Amazon, the world’s biggest provider of cloud infrastructure for running applications, has acquired ClusterK, with an eye toward integrating the startup’s technology into Amazon’s EC2 Spot Instances, VentureBeat has learned.
Amazon has confirmed the deal to VentureBeat but declined to provide additional information.
ClusterK devised a clever way to rely on Spot Instances — which let you name your price for slices of servers in Amazon Web Services (AWS) — to run applications for 1/10 of the cost of using Amazon’s far more popular on-demand instances.
Note that ClusterK isn’t a competitor to Amazon. It’s just helping customers use a cheaper AWS product in place of a more expensive one.
Amazon made the acquisition yesterday, paying $20-50 million, Marc Parrish, an investor in the startup, told VentureBeat in an interview.
It makes very good sense for Amazon to pick up the startup’s technology, as AWS looks to stay ahead of challengers like Microsoft Azure, and Google Cloud Platform, all of which have been steadily lowering their own cloud prices.
Not that Amazon is a small vendor at risk of being edged out of the market. Last week Amazon said it generated more than $5 billion in revenue in one year.
Amazon’s biggest competitors have looked to match Amazon on certain features again and again, but Spot Instances have not become a standard. ClusterK’s capabilities — including fault tolerance even when prices go up — might well have brought more attention to Spot Instances than Amazon has seen in some time, Parrish said.
“They did have quite a bit of traction before in saving POC [proof of concept] guys just a ton of money, like, $500,000 or $600,000 a year,” Parrish said.
The deal suggests that Amazon is looking to do more with Spot Instances in the months and years to come. If nothing else, Amazon could make Spot Instances easier to consume, but also potentially use them as an obvious platform for low-cost cloud application deployment.
The ClusterK team will relocate and work at Amazon headquarters in Seattle, Parrish said, adding that he expects ClusterK founder and chief executive Dmitry Pushkarev will take on a prominent role at AWS.
ClusterK in February announced a $1.2 million seed round. Investors included Rally Ventures, Data Collective, Mayo Foundation for Medical Education and Research, and angel investors. (Disclosure: Rally Ventures is one of the investors in VentureBeat as well.)
ClusterK started in 2013 and was based in Palo Alto, Calif.
Updated at 4:01 p.m. Pacific to add confirmation of the deal.