Effective capacity modulation as an explicit control knob for public cloud profitability

We explore the efficacy of dynamic effective capacity modulation (i.e., using virtualization techniques to offer lower resource capacity than that advertised by the cloud provider) as an explicit control knob for a cloud provider's profit maximization complementing the more well-studied approach of dynamic pricing. Our focus is on emerging cloud ecosystems wherein we expect tenants to modify their demands strategically in response to such modulation in effective capacity and prices. We consider a simple model of a cloud provider that offers a single type of virtual machine to its tenants and devise a leader/follower game-based control framework to capture the interactions between the provider and its tenants. We assume both parties employ myopic control and short-term predictions to reflect their operation under the high dynamism and poor predictability in such environments. Our evaluation using a combination of real-world data center traces and benchmarks hosted on a prototype OpenStack-based cloud shows 10-30% profit improvement for a cloud provider compared with baselines that use static pricing and/or static effective capacity.