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I am still honestly confused by the whole "OpEx > CapEx" thing. Apparently for some people this is worth paying over double the price when you look at things on
by ocdtrekkie 6y ago
I am still honestly confused by the whole "OpEx > CapEx" thing. Apparently for some people this is worth paying over double the price when you look at things on an annualized basis, even for an established business that's got a very stable environment?
- HeyLaughingBoy 6y agoCompare SaaS to COTS software: same thing, (somewhat) different industry.
- brk 6y agoIn short, yes it is. The concept of having a predictable recurring bill, and known costs can have a lot of value. In the opex hardware model, there is usually a hardware refresh built in (a lease of sorts) and also covered replacements for any failures before the refresh.
- ocdtrekkie 6y ago> a predictable recurring bill This makes no sense to me, because almost no OpEx-based services operate on a predictable billing model. Usage based pricing means they are subject to change. If I buy a $5,000 server, and it lasts me five years, I can plan around needing $1,000 a year set aside to replace it. Meanwhile, my AWS bill can suddenly be $20,000 with no warning. The hardware refresh model you describe... I've actually only ever seen in a CapEx appliance, where paying for the support contract got you those refreshes regularly, replacement for failures, etc. but had an initial upfront purchase cost.
- closeparen 6y agoWhen the news comes out that a major company has signed a deal with a cloud provider, it's that they've committed to spend $X over N years. Presumably the deal would be renegotiated if their usage changed dramatically, but it is not actually variable pricing.