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>Renting your information infrastructure is a great way to reduce startup costs, but down the road, that information infrastructure runs your company. Trying to

>Renting your information infrastructure is a great way to reduce startup costs, but down the road, that information infrastructure runs your company. Trying to outsource it is like trying to outsource upper management. This isn't a one size fits all thing. For a company like FedEx I don't see the advantage of owning their own data centers. They just don't have the scaling challenges that would require that. Data centers or information infrastructure as you put it does't fall within the core competency of FedEx, so I don't think it's a fair comparison to say its like outsourcing upper management. I think its more fair to so that FedEx building their own datacenters is like building their own roads to deliver packages on. For a company like Facebook or Google, the difference is clear. They need to handle such a high scale of traffic and volume of data that they need custom infrastructure to be able to scale efficiently at significantly reduced costs. The same reason it made sense for them to invest in building their own databases, because the existing options didn't meet the scaling requirements. FedEx won't realistically be needing their own database or infrastructure any time soon.

alexvoda 4y ago
Difference being that FedEx pays 0 $/km for the roads, but the $/GB and $/GHz will be at the mercy of their cloud provider.
- citizenpaul 4y ago
  > pays 0 $/km for the roads, That is really not true at least in the USA. There are all kinds of taxes and fees for using the roads with large trucks. Have you ever seen the weigh stations on the sides of the highway in the US? Those are there to fine the trucks for what they are carrying if it is beyond what is allowed among other things. You said km though so you probably are not in the US.
  - misterprime 4y ago
    Every state charges their own fee per mile to commercial trucks. Filing taxes as a long distance trucking company that operates in multiple states is pretty annoying. There's also tax built in to every gallon of fuel. There are also flat annual registration fees you have to pay as well.
    - oogali 4y ago
      Don’t forget the tolls for various highways, bridges, and tunnels as they’re almost always priced higher for vehicles with more than two axles.
      - ihaveajob 4y ago
        Side point here, but that's a very justifiable cost. The damaged to a road is proportional to the fourth power of the axle weight [1]. That's something that amuses me when drivers complain that bike riders don't pay a "road tax". If they did, it would be a laughably low amount compared to what a car driver would have to pay in proportion. [1] https://www.insidescience.org/news/how-much-damage-do-heavy-trucks-do-our-roads https://www.insidescience.org/news/how-much-damage-do-heavy-...
  - nightpool 4y ago
    It's not true in the EU either, plenty of countries have truck and trailer specific tolls. The average truck on the German autobahn, for example, pays €0.15 per kilometre.
    - Retric 4y ago
      Which roughly covers the actual damage large trucks do per km traveled and in no way covers construction costs.
    - tpm 4y ago
      More or less all EU members should charge freight road transport fees on highways and sometimes other roads too.
pfisherman 4y ago
> They just don't have the scaling challenges that would require that. I don’t know about that. They are a global logistics organization that rivals Amazon in scale. They are not parsing web scale data like Google, but as far as meatspace data goes they are they seem to be about as big as it gets?
deleted 4y ago
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phpisthebest 4y ago
>>They just don't have the scaling challenges that would require that Scaling is one of the big cloud advantages. Static Known workloads will almost always be cheaper on Prem than dynamic workloads that need automated scaling One of the big ways an organization can save money is if they can scale up and down their loads on demand But if you have a static 24/7 workload almost universally I can build a onprem solution that is be 50% or more cheaper than cloud
shuntress 4y ago
> I think its more fair to so that FedEx building their own datacenters is like building their own roads to deliver packages on. Your metaphor is a little bit off. This is more comparable to FedEx renting vs owning their fleet vehicles. Obviously they aren't going to be setting up foundries to to scratch-build engines and network switches. But it probably makes as much sense for them to own the buildings & computers running their logistics software as it does for them to own the buildings and vehicles running their logistics hardware. As an aside, I'm sure FedEx would LOVE to get customers locked in to private FedEx roads with private FedEx addresses that no one else is allowed to deliver too. Thankfully, our system of public infrastructure is robust enough to make this infeasible.
- scottyah 4y ago
  Fun Fact: They don't technically own their planes, since it would have made them an nice target for a hostile takeover if someone wanted them
  - Jabbles 4y ago
    Please elaborate.
  - kragen 4y ago
    Oh really. They lease their fleet of planes? I had no idea!
  - nightpool 4y ago
    This seems... incorrect? http://www.fedex.com/us/about/overview/companies/express/Express.pdf http://www.fedex.com/us/about/overview/companies/express/Exp... indicates that they own 696 aircraft, and https://www.reuters.com/article/us-airline-fedex-orders/fedex-orders-50-boeing-freighters-in-deal-worth-9-97-billion-at-list-prices-idINKCN0PW04920150722 https://www.reuters.com/article/us-airline-fedex-orders/fede... says that they just bought 50 more in 2015. No mentions of a lease agreement here. In fact, according to Wikipedia, for smaller aircraft FedEx operates a dry lease business where they lease their fleet out to contractors to deliver certain routes: In the United States (along with Morningstar Air Express in Canada), FedEx Express operates FedEx Feeder (and for Morningstar, mainline FedEx service) on a dry lease program where the contractor will lease the aircraft from the FedEx fleet and provide a crew to operate the aircraft solely for FedEx
deleted 4y ago
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FooHentai 4y ago
>For a company like FedEx I don't see the advantage of owning their own data centers. They just don't have the scaling challenges that would require that. Depends how seriously they're locked onto the postman/route inspection problem. Which is a factor for delivery companies and, depending on how hard you chase it, a driver for almost infinite compute. Once you're playing that game, the economics look very different to most 'not an IT company' IT needs.

alexvoda 4y ago

Difference being that FedEx pays 0 $/km for the roads, but the $/GB and $/GHz will be at the mercy of their cloud provider.

citizenpaul 4y ago
> pays 0 $/km for the roads, That is really not true at least in the USA. There are all kinds of taxes and fees for using the roads with large trucks. Have you ever seen the weigh stations on the sides of the highway in the US? Those are there to fine the trucks for what they are carrying if it is beyond what is allowed among other things. You said km though so you probably are not in the US.
- misterprime 4y ago
  Every state charges their own fee per mile to commercial trucks. Filing taxes as a long distance trucking company that operates in multiple states is pretty annoying. There's also tax built in to every gallon of fuel. There are also flat annual registration fees you have to pay as well.
  - oogali 4y ago
    Don’t forget the tolls for various highways, bridges, and tunnels as they’re almost always priced higher for vehicles with more than two axles.
    - ihaveajob 4y ago
      Side point here, but that's a very justifiable cost. The damaged to a road is proportional to the fourth power of the axle weight [1]. That's something that amuses me when drivers complain that bike riders don't pay a "road tax". If they did, it would be a laughably low amount compared to what a car driver would have to pay in proportion. [1] https://www.insidescience.org/news/how-much-damage-do-heavy-trucks-do-our-roads https://www.insidescience.org/news/how-much-damage-do-heavy-...
- nightpool 4y ago
  It's not true in the EU either, plenty of countries have truck and trailer specific tolls. The average truck on the German autobahn, for example, pays €0.15 per kilometre.
  - Retric 4y ago
    Which roughly covers the actual damage large trucks do per km traveled and in no way covers construction costs.
  - tpm 4y ago
    More or less all EU members should charge freight road transport fees on highways and sometimes other roads too.

pfisherman 4y ago

> They just don't have the scaling challenges that would require that. I don’t know about that. They are a global logistics organization that rivals Amazon in scale. They are not parsing web scale data like Google, but as far as meatspace data goes they are they seem to be about as big as it gets?

deleted 4y ago

[deleted]

phpisthebest 4y ago

>>They just don't have the scaling challenges that would require that Scaling is one of the big cloud advantages. Static Known workloads will almost always be cheaper on Prem than dynamic workloads that need automated scaling One of the big ways an organization can save money is if they can scale up and down their loads on demand But if you have a static 24/7 workload almost universally I can build a onprem solution that is be 50% or more cheaper than cloud

shuntress 4y ago

> I think its more fair to so that FedEx building their own datacenters is like building their own roads to deliver packages on. Your metaphor is a little bit off. This is more comparable to FedEx renting vs owning their fleet vehicles. Obviously they aren't going to be setting up foundries to to scratch-build engines and network switches. But it probably makes as much sense for them to own the buildings & computers running their logistics software as it does for them to own the buildings and vehicles running their logistics hardware. As an aside, I'm sure FedEx would LOVE to get customers locked in to private FedEx roads with private FedEx addresses that no one else is allowed to deliver too. Thankfully, our system of public infrastructure is robust enough to make this infeasible.

scottyah 4y ago
Fun Fact: They don't technically own their planes, since it would have made them an nice target for a hostile takeover if someone wanted them
- Jabbles 4y ago
  Please elaborate.
- kragen 4y ago
  Oh really. They lease their fleet of planes? I had no idea!
- nightpool 4y ago
  This seems... incorrect? http://www.fedex.com/us/about/overview/companies/express/Express.pdf http://www.fedex.com/us/about/overview/companies/express/Exp... indicates that they own 696 aircraft, and https://www.reuters.com/article/us-airline-fedex-orders/fedex-orders-50-boeing-freighters-in-deal-worth-9-97-billion-at-list-prices-idINKCN0PW04920150722 https://www.reuters.com/article/us-airline-fedex-orders/fede... says that they just bought 50 more in 2015. No mentions of a lease agreement here. In fact, according to Wikipedia, for smaller aircraft FedEx operates a dry lease business where they lease their fleet out to contractors to deliver certain routes: In the United States (along with Morningstar Air Express in Canada), FedEx Express operates FedEx Feeder (and for Morningstar, mainline FedEx service) on a dry lease program where the contractor will lease the aircraft from the FedEx fleet and provide a crew to operate the aircraft solely for FedEx

deleted 4y ago

[deleted]

FooHentai 4y ago

>For a company like FedEx I don't see the advantage of owning their own data centers. They just don't have the scaling challenges that would require that. Depends how seriously they're locked onto the postman/route inspection problem. Which is a factor for delivery companies and, depending on how hard you chase it, a driver for almost infinite compute. Once you're playing that game, the economics look very different to most 'not an IT company' IT needs.