The pricing model of Cloud computing services

• Main Authors: HUANG, Jianhui, MA, Dan
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2013
• Subjects: Cloud Computing; Pricing model; Multi-stage Game; Computer Sciences; Management Information Systems
• Online Access: https://ink.library.smu.edu.sg/sis_research/1742; https://ink.library.smu.edu.sg/context/sis_research/article/2741/viewcontent/p263_ma.pdf
• Institution: Singapore Management University

Cloud computing service providers offer computing resource as a utility and software as a service over network. Many believe that Cloud computing is making an industry-wise paradigm shift for IT use. Besides its technique issues, the business feature of Cloud computing attracts our interests. Specifically the practice of Amazon EC2 introduces an interesting pricing scheme. Amazon provides users with virtual computing instances as a combination of interruptible service (i.e., spot instance) and uninterruptible service (i.e., on-demand and reserved instance). Spot instance is charged at a per use price which is dynamically changing over time; users of spot instance face the risk of service termination on the provider’s side. In this paper, we build a multiple-stage game to study users’ best job submission strategy under such a mixed pricing scheme, and to analyze the potential benefits and influence of such pricing scheme. We identify user-segments that will take different job submission strategies, and show that users should reserve resource for future high-value job arrivals. We also conduct numerical investigations to demonstrate how the outcome and best strategy vary according to the external market conditions.