. That's because traditional internal storage systems are designed to reduce storage costs over the life of the data by moving older and less-accessed data to less-expensive media, such as slower disk, tape or optical systems. But today, cloud companies essentially charge the same amount "from Day One to Day 700," Crump says.
Amazon's formula for calculating monthly rates for its S3 cloud storage service is based on the amount of data being stored, the number of access requests made and the number of data transfers, according to Methvin. The more you do, the more you pay.
Crump says that with the constant decline of storage media costs, it's not economical to store data in the cloud over a long period of time.
Cloud storage vendors need to create a different pricing model, he says. One idea is to move data that hasn't been accessed in, say, six months to a slower form of media and charge less for this storage. Users would also need to agree to lower service levels on the older data. "They might charge you $200 for 64G the first year; and the next year, instead of your having to buy more storage, they'd ask permission to archive 32G of the data and charge maybe 4 cents per gigabyte," Crump explains.