Amazon EC2 with Hadoop is 4 times more expensive than running on our own cluster

Are you implying Amazon web services is a high margin business? That would be good for Amazon stocks<p>I agree virtualised server performance is lower than equivalent hardware, but order of 4 magnitude seems very high and improbable.<p>Assuming you don't use S3 locally, I don't see EMC mentioned anywhere in your local cluster, we should remove that in comparison

I am not surprised by your calculation. Amazon has to earn from the service it provides. It is not on the basis of no-loss no-gain. It is well known that the EC2 is great if you have to quick start your system without worrying about the hardware infra. It is also good for initial quick scaling. And it is good to some extent of scaling after that it is not advisable? If would be cheap, then why not other big companies will use amazon rather than managing their own data center?

I would also suggest taking into account other cloud options. Amazon is very often not the cheapest option. Just compare it here: <a href="http://www.cloudorado.com/" rel="nofollow">http://www.cloudorado.com/</a>

Nice analysis, ec2 certainly comes with its own problems, Like difficult to manage and hard to integrate ec2 hadoop cluster with private cluster