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I’m not sure what you mean when you reference CapEx—the CapEx required to develop Nitro (definitely nonzero)? To buy the hardware and deploy it in their data ce

I’m not sure what you mean when you reference CapEx—the CapEx required to develop Nitro (definitely nonzero)? To buy the hardware and deploy it in their data centers (also assuredly nonzero)? Or on a unit basis, where it would have to be balanced against what it was replacing? As far as development and deployment goes, this is a great example of how large companies should use CapEx to build competitive barriers. They can do something hard and expensive—5 years of engineering and then the expense of custom fab—then use that to make their unit economics better (significantly more utilization of the server by customer apps) and differentiate their products. Vogels says that development began in 2012; left unsaid is that AWS knew by then that competitors were gunning for them, so how do you protect your lead? Nitro seems like one answer. One thing to consider in the balance is the potential savings from not relying so much on Xen. There have been Xen vulnerabilities; those haven’t been fun for AWS. It’s a complex piece of software and AWS’s version was likely heavily patched, requiring a dedicated team of senior devs. The reduction in operational complexity from using Nitro plays a role, too. Finally, you have to consider one of AWS’s big market pushes, getting Big Enterprise to transition internal business applications away from in-house hardware/data centers and onto AWS. Few in-house IT teams could likely match the performance of EC2 with Nitro; killing off managing data centers makes the CFO happy, and having improved performance on AWS makes users happy.

KMag 6y ago
> I’m not sure what you mean when you reference CapEx ... When I talk about CapEx, I'm talking about the portion of the whole server's CapEx represented by the Nitro hardware cost, including amortized Nitro development cost. CapEx + OpEx is the normal way to account for "total cost" of the new hardware, which can be compared against CapEx + OpEx fraction of the server's cost that can be attributed to the Intel / AMD CPUs. Likewise for OpEx, I'm talking about the portion of the whole server's OpEx represented by the Nitro hardware operating cost. They've offloaded 30% of the work to this new hardware, and there are two obvious ways to look at if this was a good idea: (1, evaluating monetary savings) is the cost (CapEx + OpEx) of this Nitro hardware less than that of the 30% of the box's CPU resources freed up? (2, evaluating environmental savings) is the wattage used by this Nitro hardware less than the 30% of the box's CPU resources freed up?

KMag 6y ago

> I’m not sure what you mean when you reference CapEx ... When I talk about CapEx, I'm talking about the portion of the whole server's CapEx represented by the Nitro hardware cost, including amortized Nitro development cost. CapEx + OpEx is the normal way to account for "total cost" of the new hardware, which can be compared against CapEx + OpEx fraction of the server's cost that can be attributed to the Intel / AMD CPUs. Likewise for OpEx, I'm talking about the portion of the whole server's OpEx represented by the Nitro hardware operating cost. They've offloaded 30% of the work to this new hardware, and there are two obvious ways to look at if this was a good idea: (1, evaluating monetary savings) is the cost (CapEx + OpEx) of this Nitro hardware less than that of the 30% of the box's CPU resources freed up? (2, evaluating environmental savings) is the wattage used by this Nitro hardware less than the 30% of the box's CPU resources freed up?