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Doesn't that kind of problem get easier at large scale? It's like any time you have a limited resource to share out. e.g. if an ISP has 150mbits of connectivity

Doesn't that kind of problem get easier at large scale? It's like any time you have a limited resource to share out. e.g. if an ISP has 150mbits of connectivity, it would be difficult to provide a '100mbit' service to two homes - one busy user will clearly hit the other. But if you have 1500mbits to share out to 20 homes, the service will seem much better. As you scale up, it becomes easier to provision less per customer.

inlined 6y ago
Economy of scale is different when you’re providing a cloud business because your costs (and hopefully revenue) are dominated by the head customers. Imagine a company whose business model isn’t profitable for AWS becomes the next Dropbox. Suddenly the tail can’t subsidize the head. And even if it could, the business is shot. You always need the head to subsidize the tail (e.g. free trials). You can’t let the head become unprofitable.
- joosters 6y ago
  All these are problems, yes, but my point is they become more manageable when you have more customers. Having Dropbox as a client would be exceedingly difficult if you only have two other customers, but it gets easier as you add more customers and scale up.
moduspol 6y ago
I think that works for ISPs because their service area and customer base are arbitrarily defined and within their control. They don't have to worry as much about a datacenter suddenly opening up in the middle of a neighborhood that throws off the profitability of everyone else. And they can also impose things like bandwidth caps to curb some less-profitable customers' usage. But cloud providers, by design, are charging "per use" and expected to scale "indefinitely"... at least for expected use cases.
scarface74 6y ago
One case that comes to mind is when they started charging for S3 API requests because people were using it as a free KV store.

inlined 6y ago

Economy of scale is different when you’re providing a cloud business because your costs (and hopefully revenue) are dominated by the head customers. Imagine a company whose business model isn’t profitable for AWS becomes the next Dropbox. Suddenly the tail can’t subsidize the head. And even if it could, the business is shot. You always need the head to subsidize the tail (e.g. free trials). You can’t let the head become unprofitable.

joosters 6y ago
All these are problems, yes, but my point is they become more manageable when you have more customers. Having Dropbox as a client would be exceedingly difficult if you only have two other customers, but it gets easier as you add more customers and scale up.

moduspol 6y ago

I think that works for ISPs because their service area and customer base are arbitrarily defined and within their control. They don't have to worry as much about a datacenter suddenly opening up in the middle of a neighborhood that throws off the profitability of everyone else. And they can also impose things like bandwidth caps to curb some less-profitable customers' usage. But cloud providers, by design, are charging "per use" and expected to scale "indefinitely"... at least for expected use cases.

scarface74 6y ago

One case that comes to mind is when they started charging for S3 API requests because people were using it as a free KV store.