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Not really. As far as I can tell, the core value of AWS is letting accountant shift CAPEX to OPEX. The technical considerations are a distant second or third p

Not really. As far as I can tell, the core value of AWS is letting accountant shift CAPEX to OPEX. The technical considerations are a distant second or third place.

oars 5y ago
Could you elaborate how this is an advantage? In my previous role, my manager argued for my work as a developer to be charged as Capex to the project instead of Opex. Why would accountants want the opposite for AWS?
- 2Gkashmiri 5y ago
  if the project is in R&D phase, we call it "captalization" . other than that, the regular employee is generally opex and sent to profit and loss
- bfung 5y ago
  OPEX in the US is tax deductible for the current financial year; a lot easier to calculate and maintain. It’s basically the cost to run the company, taking away from revenue. CAPEX items are amortized over multiple fiscal cycles; it’ll count and can helps raise the value(valuation) of your company, but tricker to calculate. So depending what financial number goals your company has, the accounting of items can go one way or the other. If your dev work brought permanent value to the company, then it can be capex. If you were a contractor instead, it could be either cap or opex. AWS services are basically rented and not permanent value to the company, ie, if you sold everything the company owned for cash, you couldn’t sell the AWS part, just the terraform scripts.
- Rastonbury 5y ago
  For business perspective, it's large irreversible upfront investment on capex vs ongoing opex. Sizing and building a data center is risky, execs not wanting to attach their names to $xxM data center project. Cost wise Capex are depreciated, this gives less visibility on month on month costs compared with opex which goes onto income statement. Developer work as capex is intangible asset, which has a bit more 'flexibility' depending on what management wants. It can operate on the same idea, developer wages for 1 year spread over several years via amortization of intangible asset.
  - cgio 5y ago
    Depreciation of assets also goes on P&L so no difference on periodic visibility. Also, while not capex, prepayments/reservations for cloud services are in fact assets/liabilities so yes opex vs capex is a good high level distinction but not 100% the essence.
    - bushbaba 5y ago
      The capex vs opex argument in cloud is more about having better transparency on your infra costs on a monthly/quarterly/yearly basis. With DCs you need to make large upfront purchases for todays and the next 3 years needs. If you under estimate you’ll be unable to grow further. If you over estimate you’ll be stuck with a bunch of unused infra. Now say you want to spin up a new feature/product. Can you accurately forecast the compute needs? How difficult would it be to get a large capex PO out through your internal orgs on the unreleased non-revenue functionality. Compare that to cloud where you pay for what you need. Calculating marginal cost is much easier, and securing budget on an ongoing basis to pay for clouds opex is also much easier, as you can easily show to finance the profit margins.
    - Rastonbury 5y ago
      As the other commentor has mentioned, much easier for management to manage costs and assign to cost centers or buckets. It's a big difference to track consumption monthly based on actual instead of straight line depre, eg. depreciation hits even if everything turned off
presentation 5y ago
I choose to host on Vercel because I can spin up a production-ready, globally distributed web app in about 5 minutes with marginal, predictable costs without hiring a single other person, procuring any hardware nor learning anything beyond what’s necessary for coding my application. Pair it with analogous services like Upstash and Fly.io for persistence, and you can achieve incredible scale with minimal operational burden. Obviously this depends on your workload - for mine I can imagine this would cover the majority of use cases for the lifetime of my company. And there are many companies like mine.
- CodesInChaos 5y ago
  At a glance, Vercel's pricing looks unbelievably expensive. $550/TB traffic, and $60k/yr for a 128MB function running at 100% utilization. What's the point of scalability, if you can't afford it to scale above the size of a small vserver? I'd have nightmares about a small DDoS attack costing me millions running on infrastructure like that. What does it offer compared to other serverless offerings (aws lambda, google cloud run) to justify this cost?
  - sofixa 5y ago
    I think you're misunderstanding Vercel. You host static, or slightly dynamic (calling APIs from the front-end) websites. Serverless functions are a bonus to use occasionally. If you're using a serverless function at 100%, you're doing something terribly wrong. As for DDoSes, such providers are genuinely okay with waiving bills from serious mistakes or DDoSes (besides also having anti-DDoS services for "free" and transparently, so must DDoSes won't even show up on your bill).
    - presentation 5y ago
      Exactly, you’re incentivized to make your website as static as possible, and I attach standard http cache headers to most of the server rendered stuff so that their responses get cached in Vercel’s CDN, and once again not invoked super often.
Ozzie_osman 5y ago
Couldn't you do this by leasing hardware before AWS?
dilyevsky 5y ago
Rent colo space, rent transit, rent equipment (which you should absolutely do below gigantic footprint). Boom - your physical dc is now an opex. Still cheaper than public cloud by an order of magnitude on certain workloads (egress heavy, gpus, etc)

Not really. As far as I can tell, the core value of AWS is letting accountant shift CAPEX to OPEX. The technical considerations are a distant second or third place.

oars 5y ago

Could you elaborate how this is an advantage? In my previous role, my manager argued for my work as a developer to be charged as Capex to the project instead of Opex. Why would accountants want the opposite for AWS?

2Gkashmiri 5y ago
if the project is in R&D phase, we call it "captalization" . other than that, the regular employee is generally opex and sent to profit and loss
bfung 5y ago
OPEX in the US is tax deductible for the current financial year; a lot easier to calculate and maintain. It’s basically the cost to run the company, taking away from revenue. CAPEX items are amortized over multiple fiscal cycles; it’ll count and can helps raise the value(valuation) of your company, but tricker to calculate. So depending what financial number goals your company has, the accounting of items can go one way or the other. If your dev work brought permanent value to the company, then it can be capex. If you were a contractor instead, it could be either cap or opex. AWS services are basically rented and not permanent value to the company, ie, if you sold everything the company owned for cash, you couldn’t sell the AWS part, just the terraform scripts.
Rastonbury 5y ago
For business perspective, it's large irreversible upfront investment on capex vs ongoing opex. Sizing and building a data center is risky, execs not wanting to attach their names to $xxM data center project. Cost wise Capex are depreciated, this gives less visibility on month on month costs compared with opex which goes onto income statement. Developer work as capex is intangible asset, which has a bit more 'flexibility' depending on what management wants. It can operate on the same idea, developer wages for 1 year spread over several years via amortization of intangible asset.
- cgio 5y ago
  Depreciation of assets also goes on P&L so no difference on periodic visibility. Also, while not capex, prepayments/reservations for cloud services are in fact assets/liabilities so yes opex vs capex is a good high level distinction but not 100% the essence.
  - bushbaba 5y ago
    The capex vs opex argument in cloud is more about having better transparency on your infra costs on a monthly/quarterly/yearly basis. With DCs you need to make large upfront purchases for todays and the next 3 years needs. If you under estimate you’ll be unable to grow further. If you over estimate you’ll be stuck with a bunch of unused infra. Now say you want to spin up a new feature/product. Can you accurately forecast the compute needs? How difficult would it be to get a large capex PO out through your internal orgs on the unreleased non-revenue functionality. Compare that to cloud where you pay for what you need. Calculating marginal cost is much easier, and securing budget on an ongoing basis to pay for clouds opex is also much easier, as you can easily show to finance the profit margins.
  - Rastonbury 5y ago
    As the other commentor has mentioned, much easier for management to manage costs and assign to cost centers or buckets. It's a big difference to track consumption monthly based on actual instead of straight line depre, eg. depreciation hits even if everything turned off

presentation 5y ago

I choose to host on Vercel because I can spin up a production-ready, globally distributed web app in about 5 minutes with marginal, predictable costs without hiring a single other person, procuring any hardware nor learning anything beyond what’s necessary for coding my application. Pair it with analogous services like Upstash and Fly.io for persistence, and you can achieve incredible scale with minimal operational burden. Obviously this depends on your workload - for mine I can imagine this would cover the majority of use cases for the lifetime of my company. And there are many companies like mine.

CodesInChaos 5y ago
At a glance, Vercel's pricing looks unbelievably expensive. $550/TB traffic, and $60k/yr for a 128MB function running at 100% utilization. What's the point of scalability, if you can't afford it to scale above the size of a small vserver? I'd have nightmares about a small DDoS attack costing me millions running on infrastructure like that. What does it offer compared to other serverless offerings (aws lambda, google cloud run) to justify this cost?
- sofixa 5y ago
  I think you're misunderstanding Vercel. You host static, or slightly dynamic (calling APIs from the front-end) websites. Serverless functions are a bonus to use occasionally. If you're using a serverless function at 100%, you're doing something terribly wrong. As for DDoSes, such providers are genuinely okay with waiving bills from serious mistakes or DDoSes (besides also having anti-DDoS services for "free" and transparently, so must DDoSes won't even show up on your bill).
  - presentation 5y ago
    Exactly, you’re incentivized to make your website as static as possible, and I attach standard http cache headers to most of the server rendered stuff so that their responses get cached in Vercel’s CDN, and once again not invoked super often.

Ozzie_osman 5y ago

Couldn't you do this by leasing hardware before AWS?

dilyevsky 5y ago

Rent colo space, rent transit, rent equipment (which you should absolutely do below gigantic footprint). Boom - your physical dc is now an opex. Still cheaper than public cloud by an order of magnitude on certain workloads (egress heavy, gpus, etc)