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When I did the calculations, the break-even point on AWS versus on-premises was about three servers - at that point it was cheaper to go with your own physical

When I did the calculations, the break-even point on AWS versus on-premises was about three servers - at that point it was cheaper to go with your own physical hardware. The big reason for most people is CAPEX vs. OPEX - even if it doesn't make financial sense in a dollar amount, it does in an accounting sense. Investors don't like to see big CAPEX numbers but seem fine with large OPEX ones.

tr0ut 9y ago
+1 Throw all other rational out the window if OPEX is what works. So here we are migrating to AWS..
bonesss 9y ago
> Investors don't like to see big CAPEX numbers but seem fine with large OPEX ones. If things go pear shaped large OPEX numbers resolve themselves as OP-erations get slimmed and shut down. Large CAPEX numbers, in the same situation, resolve themselves through liquidation and tears... More importantly, OPEX comes from next years profits yielding a business I can loan against. CAPEX comes from last years profits, increasing the amount of loans I need to get it together. It's the difference between thinking about short term profit margins and thinking about asset growth over time. Throwing a lot of optional cash today at a problem is better business than being forced to throw non-optional cash at a problem whenever the problem is feeling problematic. It's also quite freeing in terms of M&A.
- sah2ed 9y ago
  > More importantly, OPEX comes from next years profits yielding a business I can loan against. CAPEX comes from last years profits, increasing the amount of loans I need to get it together. That's a very illuminating way to highlight the accounting fears mentioned in the gp.