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My point is that all cloud competitors would necessarily switch for economic reasons. If not to keep you from leaving, then to keep a competitor from capturing

My point is that all cloud competitors would necessarily switch for economic reasons. If not to keep you from leaving, then to keep a competitor from capturing all new growth.

brianwawok 10y ago
Thats not how it works. People still use IBM mainframes, despite linux being 10x cheaper or more. If you got locked in sometimes you get locked in. Many AWS services have no easy migration path off it.
- gamegoblin 10y ago
  That's absolutely how it works. If a 10x cost reduction storage technology comes along, cloud providers will necessarily adopt it and will reduce their prices by approximately 10x. Here's why: - If they don't, it will become more cost effective for potential customers to run their own datacenters rather than put data into the cloud, so their growth will basically stop. - Even if potential customers don't want to run their own datacenters, both potential and existing customers will put new data to a competitor who did pass along the 10x savings to the customer. So again, their growth will basically stop. This is the nature of a commodity product in a free market. Basically all cloud providers use an S3-compatible API, and costs and performance are in the same ballpark. There are tons of open source compatibility layers that abstract which provider you are putting to. If one of them starts costing 10x less, you just flip the switch and all new data goes there. The ability for customers to completely cut off growth of their service if prices don't fall is a supreme motivator. The only case this wouldn't be true is if all of the cloud storage services formed a cartel to fix prices. But given that every time Google or Amazon lowers prices, the other one follows to maintain parity, we have evidence that that isn't the case. Addendum: I don't understand your analogy at all. IBM mainframes are a specific type of hardware that excel at highly available batch and transactional processing. Linux is an operating system. Linux is free, so it's infinitely cheaper. Also, IBM mainframes run Linux.
  - brianwawok 10y ago
    > If a 10x cost reduction storage technology comes along, cloud providers will necessarily adopt it and will reduce their prices by approximately 10x. Here are my two counterpoints. 1) Bandwidth prices HAVE fallen 10x in the past N years. Many cloud providers (ovh, etc) DO offer this price drop. Yet how many people really left AWS or GCE for ovh? I would guess not that many. 2) As I said with mainframes.. there is a 10x cheaper option to a mainframe that has been around for oh 15 years. But people are still on them, BECAUSE they are still locked in to them. That is my point. Don't get locked into a single anything. Sending 100 PB data for a commercial entity to hold for you, with no guarantees of future pricing, is a bad move. Locking yourself in is one of the worst things you can do as a company.
    - gamegoblin 10y ago
      @1: That doesn't directly address either of my points. You're just providing an orthogonal example of a something that cloud providers didn't move on. I agree that the bandwidth pricing is almost certainly designed to create lock-in. What I am contending is that that is unrelated to the storage pricing. You'll notice that my arguments didn't include bandwidth pricing at all, because it is irrelevant to those arguments. I'll give a more concrete example. Let's say I want to transfer 10PB out of S3. On their pricing sheet they actually say to contact them to get a quote, but before that the prices are dropping pretty fast as you get more data. e.g. 10TB is 9 cents per GB, but after you get past 300TB you're paying 5 cents per GB. Let's be pessimistic and assume 5 cents per GB, even though you could probably get it for much cheaper by contacting them. So 10PB will cost me (10PB * (5c/GB)) = $500K to export Standard storage is about 2 cents per GB. So your 10PB sitting in S3 is costing you 200K / month just to sit there and do nothing. Do you see the problem here? Moving onto the 20K / month provider becomes cost-positive after 3 months. Even if they were to increase bandwidth costs 10x, it'd still become cost-positive in a relatively short amount of time (couple of years). Furthermore, if you are paying S3 millions of dollars per year to store data, you're almost certainly in a position to get them to contractually agree to that cheaper-than-public bandwidth cost I mentioned earlier, so you don't even have to worry about the situation in which they hold you hostage by increasing bandwidth costs 1000x. Yet furthermore, to reiterate my previous point even if they were to increase bandwidth costs 1000x on normal customers that didn't have enough clout to get contractual guarantees, that would kill their business. Nobody new would put any new data in them. Sure, they could hold the existing data hostage, but absolutely nobody is going to put any new data there. Similarly, if they were to not decrease storage costs 10x compared to a virtually-identical competitor, nobody would put new data with them. This is the part that is totally unrelated to bandwidth costs. Everyone would start putting all of their new data into the competitor, regardless of their old data being locked in. The fact that Amazon and Google both immediately reduce storage prices after the other one does is evidence that this is the case. @2 I think you underestimate mainframes. People who use them aren't totally stupid. They do a specific thing very well. Right tool for the job and all that.

My point is that all cloud competitors would necessarily switch for economic reasons. If not to keep you from leaving, then to keep a competitor from capturing all new growth.

brianwawok 10y ago

Thats not how it works. People still use IBM mainframes, despite linux being 10x cheaper or more. If you got locked in sometimes you get locked in. Many AWS services have no easy migration path off it.

gamegoblin 10y ago
That's absolutely how it works. If a 10x cost reduction storage technology comes along, cloud providers will necessarily adopt it and will reduce their prices by approximately 10x. Here's why: - If they don't, it will become more cost effective for potential customers to run their own datacenters rather than put data into the cloud, so their growth will basically stop. - Even if potential customers don't want to run their own datacenters, both potential and existing customers will put new data to a competitor who did pass along the 10x savings to the customer. So again, their growth will basically stop. This is the nature of a commodity product in a free market. Basically all cloud providers use an S3-compatible API, and costs and performance are in the same ballpark. There are tons of open source compatibility layers that abstract which provider you are putting to. If one of them starts costing 10x less, you just flip the switch and all new data goes there. The ability for customers to completely cut off growth of their service if prices don't fall is a supreme motivator. The only case this wouldn't be true is if all of the cloud storage services formed a cartel to fix prices. But given that every time Google or Amazon lowers prices, the other one follows to maintain parity, we have evidence that that isn't the case. Addendum: I don't understand your analogy at all. IBM mainframes are a specific type of hardware that excel at highly available batch and transactional processing. Linux is an operating system. Linux is free, so it's infinitely cheaper. Also, IBM mainframes run Linux.
- brianwawok 10y ago
  > If a 10x cost reduction storage technology comes along, cloud providers will necessarily adopt it and will reduce their prices by approximately 10x. Here are my two counterpoints. 1) Bandwidth prices HAVE fallen 10x in the past N years. Many cloud providers (ovh, etc) DO offer this price drop. Yet how many people really left AWS or GCE for ovh? I would guess not that many. 2) As I said with mainframes.. there is a 10x cheaper option to a mainframe that has been around for oh 15 years. But people are still on them, BECAUSE they are still locked in to them. That is my point. Don't get locked into a single anything. Sending 100 PB data for a commercial entity to hold for you, with no guarantees of future pricing, is a bad move. Locking yourself in is one of the worst things you can do as a company.
  - gamegoblin 10y ago
    @1: That doesn't directly address either of my points. You're just providing an orthogonal example of a something that cloud providers didn't move on. I agree that the bandwidth pricing is almost certainly designed to create lock-in. What I am contending is that that is unrelated to the storage pricing. You'll notice that my arguments didn't include bandwidth pricing at all, because it is irrelevant to those arguments. I'll give a more concrete example. Let's say I want to transfer 10PB out of S3. On their pricing sheet they actually say to contact them to get a quote, but before that the prices are dropping pretty fast as you get more data. e.g. 10TB is 9 cents per GB, but after you get past 300TB you're paying 5 cents per GB. Let's be pessimistic and assume 5 cents per GB, even though you could probably get it for much cheaper by contacting them. So 10PB will cost me (10PB * (5c/GB)) = $500K to export Standard storage is about 2 cents per GB. So your 10PB sitting in S3 is costing you 200K / month just to sit there and do nothing. Do you see the problem here? Moving onto the 20K / month provider becomes cost-positive after 3 months. Even if they were to increase bandwidth costs 10x, it'd still become cost-positive in a relatively short amount of time (couple of years). Furthermore, if you are paying S3 millions of dollars per year to store data, you're almost certainly in a position to get them to contractually agree to that cheaper-than-public bandwidth cost I mentioned earlier, so you don't even have to worry about the situation in which they hold you hostage by increasing bandwidth costs 1000x. Yet furthermore, to reiterate my previous point even if they were to increase bandwidth costs 1000x on normal customers that didn't have enough clout to get contractual guarantees, that would kill their business. Nobody new would put any new data in them. Sure, they could hold the existing data hostage, but absolutely nobody is going to put any new data there. Similarly, if they were to not decrease storage costs 10x compared to a virtually-identical competitor, nobody would put new data with them. This is the part that is totally unrelated to bandwidth costs. Everyone would start putting all of their new data into the competitor, regardless of their old data being locked in. The fact that Amazon and Google both immediately reduce storage prices after the other one does is evidence that this is the case. @2 I think you underestimate mainframes. People who use them aren't totally stupid. They do a specific thing very well. Right tool for the job and all that.