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>Is it, though? Other than the special case of Netflix, it strains credibility that any cloud provider would be willing to give enough of a discount to match, l

by lsc 8y ago

>Is it, though? Other than the special case of Netflix, it strains credibility that any cloud provider would be willing to give enough of a discount to match, let alone beat, ones own hardware. How would they make money? Right now, as I understand it, Uber is losing money driving me to work every day, and I'm not really sure how they will ever make a profit off of that. if they double their prices? I'm gonna buy a car, drive my own self to work, and use uber once a week when I go to the bar. I don't really see how buying fake market share (rather,market share that only exists when you are dumping) helps them when it comes time to not dump anymore. Point being, there are plenty of people who are willing to sell two dollar bills for a dollar when the economy is hot. (I'm not suggesting amazon does this... but they certainly could. It's possible. ) Even in more rational markets, loss leaders are a big thing, and in leasing situations, where it's hard to move once you are in? loss leaders are a really common sales tactic. How often have you gotten "first month free" rent deals on one year leases, that work out to below market for the first year (because of the free first month) but above market after that, even if they don't actually raise the rent? Datacenter leases often have a similar 'ramp up' period, where you pay less at the beginning of a contract than towards the end, even not counting the fact that they jack up your bill by however much they think it will cost you to leave. I mean, these all can be really good deals if you know that it's easy for you to move later,and it's certainly possible (though maybe not easy) to setup your infrastructure so you can switch cloud providers with little cost. >Fortunately, there's an upper bound, which is the public price This is true...but that's a pretty high upper bound, when you compare to owning hardware/leasing pipe and power at all but the smallest scale. >which has, at least historically, been coming down. Historically, the cost of compute has come down, though slower than the cost of hardware (at least until lately) the cost of bandwidth has come down... much more slowly. >Also, AWS has the spot instance market, which can provide downward price pressure from even that ceiling. I think spot instances are a difference in kind (and actually a really great deal, if you have a workload that can be interrupted like that) - but most workloads I have worked with, especially in corp, don't really work that way.

mmt 8y ago
I think most of us here understand the concept of loss leaders and of sacrificing profits (even operating at a loss) for market share. My point isn't that it doesn't happen, nor that it couldn't happen in this space. Rather, my point is, why would they bother (be willing)? > there are plenty of people who are willing to sell two dollar bills for a dollar when the economy is hot. (I'm not suggesting amazon does this... but they certainly could. It's possible. ) In fact, we pretty much know, because Amazon has revealed it, that AWS is making money hand-over-fist, and they do this while having sizeable (existing) market share. Would the other providers compete on (non-public) price just to gain (new) market share? It's possible, but I maintain it's an extraordinary proposition, considering Microsoft's overall software ecosystem integration advantage with Azure (much better lock-in) and Google's various attempts at features, including AI hardware. Of course, this is all fairly academic, because.. > This is true...but that's a pretty high upper bound, when you compare to owning hardware/leasing pipe and power at all but the smallest scale. The OP admitted that the cost savings is based on public pricing, so the decision makers don't actually care about the hugely inflated cost of cloud infrastructure! (Or, as in my personal experience, they refuse to believe it, which makes job hunting particularly surreal). That further supports my belief that the providers have no motivation to negotiate price. > Historically, the cost of compute has come down, though slower than the cost of hardware (at least until lately) (Did you mean the parenthetical to apply to this or to the statement about bandwidth?) Is there anywhere that tracks this? I've only ever done that-point-in-time pricing analysis, never historical tracking. I tend to wonder how much of the difference is due to Amazon's specific choice of hardware for each generation. That is, would the trend look different if you limited the comparison to the cost of hardware with only the same specs as theirs (which are, of course, not necessarily, or even ever, the best bang-for-the-buck)? > I think spot instances are a difference in kind (and actually a really great deal, if you have a workload that can be interrupted like that) - but most workloads I have worked with, especially in corp, don't really work that way. Agreed, and they require additional engineering work (and forethought) to take advantage of properly. I just like to mention them to avoid any cries of "but cloud doesn't have to cost full price" when venturing into the territory of how expensive it is. (Also, with AWS, previous generation, and reserved instances, though knowled of the latter is implied with the spot market).
- 8y ago

by lsc 8y ago

mmt 8y ago

I think most of us here understand the concept of loss leaders and of sacrificing profits (even operating at a loss) for market share. My point isn't that it doesn't happen, nor that it couldn't happen in this space. Rather, my point is, why would they bother (be willing)? > there are plenty of people who are willing to sell two dollar bills for a dollar when the economy is hot. (I'm not suggesting amazon does this... but they certainly could. It's possible. ) In fact, we pretty much know, because Amazon has revealed it, that AWS is making money hand-over-fist, and they do this while having sizeable (existing) market share. Would the other providers compete on (non-public) price just to gain (new) market share? It's possible, but I maintain it's an extraordinary proposition, considering Microsoft's overall software ecosystem integration advantage with Azure (much better lock-in) and Google's various attempts at features, including AI hardware. Of course, this is all fairly academic, because.. > This is true...but that's a pretty high upper bound, when you compare to owning hardware/leasing pipe and power at all but the smallest scale. The OP admitted that the cost savings is based on public pricing, so the decision makers don't actually care about the hugely inflated cost of cloud infrastructure! (Or, as in my personal experience, they refuse to believe it, which makes job hunting particularly surreal). That further supports my belief that the providers have no motivation to negotiate price. > Historically, the cost of compute has come down, though slower than the cost of hardware (at least until lately) (Did you mean the parenthetical to apply to this or to the statement about bandwidth?) Is there anywhere that tracks this? I've only ever done that-point-in-time pricing analysis, never historical tracking. I tend to wonder how much of the difference is due to Amazon's specific choice of hardware for each generation. That is, would the trend look different if you limited the comparison to the cost of hardware with only the same specs as theirs (which are, of course, not necessarily, or even ever, the best bang-for-the-buck)? > I think spot instances are a difference in kind (and actually a really great deal, if you have a workload that can be interrupted like that) - but most workloads I have worked with, especially in corp, don't really work that way. Agreed, and they require additional engineering work (and forethought) to take advantage of properly. I just like to mention them to avoid any cries of "but cloud doesn't have to cost full price" when venturing into the territory of how expensive it is. (Also, with AWS, previous generation, and reserved instances, though knowled of the latter is implied with the spot market).

8y ago