Competition is a good thing. Continuous drop in the hardware price is a good thing. Improvement in efficient is also a good thing. All those should translate into a lower computing cost to you — the end user — over time. That is exactly what Terremark has done today — lowering its cloud offering price, in one case, up to 42% lower. We compared Terremark’s price to EC2 before, it is time to update the comparison based on the new pricing.

Following what we did to get EC2’s unit cost, we can run regression analysis to estimate Terremark’s unit cost. We only consider Linux VMs, in order not to factor is software license cost. We assume the Cost = c * CPU + m * RAM (Terremark charges storage separately from the VM cost at $0.25/GB/month). The regression determines the unit cost to be

c = 1.31 cents/VPU/hour
m = 5.38 cents/GB/hour

Not surprisingly, both unit costs are lower than their previous price (c used to be 2.06 cents/VPU/hour, and m used to be 6.46 cents/GB/hour).

The regression result still does not fit the real cost very well. Terremark offers economy-of-scale in its cost model, where it heavily discounts both CPU and RAM as you move up in the configuration. The following table shows both the newer reduced cost (color green) and the cost as determined by the estimated parameters (color red) for the various VM configurations.

Again, we compare cost by comparing with a fictitious EC2 instance with the exact same spec. For simplicity, we assume a VPU in a Terremark’s VM can get the full attention of a Physical Core. This is a more common case because Terremark uses VMWare’s DRS (Distributed Resource Scheduler), which can dynamically reassign virtual cores to a different physical core to avoid contention.

The following table shows the EC2 equivalent cost assuming a virtual core can get the full power of the physical core.

Like we observed before, there are several configurations where Terremark is much cheaper than EC2. The 8VPU+0.5GB configuration is still the cheapest at 19% of the equivalent EC2 cost. What is different from before is that the larger VM configurations are getting significantly cheaper. For example, the 16GB+8VPU configuration costs only 1.64 over its EC2 equivalent, compared to a ratio of 2.83 before. This means that it is getting more economical to run larger VMs in Terremark.

Let us hope the trend continues that cloud providers continue to reduce the cost of computing so that we can pay less for the same work or get more work done for the same budget.