Microsoft Details Patent Application for Performance-Based Cloud Pricing

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Microsoft researchers have announced a patent application for performance-based pricing models for cloud computing. The inventors suggest that performance-based pricing will allow clients to purchase the resources they require without paying for excess, while retaining cost certainty.

A pair of Microsoft employees applied for the patent in July of 2012, and revealed information about it to VerticalNews for online publication last week. The newly invented pricing scheme is contrasted by the inventors with the common methods of pricing.

On-demand pricing, they say, is expensive without guaranteeing that resource requirements will be met in cases of large dynamic demand. Spot pricing has the drawback of cost uncertainty, as well as the possibility of job interruptions when dynamic market spot price surpasses the client’s bid price. Reservation/subscription pricing is less efficient when the client’s long-term usage fluctuates or usage predictions are inaccurate, as the client ends up paying for excess capacity or running out of what they have allotted.

The four drawings in the patent application describe a system of job price evaluation based on performance parameters, which are then used to set the job price through either a bid by the client, or a quote from Microsoft.

“For a job comprising a batch-type application, example parameters include a work volume parameter and time data comprising a completion time,” Microsoft told VerticalNews. “For a job set comprising an interactive-type application, example performance-related parameters may include an average load parameter (e.g., number of requests or transactions), a peak load parameter, an acceptance rate parameter, a capacity parameter corresponding to a statistical metric, and/or a time window parameter over which load is specified.”

High profile tech companies have been loading up on patents recently, with new patents being announced by Sony and GoDaddy last week. The protection of intellectual property is also a focus of the recently leaked Trans-Pacific Partnership documents.

The Microsoft performance-based pricing patent application is of particular interest to all cloud service vendors, as its success could block competitors from offering similar price schemes.  If that is the case, and the benefits of the patent-protected price scheme are as Microsoft claims, then Microsoft will have a legally guaranteed price advantage to offer to large clients who require the scalability advantages of cloud hosting.

Microsoft moved to improve support for clients running Parallels Hypervisor on Windows Server, and also expanded its partner program in late 2013.

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