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Oh dear I didn't realise Dropbox had invested all of that time and money moving into their own data centre. From my perspective the future of Dropbox looks blea

Oh dear I didn't realise Dropbox had invested all of that time and money moving into their own data centre. From my perspective the future of Dropbox looks bleak. Mass storage with Amazon is much cheaper [edit: from a consumer perspective]. I know Dropbox has superior software that works (as opposed to the poor apps by Amazon and Google) but I imagine a lot of people are like me i.e. Store most of the stuff at the cheapest location and use Dropbox just for docs that you want to sync on multiple devices. Total income from consumers like me equals 0. Dropbox also had that email app didn't they that they recently announced was closing down - mailbox if I recall correctly. Can anyone convince me that this move by Dropbox isn't going to end very badly for them? EDIT: downvoters - is HN unable to have a debate about whether this was a smart move or not.

jamwt 11y ago
> Oh dear I didn't realise Dropbox had invested all of that time and money moving into their own data centre. We've had our own datacenters for a very long time; this project just represents moving "blob storage" into our own datacenter rather than just metadata. > Mass storage with Amazon is much cheaper As the article says, in Dropbox's particular case this is very untrue. Although I agree with your general point that, absent having something like Dropbox's scale/resources, just using S3 is probably your best bet. > Can anyone convince me that this move by Dropbox isn't going to end very badly for them? So, wrt "ending badly", the project has already happened. It's more efficient, faster, more flexible, etc. So I can say with some confidence it won't end badly. :-)
- planetjones 11y ago
  Sorry I think you misunderstand me. Technically it sounds like a great achievement. Well done! Ending badly I mean that in 5 years time Dropbox will be left with a load of servers and a business model in tatters. It's the economics I think will end badly Also I am sure the in house data centre looks cheaper to Dropbox - but now they have their own hardware on the balance sheet. But I meant cheaper from a consumer point of view - I get unlimited storage at Amazon for $60 a year.
  - beachstartup 11y ago
    > but now they have their own hardware on the balance sheet i don't know if this is true or not, but it isn't at all necessary. you can just buy everything on an operating lease for a fraction of what amazon or any other provider charges and write the payment off without any sort of depreciation schedule or hit to your cash or unnecessarily grow the balance sheet/liabilities. how do you think it's possible that you can easily get a $15/month dedicated server?
    - planetjones 11y ago
      > how do you think it's possible that you can easily get a $15/month dedicated server? Sorry makes no sense to me.
      - deleted 11y ago
        [deleted]
      - apalmer 11y ago
        I don't understand your concern. Fundamentally, if you have large enough consistent need for storage/VMs/Any non proprietary resource then AWS is not the lowest cost option by a long shot. This is not at all a controversial statement. Even taking into account depreciation, administration, maintenance etc, if you have a large enough consistent need amazon is not the lowest cost option by a significant margin. This isn't a controversial statement.
        toomuchtodo 11y ago
        Rarely do people "get" that if you have a consistent workload or resource need, AWS is more expensive than your own gear.
        scholia 11y ago
        But presumably Amazon benefits (saves money) from making more use of hardware resources. It has to have some spare, but not as much spare as a comparable group of non-AWS users would have in total.... Also, presumably, not all the AWS users are awake at the same time ;-)
gshx 11y ago
Not at all, cost/TB of S3 is much higher compared to what you can build provided you know how to build it yourself.
- LeifCarrotson 11y ago
  And provided your management costs are lower than Amazon's profit on S3. There's an infection point somewhere at which owning your own hardware and paying someone to acquire, build, manage, and maintain it becomes cheaper than renting from someone who does the same thing at scale and makes a profit off of it. Dropbox is probably there, but many small web apps are not.
  - beachstartup 11y ago
    it's entirely dependent on whether or not you know what the hell you're doing in a datacenter. if you don't know what you're doing, you'll never hit any such point.
  - iofj 11y ago
    Keep in mind that that doesn't just result in more costs : it results in limits on scaling. Suppose you are on S3 and you can serve a customer x Mb/$. Now you're limited to products that you can charge more for. Suppose you get data served to customers on dedicated at x/10 Mb/$ (easily doable, and compared to S3 I bet x/50 would be doable). Isn't this how products like facebook video, vimeo (and thousands of porn sites) survive ? If you calculate how much it would cost to serve 20 Mb out from EC2, you would never ever be able to pay that using advertising revenue, even if you got as much as TV gets. So that reduction in price that comes from not using the cloud doesn't just go into your pocket : it enables new business models that just aren't accessible to you otherwise. Also can we stop pretending that the alternative to the cloud is buying servers from HP and colocate them ? That's simply not true. There's any number of projects that would enable you to slowly scale up that aren't EC2. It's more work, certainly. But it's worth it at quite small scales. And in some ways (e.g. geographic reach) clouds simply don't match existing dedicated offerings. Not now, and at a 20% yearly price reduction it'll take them decades to match dedicated server rental. Obviously I'm not claiming clouds don't have advantages. But you're paying quite a high price for them atm.
toyg 11y ago
> Total income from consumers like me equals 0 That doesn't matter, they have gained a good foothold in SMEs which is where the real money is. > Dropbox also had that email app That was a peculiar acquisition, I guess more of a acquihire for a team that made some waves in UI design. They would have folded anyway, Google has caught up with the "swiping todo" concept. > Can anyone convince me that this move by Dropbox isn't going to end very badly for them? A company on that size has many metrics they can use to define success. Owning your metal is a big investment, but it also brings a level of control and performance that you will never get from outsourced infrastructure. Google became Google without AWS ever entering the picture, after all. I think these are the first moves in a wave of "de-cloudification" by the fields' own pioneers. The longer you've been on the cloud, the more you're intimately aware of its limits and its costs. No technology is a silver bullet.
jbob2000 11y ago
Their service is primarily for consumers and many large companies won't use them, favoring an in-house solution or an offering from a specialized company. That's a dangerous position to be in, as consumers are fickle and are liable to drop the service at a moment's notice. Dropbox is probably trying to position themselves as a secure data storage solution for larger organizations. Being on Amazon scares away a lot of people. I'm sure we'll hear about some new paid services from them which will be compliant with all manner of regulations. This will open them up to huge multi-million dollar contracts and they'll get baked into some big companies for years to come.
- JonFish85 11y ago
  "Dropbox is probably trying to position themselves as a secure data storage solution for larger organizations. Being on Amazon scares away a lot of people. I'm sure we'll hear about some new paid services from them which will be compliant with all manner of regulations. This will open them up to huge multi-million dollar contracts and they'll get baked into some big companies for years to come." Isn't that Box's business plan?
  - ethanbond 11y ago
    Yeah if that's their goal, Dropbox really needs to learn to design their products for more advanced usecases.
  - jamwt 11y ago
    Little known fact, but already we have more business customers than Box: https://www.dropbox.com/business/customers https://www.dropbox.com/business/customers
- toyg 11y ago
  > Dropbox is probably trying to position themselves as a secure data storage solution for larger organizations. Being on Amazon scares away a lot of people. I don't think the people scared by Amazon would not be scared by a company with Condoleeza Rice on the board. Amazon is already compliant with all those regulations you speak of -- they host large swaths of USGov infrastructure, after all. More likely, DB people have simply come to the realization that, at their scale, AWS is extremely expensive for what it delivers. Being a technology company, they are not scared by the thought of building and maintaining their own iron in order to make substantial savings. Their core business is storage, after all.
wpietri 11y ago
I think this is where your mistake comes in: > I imagine a lot of people are like me i.e. Store most of the stuff at the cheapest location and use Dropbox just for docs that you want to sync on multiple devices I don't believe that's a correct intuition. You're describing optimizer behavior, but for most things people are saticficers [1]. I happily pay Dropbox $100 a year to make a problem go away. Is it the best deal? I don't care. I'm not going to mess around over $0.27 per day. For me it's magic syncing and backup for all my important stuff. Using Dropbox may not be cash-optimal, as I'm currently paying something like $4 per GB/year. But for this I'm not an optimizer, I'm a satisficer, and as long as Dropbox maintains my experience of perfect reliability, I'll keep paying them. [1] https://en.wikipedia.org/wiki/Satisficing https://en.wikipedia.org/wiki/Satisficing
- T2_t2 11y ago
  It is hard enough to get staff to use DropBox at all, let alone optimise the spend. Most of the world is not HN readers, it is McDonalds workers (gross generalisation for affect, not accuracy). Dropbox is the greatest tool ever when dealing with the vast majority of workers, because it just WORKS, without a lot of explanation. Work in this folder always or get written up. DropBox is still my favourite SAAS service, and every time a co-worker loses a file I just want to punch them.
wpietri 11y ago
By the way: > downvoters - is HN unable to have a debate about whether this was a smart move or not I doubt the downvotes are in opposition to discussing it. I think it's your poor framing of it. You basically say, "these guys are doomed because I imagine things". It's not other people's job to argue you out of your errors. If you'd actually like to start a discussion, try saying something like, "I don't understand why X" or "How will Dropbox overcome factor Y". When you come out swinging, you start an oppositional dynamic, and downvotes are a common response to an aggressive opening that isn't so compellingly put that people feel it's worth responding to.
draw_down 11y ago
It is a little weird in this context to argue that Amazon storage is cheaper unless you're at scale like Dropbox is. I mean, this is about Dropbox.
Spooky23 11y ago
Not at all. I work at a decent size enterprise... Buying off the shelf hardware providing an s3 style API saves us a significant amount of money, and while our scale is large, it isn't a fraction of what Dropbox is.
- tschellenbach 11y ago
  I think this is only true at mid sized usage. Too small to negotiate with AWS (and have an impact on their numbers) and still big enough to matter to your budget. Dropbox should have been able to get a better deal.
  - Spooky23 11y ago
    Use case matters too. S3 is the "gateway drug" for the rest of the AWS services. If you're not going to adopt wholesale, the outbound network costs make it very expensive.
pbarnes_1 11y ago
No normal consumer is writing directly to S3, so the entire premise of your debate is kind of moot, that's why you're being downvoted. You're missing something here, which is that DropBox are probably now spending roughly 10-20% of what they were paying Amazon on an annual basis. The savings probably grow as DropBox grows. Those savings over your hypothetical 5 years could probably keep DropBox on life support for another 5 years.
- dexterdog 11y ago
  If be surprisrd if they are saving that much with all datacenter costs counted.

jamwt 11y ago

> Oh dear I didn't realise Dropbox had invested all of that time and money moving into their own data centre. We've had our own datacenters for a very long time; this project just represents moving "blob storage" into our own datacenter rather than just metadata. > Mass storage with Amazon is much cheaper As the article says, in Dropbox's particular case this is very untrue. Although I agree with your general point that, absent having something like Dropbox's scale/resources, just using S3 is probably your best bet. > Can anyone convince me that this move by Dropbox isn't going to end very badly for them? So, wrt "ending badly", the project has already happened. It's more efficient, faster, more flexible, etc. So I can say with some confidence it won't end badly. :-)

planetjones 11y ago
Sorry I think you misunderstand me. Technically it sounds like a great achievement. Well done! Ending badly I mean that in 5 years time Dropbox will be left with a load of servers and a business model in tatters. It's the economics I think will end badly Also I am sure the in house data centre looks cheaper to Dropbox - but now they have their own hardware on the balance sheet. But I meant cheaper from a consumer point of view - I get unlimited storage at Amazon for $60 a year.
- beachstartup 11y ago
  > but now they have their own hardware on the balance sheet i don't know if this is true or not, but it isn't at all necessary. you can just buy everything on an operating lease for a fraction of what amazon or any other provider charges and write the payment off without any sort of depreciation schedule or hit to your cash or unnecessarily grow the balance sheet/liabilities. how do you think it's possible that you can easily get a $15/month dedicated server?
  - planetjones 11y ago
    > how do you think it's possible that you can easily get a $15/month dedicated server? Sorry makes no sense to me.
    - deleted 11y ago
      [deleted]
    - apalmer 11y ago
      I don't understand your concern. Fundamentally, if you have large enough consistent need for storage/VMs/Any non proprietary resource then AWS is not the lowest cost option by a long shot. This is not at all a controversial statement. Even taking into account depreciation, administration, maintenance etc, if you have a large enough consistent need amazon is not the lowest cost option by a significant margin. This isn't a controversial statement.
      - toomuchtodo 11y ago
        Rarely do people "get" that if you have a consistent workload or resource need, AWS is more expensive than your own gear.
        scholia 11y ago
        But presumably Amazon benefits (saves money) from making more use of hardware resources. It has to have some spare, but not as much spare as a comparable group of non-AWS users would have in total.... Also, presumably, not all the AWS users are awake at the same time ;-)

gshx 11y ago

Not at all, cost/TB of S3 is much higher compared to what you can build provided you know how to build it yourself.

LeifCarrotson 11y ago
And provided your management costs are lower than Amazon's profit on S3. There's an infection point somewhere at which owning your own hardware and paying someone to acquire, build, manage, and maintain it becomes cheaper than renting from someone who does the same thing at scale and makes a profit off of it. Dropbox is probably there, but many small web apps are not.
- beachstartup 11y ago
  it's entirely dependent on whether or not you know what the hell you're doing in a datacenter. if you don't know what you're doing, you'll never hit any such point.
- iofj 11y ago
  Keep in mind that that doesn't just result in more costs : it results in limits on scaling. Suppose you are on S3 and you can serve a customer x Mb/$. Now you're limited to products that you can charge more for. Suppose you get data served to customers on dedicated at x/10 Mb/$ (easily doable, and compared to S3 I bet x/50 would be doable). Isn't this how products like facebook video, vimeo (and thousands of porn sites) survive ? If you calculate how much it would cost to serve 20 Mb out from EC2, you would never ever be able to pay that using advertising revenue, even if you got as much as TV gets. So that reduction in price that comes from not using the cloud doesn't just go into your pocket : it enables new business models that just aren't accessible to you otherwise. Also can we stop pretending that the alternative to the cloud is buying servers from HP and colocate them ? That's simply not true. There's any number of projects that would enable you to slowly scale up that aren't EC2. It's more work, certainly. But it's worth it at quite small scales. And in some ways (e.g. geographic reach) clouds simply don't match existing dedicated offerings. Not now, and at a 20% yearly price reduction it'll take them decades to match dedicated server rental. Obviously I'm not claiming clouds don't have advantages. But you're paying quite a high price for them atm.

toyg 11y ago

> Total income from consumers like me equals 0 That doesn't matter, they have gained a good foothold in SMEs which is where the real money is. > Dropbox also had that email app That was a peculiar acquisition, I guess more of a acquihire for a team that made some waves in UI design. They would have folded anyway, Google has caught up with the "swiping todo" concept. > Can anyone convince me that this move by Dropbox isn't going to end very badly for them? A company on that size has many metrics they can use to define success. Owning your metal is a big investment, but it also brings a level of control and performance that you will never get from outsourced infrastructure. Google became Google without AWS ever entering the picture, after all. I think these are the first moves in a wave of "de-cloudification" by the fields' own pioneers. The longer you've been on the cloud, the more you're intimately aware of its limits and its costs. No technology is a silver bullet.

jbob2000 11y ago

Their service is primarily for consumers and many large companies won't use them, favoring an in-house solution or an offering from a specialized company. That's a dangerous position to be in, as consumers are fickle and are liable to drop the service at a moment's notice. Dropbox is probably trying to position themselves as a secure data storage solution for larger organizations. Being on Amazon scares away a lot of people. I'm sure we'll hear about some new paid services from them which will be compliant with all manner of regulations. This will open them up to huge multi-million dollar contracts and they'll get baked into some big companies for years to come.

JonFish85 11y ago
"Dropbox is probably trying to position themselves as a secure data storage solution for larger organizations. Being on Amazon scares away a lot of people. I'm sure we'll hear about some new paid services from them which will be compliant with all manner of regulations. This will open them up to huge multi-million dollar contracts and they'll get baked into some big companies for years to come." Isn't that Box's business plan?
- ethanbond 11y ago
  Yeah if that's their goal, Dropbox really needs to learn to design their products for more advanced usecases.
- jamwt 11y ago
  Little known fact, but already we have more business customers than Box: https://www.dropbox.com/business/customers https://www.dropbox.com/business/customers
toyg 11y ago
> Dropbox is probably trying to position themselves as a secure data storage solution for larger organizations. Being on Amazon scares away a lot of people. I don't think the people scared by Amazon would not be scared by a company with Condoleeza Rice on the board. Amazon is already compliant with all those regulations you speak of -- they host large swaths of USGov infrastructure, after all. More likely, DB people have simply come to the realization that, at their scale, AWS is extremely expensive for what it delivers. Being a technology company, they are not scared by the thought of building and maintaining their own iron in order to make substantial savings. Their core business is storage, after all.

wpietri 11y ago

I think this is where your mistake comes in: > I imagine a lot of people are like me i.e. Store most of the stuff at the cheapest location and use Dropbox just for docs that you want to sync on multiple devices I don't believe that's a correct intuition. You're describing optimizer behavior, but for most things people are saticficers [1]. I happily pay Dropbox $100 a year to make a problem go away. Is it the best deal? I don't care. I'm not going to mess around over $0.27 per day. For me it's magic syncing and backup for all my important stuff. Using Dropbox may not be cash-optimal, as I'm currently paying something like $4 per GB/year. But for this I'm not an optimizer, I'm a satisficer, and as long as Dropbox maintains my experience of perfect reliability, I'll keep paying them. [1] https://en.wikipedia.org/wiki/Satisficing https://en.wikipedia.org/wiki/Satisficing

T2_t2 11y ago
It is hard enough to get staff to use DropBox at all, let alone optimise the spend. Most of the world is not HN readers, it is McDonalds workers (gross generalisation for affect, not accuracy). Dropbox is the greatest tool ever when dealing with the vast majority of workers, because it just WORKS, without a lot of explanation. Work in this folder always or get written up. DropBox is still my favourite SAAS service, and every time a co-worker loses a file I just want to punch them.

wpietri 11y ago

By the way: > downvoters - is HN unable to have a debate about whether this was a smart move or not I doubt the downvotes are in opposition to discussing it. I think it's your poor framing of it. You basically say, "these guys are doomed because I imagine things". It's not other people's job to argue you out of your errors. If you'd actually like to start a discussion, try saying something like, "I don't understand why X" or "How will Dropbox overcome factor Y". When you come out swinging, you start an oppositional dynamic, and downvotes are a common response to an aggressive opening that isn't so compellingly put that people feel it's worth responding to.

draw_down 11y ago

It is a little weird in this context to argue that Amazon storage is cheaper unless you're at scale like Dropbox is. I mean, this is about Dropbox.

Spooky23 11y ago

Not at all. I work at a decent size enterprise... Buying off the shelf hardware providing an s3 style API saves us a significant amount of money, and while our scale is large, it isn't a fraction of what Dropbox is.

tschellenbach 11y ago
I think this is only true at mid sized usage. Too small to negotiate with AWS (and have an impact on their numbers) and still big enough to matter to your budget. Dropbox should have been able to get a better deal.
- Spooky23 11y ago
  Use case matters too. S3 is the "gateway drug" for the rest of the AWS services. If you're not going to adopt wholesale, the outbound network costs make it very expensive.

pbarnes_1 11y ago

No normal consumer is writing directly to S3, so the entire premise of your debate is kind of moot, that's why you're being downvoted. You're missing something here, which is that DropBox are probably now spending roughly 10-20% of what they were paying Amazon on an annual basis. The savings probably grow as DropBox grows. Those savings over your hypothetical 5 years could probably keep DropBox on life support for another 5 years.

dexterdog 11y ago
If be surprisrd if they are saving that much with all datacenter costs counted.