5 ms·

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 d

by 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).

lsc 8y ago
>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. The better their lock-in, the more sense it makes for them to lose money at first, if that's what it takes to get you into bondage. (assuming they have a way of raising the prices later, or of dropping their costs later) I'm just saying that it would totally make sense to do this if it got you more business. Maybe they only do it for especially juicy customers? I mean, yeah, I'm reaching for some way that it might conceivably be cheaper to rent servers when you have already done the work of setting up your own datacenter, and it's hard. (now, I do understand that most in house datacenters have ridiculous policies that managers would be happy to pay 5x to get around. But if you are at f50 scale, you can setup your own "internal cloud" with amazon like policy affordances.) In the aughts, the standard thing to do when starting a VPS provider was to come in as cheap as you possibly could, get as many customers as you could, and then just leave your prices the same as the hardware (and thus power) costs fell out from under you. I mean, I don't know anyone who lost money on their marginal customer, but plenty started out with margins that wouldn't have been any good long-term. That said, I don't know of any cloud infrastructure providers who seem to be losing money on their marginal customer, and as you point out, there's very good evidence that AWS makes a killing. My impression is that it's an industry with pretty good margins, once you scale enough to amortize your labor costs, which is harder than it looks. I mean, in those days, hardware(and thus power) costs were dropping dramatically, labor costs were not, and even if you have a scalable system where one person can handle a lot of servers, you need a minimum size team, which gets expensive fast. >(Did you mean the parenthetical to apply to this or to the statement about bandwidth?) the recent change is that hardware has gotten... more expensive in the last little bit. not just ddr4 (but mostly ddr4... and that's most of your cost, a lot of the time, as that's the thing you least want to oversubscribe) To me? this is shocking. Honestly, I haven't really been keeping up with bandwidth prices since I sold my thing, so I wouldn't know as much about that side of things. >Is there anywhere that tracks this? I've only ever done that-point-in-time pricing analysis, never historical tracking. pcpartpicker has nice historical graphs for hardware pricing that are publicly accessible (but that don't go back so far) One of my super early projects was a web price scraper for books... I wish I had kept up with that project and expanded it to computer parts, because there's a lot of data that I don't know how to get anymore. https://pcpartpicker.com/trends/price/memory/ https://pcpartpicker.com/trends/price/memory/ >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)? From what I've seen, the x86 server market is pretty efficient. Yes, yes, the professionals will take you if you let them, but it's pretty easy to get to within 10% of the tray price even on small purchases, and it's hard to get much below tray prices, even on large purchases - (dramxchange is a pretty good resource if you want to know about 'tray price' for ram) I mean, x86 hardware is... x86 hardware. Dell vs. HP vs. supermicro- it mostly even uses the same chipsets, and most of the cost is the cpu/ram, so there's really not a lot of difference in who you buy from, as long as you get quotes from more than one vendor. The times I've seen people get really ripped off, they got sold different types of hardware; like one place I worked was getting sold blade servers using FBDIMMs. Blade servers for "efficency" - of course, there was only enough power for one blade chassis per rack. And FBDIMMs used like 3x the power of low voltage reg. ecc ddr2. I pointed out the existence of the low power xeons that took reg. ecc ddr2 rather than FBDIMMs, and ran enough benchmarks to show that they were about as good as the regular xeons of similar speed... and used a lot less power. I'm not aware of any similar traps in the market right now, but I am a little out of the loop. My personal theory as to the lack of cost concern in "cloud" is that times are hot. When times are hot? you jump. make hay while the sun is shining. If spinning up cloud servers is faster than developing your datacenter infrastructure? who cares if it costs 5x as much. Setting up openstack is a huge pain in the ass, and you're going to have growing pains for the next six months, if your team is really good. My personal theory is that this trend will reverse with the next downturn. Meanwhile, I'm working for other people, which is pretty nice in a lot of ways, even though it does feel sad that all the time I spent in managing x86 hardware is something people just don't care about anymore.

by mmt 8y ago

lsc 8y ago

>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. The better their lock-in, the more sense it makes for them to lose money at first, if that's what it takes to get you into bondage. (assuming they have a way of raising the prices later, or of dropping their costs later) I'm just saying that it would totally make sense to do this if it got you more business. Maybe they only do it for especially juicy customers? I mean, yeah, I'm reaching for some way that it might conceivably be cheaper to rent servers when you have already done the work of setting up your own datacenter, and it's hard. (now, I do understand that most in house datacenters have ridiculous policies that managers would be happy to pay 5x to get around. But if you are at f50 scale, you can setup your own "internal cloud" with amazon like policy affordances.) In the aughts, the standard thing to do when starting a VPS provider was to come in as cheap as you possibly could, get as many customers as you could, and then just leave your prices the same as the hardware (and thus power) costs fell out from under you. I mean, I don't know anyone who lost money on their marginal customer, but plenty started out with margins that wouldn't have been any good long-term. That said, I don't know of any cloud infrastructure providers who seem to be losing money on their marginal customer, and as you point out, there's very good evidence that AWS makes a killing. My impression is that it's an industry with pretty good margins, once you scale enough to amortize your labor costs, which is harder than it looks. I mean, in those days, hardware(and thus power) costs were dropping dramatically, labor costs were not, and even if you have a scalable system where one person can handle a lot of servers, you need a minimum size team, which gets expensive fast. >(Did you mean the parenthetical to apply to this or to the statement about bandwidth?) the recent change is that hardware has gotten... more expensive in the last little bit. not just ddr4 (but mostly ddr4... and that's most of your cost, a lot of the time, as that's the thing you least want to oversubscribe) To me? this is shocking. Honestly, I haven't really been keeping up with bandwidth prices since I sold my thing, so I wouldn't know as much about that side of things. >Is there anywhere that tracks this? I've only ever done that-point-in-time pricing analysis, never historical tracking. pcpartpicker has nice historical graphs for hardware pricing that are publicly accessible (but that don't go back so far) One of my super early projects was a web price scraper for books... I wish I had kept up with that project and expanded it to computer parts, because there's a lot of data that I don't know how to get anymore. https://pcpartpicker.com/trends/price/memory/ https://pcpartpicker.com/trends/price/memory/ >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)? From what I've seen, the x86 server market is pretty efficient. Yes, yes, the professionals will take you if you let them, but it's pretty easy to get to within 10% of the tray price even on small purchases, and it's hard to get much below tray prices, even on large purchases - (dramxchange is a pretty good resource if you want to know about 'tray price' for ram) I mean, x86 hardware is... x86 hardware. Dell vs. HP vs. supermicro- it mostly even uses the same chipsets, and most of the cost is the cpu/ram, so there's really not a lot of difference in who you buy from, as long as you get quotes from more than one vendor. The times I've seen people get really ripped off, they got sold different types of hardware; like one place I worked was getting sold blade servers using FBDIMMs. Blade servers for "efficency" - of course, there was only enough power for one blade chassis per rack. And FBDIMMs used like 3x the power of low voltage reg. ecc ddr2. I pointed out the existence of the low power xeons that took reg. ecc ddr2 rather than FBDIMMs, and ran enough benchmarks to show that they were about as good as the regular xeons of similar speed... and used a lot less power. I'm not aware of any similar traps in the market right now, but I am a little out of the loop. My personal theory as to the lack of cost concern in "cloud" is that times are hot. When times are hot? you jump. make hay while the sun is shining. If spinning up cloud servers is faster than developing your datacenter infrastructure? who cares if it costs 5x as much. Setting up openstack is a huge pain in the ass, and you're going to have growing pains for the next six months, if your team is really good. My personal theory is that this trend will reverse with the next downturn. Meanwhile, I'm working for other people, which is pretty nice in a lot of ways, even though it does feel sad that all the time I spent in managing x86 hardware is something people just don't care about anymore.