Towards Optimal Capacity Segmentation With Hybrid Cloud Pricing

Date Added: Apr 2012
Format: PDF

Cloud resources are usually priced in multiple markets with different service guarantees. For example, Amazon EC2 prices virtual instances under three pricing schemes - the subscription option (a.k.a., Reserved Instances), the pay-as-you-go offer (a.k.a., On-Demand Instances), and an auction-like spot market (a.k.a., Spot Instances) - simultaneously. There arises a new problem of capacity segmentation: how can a provider allocate resources to different categories of pricing schemes, so that the total revenue is maximized? In this paper, the authors consider an EC2-like pricing scheme with traditional pay-as-you-go pricing augmented by an auction market, where bidders periodically bid for resources and can use the instances for as long as they wish, until the clearing price exceeds their bids.