When I initially read the story I wrote this off as a bad trip down "Revenue Optimization" lane. The self-destructive road that the travel industry took in the 90s. Being part of that business, it was exciting to develop systems to determine optimal pricing that mapped to demand segmentation. It became a real craze across airlines, then hotels. And it's still a big feature of that business today. But as the economy soured, the use of technology to maximize revenue became an accelerated exercise in optimally dumping excess inventory. What we later learned was that when travelers compared notes and realized that one paid a hundred dollars less than the other for the same seat or bed, it had an incredible commoditizing effect on how they viewed your product. And fueled by the power of the Internet, it's a trap they never escaped. We perpetuate this legacy every time we begin our travel planning by using a price comparison site like kayak, orbits or travelocity. The brand value of the individual airline, hotel or rental car has all but vanished. The same attraction recently hit Broadway – the phenomenon was captured nicely in a NYT article. But then I went back and read the details of how the Spot Instance program works. Turns out you bid a rate, and if the price falls to that level, then your Amazon instance will turn on. And just as quickly, it will turn off as soon as the spot price exceeds your maximum price! It would be like kicking the discount vacationer out of their bed because a full-rate business traveler showed up at the front desk. And who has a workload like that, anyway???
Time will tell how this experiment plays out, but I’d suggest keeping an eye on this service, as we are either seeing the next chapter being written in the Pricing and Revenue Optimization text book, or the emergent Cloud industry starting down the commodity road to ruin.
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