SpotCloud Launches Exchange for Cloud Capacity

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A diagram of how the SpotCloud marketplace brings together buyers and sellers of cloud computing capacity (click for larger image).

A year ago we published an article titled Could A Cloud Computing Exchange Work?, which examined the potential applications for commodity-style trading of compute capacity.

The answer arrives today in SpotCloud, an online marketplace bringing together buyers and sellers in a cloud capacity clearinghouse and marketplace. It's an intriguing service that promises to take the advantages of cloud computing to the next level, allowing users and providers to maximize the economics and efficiency of their cloud operations.

SpotCloud is the brainstorm of Reuven Cohen, the founder and CEO of Enomaly, which makes software that allows service providers and enterprises to create and manage cloud platforms. SpotCloud is powered by Enomaly's software, which provides the dual benefit of creating a new service while showcasing the capabilities of the Elastic Computing Platform.

Cohen compares SpotCloud to sites like  HotWire.com that avoid direct competition with retail sales by using an "opaque" sales model. SpotCloud meters, tracks, and bills capacity buyers, and pays capacity sellers directly.

“The market driven approach of SpotCloud is a game changer for both buyers and providers of cloud computing resources.” said Cohen. “For service providers, SpotCloud enables the most important feature – the ability to make more money. Each service provider can define prices for the excess capacity offered through the service and adjust these based on time and utilization. For consumers, SpotCloud provides a secure central location to buy from a global pool of providers at highly competitive prices.”

How It Works

Cloud providers can use SpotCloud to sell inventory that would otherwise go unsold, enabling increased utilization and revenue. By selling through SpotCloud, providers can monetize inventory without undermining their standard pricing.

For end users, SpotCloud provides a venue to discover and buy computing capacity, based on performance, cost and location parameters - all accessible through a web dashboard and API.

The potential for a service like SpotCloud emerged in late 2009, when Amazon Web Services introduced Spot Instances, a pricing approach in which customers bid on unused Amazon EC2 capacity and run those instances for as long as their maximum bid exceeds the current spot price, which changes periodically based on supply and demand.

Monetizing Data Center Space

Cohen saw the potential for a spot capacity market involving multiple providers, creating access to cheap servers for users and improved utilization for service providers. In a cloud paradigm in which utilization is the key that unlocks profitability, Cohen believes exchanges like SpotCloud provide a compelling opportunity for data center providers to get the most revenue out of their hardware.

"Imagine being able to build a data center with a guarantee that a portion of your capacity will be bought at a certain price for an extended period of time before you even built your data center?" Cohen wrote in a recent blog post. "This in a nutshell is the driver for the commoditization of computing resources. It has less to do with the actual computing resources so much as the ability to provide enhanced insight into future cash flows while reducing the risk surrounding the un-certainty of future utilization levels. Data centers are the new power plants."