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It would be theoretically possible for cloud providers, specializing in what they do, to gain from economies of scale of various sorts (having their own large p
by waterhouse 6y ago
It would be theoretically possible for cloud providers, specializing in what they do, to gain from economies of scale of various sorts (having their own large purpose-built datacenters, needing less total redundant equipment to have the same replacement speed, having local servers in all parts of the world, being able to use nighttime idle cycles in servers in one part of the world for daytime customers on the other side), which could theoretically yield savings greater than the profit margin that they charge.
Not saying this is what happens in practice.
- worldsayshi 6y agoTo me the economics of scale is the whole point of cloud. If vendors don't deliver on that promise and makes it more expensive than hosting it yourself they have fundamentally failed and there's no reason, market wise or utility wise, for them to continue in the long run.
- twic 6y agoThese economies could only put cloud ahead if they were larger than the provider's profit margin. If cloud saves 10% in costs but charges you 30% in markup, it costs you 20% more. AWS's margin is 20-25% (eg [1]). Is AWS's cost of goods sold really 25% lower? Admittedly this calculation is tricky, because it's not clear what to include. Does that figure for AWS's margin include R&D? Should it? [1] https://www.forbes.com/sites/greatspeculations/2018/10/17/how-much-will-aws-contribute-to-amazons-near-term-revenue-growth/ https://www.forbes.com/sites/greatspeculations/2018/10/17/ho...