Amazon’s Cloud Downtime Cost Estimated at Two Million Dollars

Quick math shows that Amazon might need to pay $2M to its customers due to its SLA policy.

Amazon Service in North Virgina has been down for more than 20 hours, to some degree.

Assuming Amazon’s EC2 Revenues in 2011 would reach $750M, I’m guessing that current monthly rate is $50M

Let’s assume %40 of the total EC2 servers are in north Virginia region (I’m too lazy to do the exact calculations).

Amazon SLA states that it will pay %10 of the bill for the effected month (April:)) if SLA is less than 99.5%. 20 Hours of downtime mean SLA for this year would be smaller than 99.8.

If the Annual Uptime Percentage for a customer drops below 99.95% for the Service Year, that customer is eligible to receive a Service Credit equal to 10% of their bill (excluding one-time payments made for Reserved Instances) for the Eligible Credit Period. To file a claim, a customer does not have to have wait 365 days from the day they started using the service or 365 days from their last successful claim. A customer can file a claim any time their Annual Uptime Percentage over the trailing 365 days drops below 99.95%.

Therefore Amazon has to pay %10 of the monthly bill to the relevant customer.

$50 M * %40 %10 = $2M.  By the way, it seems this is not “real money” but only credit to use EC2, so real cost to Amazon is probably 70% of that (Their margins are probably much nicer than they claim  :)).

The other interesting questions is : What was the cost of the downtime for Amazon’s customers? Would I get free badges from Foursquare? That could cost them millions of free points….

Some disclaimers:

  • Customers have to ask for their money back, not sure all will remember to do it
  • The SLA states that more than one availability zone needs to be missing in order to count as “downtime”. On 1:48PM PDT  the status update mentions that only a single availability zone is unavailable, so maybe the relevant downtime is not 20 hours
  • I’m not a lawyer ,and did not do a thorough analysis of the agreement in any way. Just trying to see economics meaningful of SLA’s
  • I still think EC2 is very cool and they seem to be very honest about what’s going on.God knows most internal enterprise apps are not in a better status.  It would be interesting to see how the market leader behaves in this case and how much will they actually pay their customers back.
  • 40% might be a bit high , but it does seem most servers are still in the US

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4 Responses to “Amazon’s Cloud Downtime Cost Estimated at Two Million Dollars”

  1. Itay R. Says:

    One more disclaimer: not all customers were affected by the event. Per Amazon notice impact was related to “.. new EBS volume creation as well as the pace with which we could re-mirror and recover affected EBS volumes. Additionally, one of our internal control planes for EBS has become inundated such that it’s difficult to create new EBS volumes and EBS backed instances”.

    Still it is interesting to see how they handle this incident.

  2. ophirk Says:

    Here is Amazon’s analysis and payment http://aws.amazon.com/message/65648/

  3. Retrospect on recent AWS Outage and Resilient Cloud-Based Architecture | horovits Says:

    […] outage this year), but this one was an earthquake, due to its extent, its duration, its costs (estimated at 2M$ !) its impact on so many high-profile services, and last but not least – the fact it […]

  4. Terry Lawton Says:

    Nice post. I found this articles which compares Caspio, Amazon, Database.com, and Microsoft SQL cloud database services
    http://blog.caspio.com/web-database/comparing-cloud-database-services/

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