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Is it not possible to build your own "alternative in the market" for $2 billion?
by leothekim 10y ago
Is it not possible to build your own "alternative in the market" for $2 billion?
- nlittlepoole 10y agoThere is also the opportunity cost of investing in hardware
- throwaway2048 10y agoi doubt it would involve hundreds of millions let alone billions in hardware costs.
- carlisle_ 10y agoIt is absolutely possible to build a stellar internal alternative to Google's offerings in 5 years with 2 billion dollars. edit: I should point out that this doesn't account for ramp-up. It would obviously take awhile before things would be to a point where it would be even comparable.
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- doubleorseven 10y agoJust to clarify your answer, here is another thing Google won't tell you: once you build yourself in their cloud you will have to find something else to do with all the time you used to spend on latency.
- brandon272 10y agoWhy won't Google tell you that?
- F_J_H 10y agoBut by the time you matched them, they likely would have moved way beyond, with all kinds of new features...
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- scarmig 10y agoOracle is spending way more than 2 billion dollars on its cloud team in an attempt to catch up to AWS, GCP, and Azure. Would you consider Oracle's cloud endeavor a fair test of how able a company is to reproduce GCP's offering with a fistful of money?
- throwaway2048 10y agoOracle is offering external services, that is a huge differentiating factor
- beamatronic 10y agoWhat I can't figure out is why Oracle didn't start down this road 10-20 years ago. They more than anyone should have some ideas about scaling infrastructure for databases.
- dreamfactory2 10y agosales led, not strategic, and it would have cannibalised their existing money printing machine. imagine if they started offering their customers PAYG elastic accounts rather than multi year mega provisioning deals - their numbers would have been destroyed
- sbov 10y agoThis, and related topics, always makes me laugh a bit. Mostly because people and companies will defend either move, with terms such as "focusing on the core business" or, opposite that statement, as "vertical integration". From my mostly uninformed POV, a company can do whatever they want with respect to this and be on good ground, making it an arbitrary decision with little basis in actual objectivity.
- Trundle 10y agoThat both directions can seem like a good idea to a speculating outsider doesn't mean the decision is an arbitrary one. It means the deciding factors aren't something we're privy to.
- mikepurvis 10y ago... but might still be wishy washy things like personal opinion or background of key stakeholders, company culture, etc.
- OrwellianChild 10y agoThings scale differently in different markets and products... It might be trivial to spin up extra cloud capacity within Google's system and benefit from all the robustness and redundancy they've already designed out. Meanwhile, Amazon is building their own UPS competitor because their infrastructure needs in the real world are specialized enough to be able to benefit. Each case is different and the details drive the decision.
- ChuckMcM 10y agoOf course it is. But you need to operate the service while you're building the replacement. What that says to me is that there is an order of magnitude improvement in their operational costs available to them. Depending on how long it takes to build their own infrastructure, that could imply a big boost to margins 1, 2 or maybe 3 years down the road.
- leothekim 10y agoThe cost of moving software that relies on app engine frameworks is probably the bigger unstated one. Unless you can port those frameworks to your shiny new datacenter with automated deploys, etc, you'd be running two versions of the same code for a while.
- dreamfactory2 10y agoyou could probably make microservices a requirement as a governance issue for this reason alone
- uppercasenut 10y agoWhy take the chance when you're about to have a lot of IPO cash? Go with Google for a few years until you (hopefully) become FB. Right now they'll focus on features, signing advertisers and users.
- steinnes 10y agoAbsolutely. I imagine they had a very strong bargaining position willing to commit this much, for this long. Even if Snapchat wasn't a valuable brand for Google to brag about, this amounts to ~10% of the yearly earnings [1] of Google's cloud business (SaaS and IaaS, of which I suspect SaaS like Apps for Work is the lion's share) I'm sure they're getting a good deal, and can focus on features and getting their platform profitable, as you said. 1. "..at that pace, Google’s cloud could generate $4.1 billion in revenue in 2016" http://www.networkworld.com/article/3029164/cloud-computing/what-google-s-earnings-tell-us-about-its-cloud-business.html http://www.networkworld.com/article/3029164/cloud-computing/...
- stuckagain 10y agoMaybe it is, but this is a path-dependent phenomenon. GAE allowed Snap to reach this point in their growth. If they had earlier focused on internalizing their operations they might have failed to get here. Now that they are here, it apparently makes sense for them to commit to GAE for at least several more years.
- brown9-2 10y agoKeep in mind that Google Cloud is much larger than App Engine.
- andrewstuart2 10y agoIn my opinion, it's highly unlikely that you could match Google's hardware for $2 billion ever, much less in 5 years. Keep in mind that Google's revenue in 2015 was $75 billion. Their hardware and software know-how is fundamental to their ability to make this kind of revenue, so you better believe they're investing more than a measly $400M per year (Snap's $2 billion over 5 years) back into their hardware. This Snap commitment is a drop in their revenue ocean, at 0.5%. From a non-fiscal perspective, there's a lot of other great reasons to think so. For one, they've been building custom hardware for a decade at least to support the needs of running at the scale they do. Worth checking out this paper [1] and this video [2] if you're interested in some of what they've been doing purely on the networking side. In mid-2015 their newest data centers were pushing 1 petabit per second of cross-sectional bandwidth. [3] That's mind-blowing capacity. So their internal data center networking is at or near top of class. In addition to this, they've also invested heavily in inter-DC and backbone capacity [4. Again, this is something that you presumably benefit from when, say, distributing your content across the world for faster access. In addition to that, you get access to all their class-leading scheduling software and state management software that they've developed, refined, and redeveloped over the last 15 years. They know how to take a pool of compute and storage and turn it into solid distributed systems like only a few organizations do. I'm sure they get a good amount of advising from Google's experts somewhere in that $2B, not to mention services like BigTable, Kubernetes, etc. that you can find on their growing products page [5]. So though I can't back my prediction up with solid data, since I'm not a Google exec, I think it's pretty obvious that even $2B is not going to get you anywhere close to Google's existing infrastructure. Definitely not in 5 years. [1] http://conferences.sigcomm.org/sigcomm/2015/pdf/papers/p183.pdf http://conferences.sigcomm.org/sigcomm/2015/pdf/papers/p183.... [2] https://www.youtube.com/watch?v=n4gOZrUwWmc https://www.youtube.com/watch?v=n4gOZrUwWmc [3] http://www.datacenterknowledge.com/archives/2015/06/18/custom-google-data-center-network-pushes-1-petabit-per-second/ http://www.datacenterknowledge.com/archives/2015/06/18/custo... [4] http://www.telegraph.co.uk/technology/2016/06/30/google-launches-giant-undersea-internet-cable/ http://www.telegraph.co.uk/technology/2016/06/30/google-laun... [5] https://cloud.google.com/products/ https://cloud.google.com/products/
- throwaway2048 10y agoYou seem to be assuming that all of googles revenue is going back into hardware/backend investments, and that somebody using Google cloud offerings is getting full access to everything they are investing in. Neither have any basis in reality.
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- joeblau 10y agoIt might be possible, but Snap could be constrained by engineering resources. Google has some super smart engineers and while Snap might be able to build something cheaper, that might mean pivoting your entire primary business to essentially compete with Google.
- dragonwriter 10y agoIf there's an adequate supplier, why take the risk and time to develop second-mover competition to them rather than just buying from them and building your core business?
- nodesocket 10y agoTwo options. Companies can focus on cutting costs (roll their own infrastructure), or focus on expanding revenue. Snap clearly should and is in expanding revenue mode.
- dpweb 10y agoNot a businessman but who says its all about the infra. buy vs. build. It allies them with Google. It gives arguably the most powerful co. in the world a stake in Snap' growth and success.
- beamatronic 10y agoThat's a great point, along the lines of, "When you borrow $100 the bank owns you; when you borrow $1,000,000 you own the bank"
- draw_down 10y agoI dunno, $2 billion over 5 years is not exactly a ton of money to big G.
- discodave 10y agoIt is to GCP. GCP revenue is currently much less than $4 billion run rate. They are reporting ~4B run rate for all cloud but that includes SaaS, GCP run rate may be < 1B (but it's hard to know for sure).
- dreamfactory2 10y agofor infrastructure on that scale smart money would be on Lambda or some other FaaS to leverage huge price savings and create a barrier to entry for competitors
- obulpathi 10y agoExpert on Cloud Computing here. Short answer is "No". Here is why. Google Cloud has infrastructure that scales to petabytes of data and millions of users. Google primary uses this infrastructure for storing, processing and communicating the Internet. Add the services like Pub/Sub, Dataflow, BigQuery, TensorFlow & CloudML and things like security, communication backbone, ... its near impossible to build Google Cloud or even few critical components like the ones mentioned above with 2 billion dollars. Also, if they focus on building infrastructure, it might slow them down significantly. They are better off building their chat platform rather than building the infrastructure.
- simonebrunozzi 10y agoHmm. Cloud computing expert here, too. I partially disagree. I would simply say "it depends". For companies with specific use cases, e.g. Dropbox, it makes A LOT of sense to build at least 60-70% private, and the rest on AWS or GCP. Snapchat looks like a special case to me.
- obulpathi 10y agoIf you are doing just one or two things at a massive scale (Dropbox storing files), it makes sense. But, we are talking about Snap Inc, the infrastructure, and services it needs. A single high-speed intercontinental fiber cable costs 400 Million $ (https://techcrunch.com/2016/10/12/google-and-facebook-are-building-the-fastest-trans-pacific-cable-yet/ https://techcrunch.com/2016/10/12/google-and-facebook-are-bu...). To build a service like CLoudML (Hosted TensorFlow), you need to write software (TensorFlow), build the ASIC Chips by manufacturing / by partnering with a chip manufacturing company like Intel / Samsung / Qualcomm, you need custom networking software and hardware to scale massively for data workloads (Andromeda), years of research to build these tools, you need to create your own programming language (Go and Dart) to be able to scale your development to these levels, you need to build data centers in multiple regions, you need to build DeeLearning models for cooling your data centers (https://deepmind.com/blog/deepmind-ai-reduces-google-data-centre-cooling-bill-40/ https://deepmind.com/blog/deepmind-ai-reduces-google-data-ce...), ...
- user5994461 10y agoIt doesn't matter the amount of money you have, it's basically impossible. Everything at Google is an internal Google secret made by Google for Google. ALL the software and ALL the hardware that's running it. Services rely on lower-level services. If you want to copy the high level service yourself and executes it at the same level Google does, you'd need to have everything it depends on. Too bad for you, each piece is a multi billion dollar projects itself, with its own dependencies... Let's imagine for a minute that there was a service that is somewhat standalone-ish. You may consider poaching the handful of people who can make it, for $1M a head. But that won't work well because money is not everything and you can't help it. Whenever there are ONLY 50 people in the world who can deliver what you need and you need almost all of them, you're fucked. In short, the castle is out of reach, even the building bricks are out of reach ;)
- ehsankia 10y agoThat's really the thing with Google. They have this huge empire and they build on top of their other work. This is why Apple Maps could never come close to competing with Google Maps. This is why Google Home at launch already did a far better job at understanding queries than Alexa which has been out for 2 years. They're so well situated, with a years worth of technology and tools, so it's really hard for a new comer to compete.
- mozumder 10y agoMost likely not. My understanding is that Google also has their own long-haul ocean fiber, and those things cost hundreds of millions of dollars by themselves.