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In a truly competitive market cloud vendors would be trying to underbid each other for people's workloads. show me the code, show me the data, and let the biddi

by hyperion2010 7y ago

In a truly competitive market cloud vendors would be trying to underbid each other for people's workloads. show me the code, show me the data, and let the bidding wars begin.

kahnjw 7y ago
I keep hearing people say some variation of this without understanding the irony of the statement. A perfectly competitive market means, among other things, that there is zero barrier to market entry. That means you can enter the market without large capital spending. Given the amount of capital plowed into these gigantic platforms, any statement starting with "if tech were truly competitive..." is purely hypothetical and probably always will be.
- hardwaresofton 7y ago
  I think you might be taking it too literally -- I don't think they mean "perfectly competitive" in the economics sense.The commenter actually "truly competitive", which I take to mean "in a market that was truly competitive". That said, somewhat orthogonal to your point -- the amount of capital applied to create these gigantic platforms is not indicative of what people can and do create with internalized cost -- the F/OSS movement has proven that. People have created immensely valuable software, and internalized/shared the burden of creating that software. I also think that it is entities with large capital that strive (and almost always end up creating) gigantic platforms -- it justifies their heft/consulting teams, etc. motivated single contributors/small groups never set out to giant platforms, they usually build things that do one thing well (see unix) and compose (see unix) to do greater things. More towards your point directly, you're right, a lot of things would stop making sense in a perfectly competitive market in the theoretical economics sense. Outside the fact that the model is wrong/incomplete (as all non-perfect knowledge models have to be), I do think this would lead to a certain number of competitors, but likely more than 0. My instinct is that the number of firms selling the product would be equal to the aggregated demand / costs to run a business selling the product -- and that ratio is probably greater than 1. Purely a spherical cow scenario but at least that's where I think it would go.
- hyperion2010 7y ago
  I would argue that the only barrier right now is information asymmetry. With the right knowledge I should be able to compete with the big boys by just moving compute around to the cheapest provider, getting information using nothing more than a script for scraping pricing pages and being able to run code on distros derived from either Debian or RHEL. The thing is, that I don't have the information that the insiders do about the billions of other workloads that are being run. They should be able to use that information to massively reduce costs (aka under utilization of resources) and more importantly to _undercut the prices of their competitors_ but they are not. Where I agree with you is that if I tried to do such a thing and they found out, they would just drop their prices and force me out. They can do this because relatively speaking they have infinite capital compared to an individual.

In a truly competitive market cloud vendors would be trying to underbid each other for people's workloads. show me the code, show me the data, and let the bidding wars begin.

kahnjw 7y ago

I keep hearing people say some variation of this without understanding the irony of the statement. A perfectly competitive market means, among other things, that there is zero barrier to market entry. That means you can enter the market without large capital spending. Given the amount of capital plowed into these gigantic platforms, any statement starting with "if tech were truly competitive..." is purely hypothetical and probably always will be.

hardwaresofton 7y ago
I think you might be taking it too literally -- I don't think they mean "perfectly competitive" in the economics sense.The commenter actually "truly competitive", which I take to mean "in a market that was truly competitive". That said, somewhat orthogonal to your point -- the amount of capital applied to create these gigantic platforms is not indicative of what people can and do create with internalized cost -- the F/OSS movement has proven that. People have created immensely valuable software, and internalized/shared the burden of creating that software. I also think that it is entities with large capital that strive (and almost always end up creating) gigantic platforms -- it justifies their heft/consulting teams, etc. motivated single contributors/small groups never set out to giant platforms, they usually build things that do one thing well (see unix) and compose (see unix) to do greater things. More towards your point directly, you're right, a lot of things would stop making sense in a perfectly competitive market in the theoretical economics sense. Outside the fact that the model is wrong/incomplete (as all non-perfect knowledge models have to be), I do think this would lead to a certain number of competitors, but likely more than 0. My instinct is that the number of firms selling the product would be equal to the aggregated demand / costs to run a business selling the product -- and that ratio is probably greater than 1. Purely a spherical cow scenario but at least that's where I think it would go.
hyperion2010 7y ago
I would argue that the only barrier right now is information asymmetry. With the right knowledge I should be able to compete with the big boys by just moving compute around to the cheapest provider, getting information using nothing more than a script for scraping pricing pages and being able to run code on distros derived from either Debian or RHEL. The thing is, that I don't have the information that the insiders do about the billions of other workloads that are being run. They should be able to use that information to massively reduce costs (aka under utilization of resources) and more importantly to _undercut the prices of their competitors_ but they are not. Where I agree with you is that if I tried to do such a thing and they found out, they would just drop their prices and force me out. They can do this because relatively speaking they have infinite capital compared to an individual.