Windows and Red Hat pricing on Amazon EC2 vs. on-premise

Open source vs. proprietary pricing differential narrows on the cloud

After my previous post, "Cloud to boost proprietary software use?," Tim Bray questioned whether the pricing comparison of "WebSphere/SUSE vs. JBoss/RHEL on EC2 was a transient anomaly." JBoss' Rich Sharples commented that I was comparing apples and oranges. That was not my intention. I simply picked the only two application server Amazon Machine Images (AMIs) that I could easily find pricing for. And in retrospect, my intention was not to compare proprietary versus open source pricing in the cloud, but rather to compare the price differential of proprietary versus open source products in the cloud versus on-premise.

Let me try again with Windows versus Linux. Specifically, I looked at the price of Windows Server 2008 R2 versus Red Hat Enterprise Linux (RHEL) on-premise and on Amazon's Elastic Compute Cloud (EC2). I wanted to evaluate how, if at all, the Windows price premium differs on-premise versus in the Amazon cloud. One can argue that "you need 2 Windows servers to do the work of a RHEL server." Such an argument has no impact on this analysis. If you do in fact need two or more Windows servers per RHEL server, this ratio would hold equally well on-premise or on Amazon EC2.

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Here's what I found:

On-premise license:

  • Windows Server 2008 R2 Datacenter Edition: $2,999
  • Windows Server 2008 R2 Enterprise with 25 Client Access Licenses: $3,999
  • Red Hat Enterprise Linux Premium Subscription for 1 year: $1,299
  • Windows price premium: 130 to 208 percent [see update below]

Amazon EC2 license on Standard-Small AMI:

If you're surprised that the Windows Server AMI is 43 percent less expensive per hour than the RHEL AMI raise your hand [see update below].

Maybe you think I've missed some important or potentially hidden costs for the Windows AMI. I may have. I'm by no means an operating systems licensing expert. However, it's difficult to accept that these costs would add up to Windows being 130 to 208 percent premium priced versus RHEL on EC2. Even if I've missed a pricing component that doubles the "true" price of a Windows AMI in a production setting, that would roughly put Windows and RHEL at par in terms of EC2 per hour pricing. That's a far cry from the 130 to 208 percent premium for Windows over RHEL in an on-premise environment.

Hat tip to William Vambenepe for astutely pointing out that the license cost differential between proprietary and open source products narrows in the cloud.

[UPDATE: 2009-12-11 @ 5:45p EST -- PLEASE Read]

Based on public and private comments, here is some new information for readers:

1. The version of RHEL on EC2 is supported by Red Hat at the Red Hat Basic Subscription Web support level. This includes two-business-day response and unlimited incidents. Red Hat charges $349 per year for this license. As previously mentioned, the equivalent RHEL AMI (with an equivalent level of support) is 21 cents per hour plus $19 per month.

2. The version of Windows 2008 offered on EC2 is Microsoft Windows 2008 Datacenter R1 SP2 64-bit. The AMI is not supported as part of the 12-cents-per-hour AMI fee. However, to receive an equivalent level of support for this AMI as Red Hat offers for the RHEL AMI, customers can purchase the AWS Premium Support at the Silver level. The AWS Silver Premium level support is $100 per month, or the equivalent of 14 cents per hour. Alternatively, to receive 24/7 support for this Windows AMI, customers could purchase the AWS Gold Premium level of support for $400 per month or the equivalent of 55 cents per hour.

3. The price comparison now becomes:

On-premise license:

  • Windows Server 2008 R2 Datacenter Edition: $2,999
  • Red Hat Enterprise Linux Basic Subscription for 1 year: $349
  • Windows price premium: 759 percent

Amazon EC2 license on Standard-Small AMI:

  • Windows Server 2008 R2 (12 cents per hour) with AWS Silver Premium support (14 cents per hour): 26 cents per hour
  • Windows Server 2008 R2 (12 cents per hour) with AWS Gold Premium support (55 cents per hour): 67 cents per hour
  • Red Hat Enterprise Linux with Basic Subscription: 21 cents per hour, plus $19 per month per customer
  • Windows Price premium: 23 to 219 percent

Key point to take away: Holding the product version and support level constant across an on-premise license and Amazon EC2 instance, the price premium of Windows vs. RHEL, if X percent for on-premise, will be less than X percent on the Amazon cloud. Said differently, the license cost differential between proprietary and open source products narrows in the cloud.

[ /UPDATE]

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p.s.: I should state: "The postings on this site are my own and don't necessarily represent IBM's positions, strategies, or opinions."

This story, "Windows and Red Hat pricing on Amazon EC2 vs. on-premise," was originally published at InfoWorld.com. Follow the latest developments in open source at InfoWorld.com.