Amazon Lowers Cost of Cloud Computing: Amazon has changed the pricing model of its cloud computing platform, Amazon Web Services, creating what’s called “Reserved Instances” for its EC2 Product. Reserved instances basically lower the price of the service and guarantees storage capacity in exchange for a commitment to use EC2 for a year or more.

Presumably Amazon Web Services is trying to lock in customers before the debut of Microsoft’s cloud computing platform Azure sometime this year.

Amazon says that its new pricing model lowers cloud computing costs for businesses. Customers make a one-time payment for each instance they want to reserve and in turn receive a significant discount on the hourly usage charge for that instance. (An instance is Amazon’s unit of computational capacity). After the one-time payment, the instance is reserved and there is no further obligation; customers only pay for the compute capacity that they consume. For example, an on-demand EC2 Small instance costs $0.10 per hour. For a one year commitment for the EC2 reserved instance, the cost is $0.067 per hour, including a one-time reserved instances fee and usage cost. Amazon compares the one-time fee to “acquiring hardware,” and the hourly usage fee to “operating costs.”

Go here for the breakdown of the on-demand instances costs vs. the reserved instances costs:

Selling Off Satyam: An article in the March 12, 2009 Times of India reported suitors for fraud-hit Satyam must give notice by Thursday if they are interested in bidding for the Indian outsourcing giant amid lingering uncertainty over the true state of its finances.

Satyam has been battling for survival since January when its founder B Ramalinga Raju, now in jail, declared he inflated the firm’s balance sheet by more than one billion dollars and fudged its profits for years.

Any bidder for India’s fourth-largest software services outsourcer has to consider potential liabilities from at least 13 lawsuits filed in US courts by defrauded shareholders who have seen the value of their shares slide.

Satyam’s board announced on Monday it had started the bidding process to sell off a 51-percent stake in the company based in the southern city of Hyderabad. At least two companies are expected to file “expressions of interest” for such a stake.

They are India’s biggest engineering company Larsen & Toubro which already holds 12 percent of Satyam. India’s Spice Group conglomerate, controlled by tycoon BK Modi, has also said it will file an expression of interest.

Satyam is valued at about 650 million dollars, a fraction of the seven billion dollars it was worth last May before India’s stock market tumbled sharply and the fraud became known.

The company operates in nearly 70 countries and has close to 700 clients including 185 firms ranked in the Fortune 500. Its strong customer base could make it an attractive purchase, but its potential liabilities may act as a major deterrent, analysts say.

Fund managers have been sceptical about the bidding process in the absence of accurate valuations for the firm. Satyam’s auditors have said it could take up to six months for its full financial picture to emerge.

“There is no clarity on Satyam’s valuations. On what basis can a bidder determine the true value?” said Hitesh Agrawal, head of research at Angel Broking.

Modi has said liabilities from the US lawsuits could range between 440 and 840 million dollars, according to Spice Group’s legal advisors. Any formal bid has to factor that in, he added.

 

Emerging Economies Shrink: Brazil’s economy shrank by 3.6% in the fourth quarter of 2008 compared with the previous three months, faster than expected and the worst quarterly performance for a decade.

China’s February exports fell by a wider margin than in January, government data showed.  February’s exports fell 25.7 per cent from a year earlier to $US64.9 billion ($100.5 billion) and imports dropped 24.1 per cent to $US60.1 billion, data from the General Administration of Customs showed.

The decline in exports steepened from January’s 17.5 per cent fall, while the dive in imports actually eased from January’s 43.1 per cent drop.

China’s trade surplus in February totalled $US4.84 billion, down from $US39.1 billion in January.

Tags: Amazon, Azure, Brazil, China, cloud computing, cost cutting, emerging markets, global economic recession, India, lawsuits, Microsoft, SaaS, Satyam, software-as-a-service

This entry was posted on Friday, March 13th, 2009 at 6:43 AM and is filed under Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.