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> These cloud providers are, by definition, charging you more than it would cost you to run it yourself. That is _not_ a given. They're charging you more than

> These cloud providers are, by definition, charging you more than it would cost you to run it yourself. That is _not_ a given. They're charging you more than it costs _them_ to run it. They get: - much lower hardware prices than you - lower bandwidth prices than you - likely lower electricity costs than you

Marazan 4y ago
Aws bandwidth costs charged to consumers are a notorious ripoff.
AtlasBarfed 4y ago
AWS's bandwidth charges are highway robbery. It's my impression that AWS competes with the EC2 instance cost (as it that's what new customers look at), and the bandwidth/storage only becomes apparent when you are locked in. Really what AWS should be is one or two phases of service maturity: dev infrastructure and experimentation is phase one, phase two would be the "its a couple servers" production, BUT: with a scale plan for phase 3 being not-AWS. Having a mature/battle tested phase 2 --> phase 3 should be a market advantage in the modern business landscape, but that's also a post-acquisition/exit phase, so none of the presumed target HN crowd care about it. There are extensive articles and public knowledgebases on various technologies and architectures, but there is effectively nothing on AWS independence out there, even though almost every mature organization will need to face it.
- hotpotamus 4y ago
  I'm also a bit blown away that anyone is surprised that AWS is expensive. Sure you can express a lot of the costs in small numbers per hour or $0.08 per gigabyte of bandwidth, but those things all add up quickly at scale. I assumed phase 3 was where AWS started giving you massive discounts because you represent so much business for them, but I've never been at a place big enough to swing that stick at them.
  - tablespoon 4y ago
    > I'm also a bit blown away that anyone is surprised that AWS is expensive. Sure you can express a lot of the costs in small numbers per hour or $0.08 per gigabyte of bandwidth, but those things all add up quickly at scale. Could it be magical thinking based on marketing hype and autoscaling fantasies?
  - AtlasBarfed 4y ago
    I have, but the technical service still sucks even at "20-30% discount" tier. I think you should have multicloud strategy just to improve your bargaining position. They know when you're locked in.
moqmar 4y ago
That is why VPS providers are cheaper than running your own hardware, at least assuming you're not always fully utilizing it. Cloud providers on the other hand, they don't really sell the resources - they mainly sell convenience, and that seems to be worth a lot.
- P5fRxh5kUvp2th 4y ago
  VPS is virtualized, of course it's cheaper than running your own hardware.
fabian2k 4y ago
Bandwith is obviously extremely expensive on AWS. But even EC2 is easily 5x as expensive as renting a dedicated server. Of course this is a deeply unfair comparison as dedicated servers don't have the flexibility of an EC2 instance and the integration into other services. So if those matter to you then the cloud is certainly worth it. But you are paying a lot more for CPU, RAM and storage compared to other options. You are also getting a lot more with AWS, but you're only saving money if you can fully exploit the flexibility of the cloud and scale the resources very well. And even then if you need a lot of egress you're screwed on the costs in any case.
- FpUser 4y ago
  >"dedicated servers don't have the flexibility of an EC2 instance and the integration into other services." I understand that there are many cases when all of that you mention is needed but for the vast majority of normal businesses having main and standby servers on Hetzner / OVH with on premises backup would cover all their needs like for ever with stellar performance. All at the fraction of the cost. Many business owners just do not know it as they're not technical and their tech stuff for some inexplicable reasons are all for doing "cool" cloud architectures at owner's expense. And of course that magical "cloud" word sells itself. So many times when I come to do something a new client I hear the owner say proudly - we are on a cloud. It takes some careful efforts to explain to them that they're just wasting money while not upsetting them in a first place.
rglullis 4y ago
That is true of any datacenter, but any offering from AWS/GCS/Azure/Digital Ocean/Vultr is an order of magnitude more expensive than Hetzner/OVH/Scaleway clouds, and orders of magnitude more expensive than if I just get a handful of dedicated servers and run my own Minio servers (to replace S3) and manage my own databases and build my own OpenStack /k8s/Nomad/Swarm cluster.
pclmulqdq 4y ago
The whole idea that since they have economies of scale, they must pass those savings on to you is a misunderstanding of how companies work. Realistically, a company will charge slightly less than whatever your alternative is, and they will provide products that restrict the number of alternatives you have. AWS, GCP, and Azure provide several differentiated products that lock you in to higher prices on everything else. Effectively, these three have an oligopoly on "highly differentiated cloud services." They are only competing with each other on those services, and they are competing with "servers plus ingress/egress costs to our differentiated services" on their commodity products. That is the real reason why AWS egress costs are so high. It prevents you from picking and choosing where to buy each part of your cloud footprint, and locks you into buying AWS. Bandwidth costs are what keep you inside the AWS/GCP/Azure walled garden. Lower-end providers like Linode, DigitalOcean, Vultr, and Cloudflare have parts of the differentiated offering, but not all of it. These people will have lower prices than AWS/GCP/Azure since their offering is less differentiated, but they will still charge you more than you would pay by renting a server, since they offer more products. Finally, hardware rental providers like Hetzner and other operators are competing directly with you buying the hardware and paying for datacenter space and bandwidth. Datacenters typically charge a premium for power, even when they are in areas with low-cost power. Notice that none of these companies are competing with large-scale server buyers who have the same hardware/bandwidth/power costs that they do. As such, they do not need to pass the savings they get onto you. That is where they get their profit.
- pessimizer 4y ago
  > The whole idea that since they have economies of scale, they must pass those savings on to you is a misunderstanding of how companies work. That idea was not expressed in the comment that you replied to. The comment you replied to was in response to a strong claim that ignored the existence of economies of scale, and therefore concluded that it's so obvious that cloud providers must always be more expensive than self-hosting.
  - pclmulqdq 4y ago
    At this point, it should be pretty clear that self-hosting is cheaper, given all of the examples we have seen. AWS's economies of scale have as much to do with its pricing as the phases of the moon, and citing them as a reason why AWS could be cheaper than self-hosting is pretty ignorant in itself.

Marazan 4y ago

Aws bandwidth costs charged to consumers are a notorious ripoff.

AtlasBarfed 4y ago

AWS's bandwidth charges are highway robbery. It's my impression that AWS competes with the EC2 instance cost (as it that's what new customers look at), and the bandwidth/storage only becomes apparent when you are locked in. Really what AWS should be is one or two phases of service maturity: dev infrastructure and experimentation is phase one, phase two would be the "its a couple servers" production, BUT: with a scale plan for phase 3 being not-AWS. Having a mature/battle tested phase 2 --> phase 3 should be a market advantage in the modern business landscape, but that's also a post-acquisition/exit phase, so none of the presumed target HN crowd care about it. There are extensive articles and public knowledgebases on various technologies and architectures, but there is effectively nothing on AWS independence out there, even though almost every mature organization will need to face it.

hotpotamus 4y ago
I'm also a bit blown away that anyone is surprised that AWS is expensive. Sure you can express a lot of the costs in small numbers per hour or $0.08 per gigabyte of bandwidth, but those things all add up quickly at scale. I assumed phase 3 was where AWS started giving you massive discounts because you represent so much business for them, but I've never been at a place big enough to swing that stick at them.
- tablespoon 4y ago
  > I'm also a bit blown away that anyone is surprised that AWS is expensive. Sure you can express a lot of the costs in small numbers per hour or $0.08 per gigabyte of bandwidth, but those things all add up quickly at scale. Could it be magical thinking based on marketing hype and autoscaling fantasies?
- AtlasBarfed 4y ago
  I have, but the technical service still sucks even at "20-30% discount" tier. I think you should have multicloud strategy just to improve your bargaining position. They know when you're locked in.

moqmar 4y ago

That is why VPS providers are cheaper than running your own hardware, at least assuming you're not always fully utilizing it. Cloud providers on the other hand, they don't really sell the resources - they mainly sell convenience, and that seems to be worth a lot.

P5fRxh5kUvp2th 4y ago
VPS is virtualized, of course it's cheaper than running your own hardware.

fabian2k 4y ago

Bandwith is obviously extremely expensive on AWS. But even EC2 is easily 5x as expensive as renting a dedicated server. Of course this is a deeply unfair comparison as dedicated servers don't have the flexibility of an EC2 instance and the integration into other services. So if those matter to you then the cloud is certainly worth it. But you are paying a lot more for CPU, RAM and storage compared to other options. You are also getting a lot more with AWS, but you're only saving money if you can fully exploit the flexibility of the cloud and scale the resources very well. And even then if you need a lot of egress you're screwed on the costs in any case.

FpUser 4y ago
>"dedicated servers don't have the flexibility of an EC2 instance and the integration into other services." I understand that there are many cases when all of that you mention is needed but for the vast majority of normal businesses having main and standby servers on Hetzner / OVH with on premises backup would cover all their needs like for ever with stellar performance. All at the fraction of the cost. Many business owners just do not know it as they're not technical and their tech stuff for some inexplicable reasons are all for doing "cool" cloud architectures at owner's expense. And of course that magical "cloud" word sells itself. So many times when I come to do something a new client I hear the owner say proudly - we are on a cloud. It takes some careful efforts to explain to them that they're just wasting money while not upsetting them in a first place.

rglullis 4y ago

That is true of any datacenter, but any offering from AWS/GCS/Azure/Digital Ocean/Vultr is an order of magnitude more expensive than Hetzner/OVH/Scaleway clouds, and orders of magnitude more expensive than if I just get a handful of dedicated servers and run my own Minio servers (to replace S3) and manage my own databases and build my own OpenStack /k8s/Nomad/Swarm cluster.

pclmulqdq 4y ago

The whole idea that since they have economies of scale, they must pass those savings on to you is a misunderstanding of how companies work. Realistically, a company will charge slightly less than whatever your alternative is, and they will provide products that restrict the number of alternatives you have. AWS, GCP, and Azure provide several differentiated products that lock you in to higher prices on everything else. Effectively, these three have an oligopoly on "highly differentiated cloud services." They are only competing with each other on those services, and they are competing with "servers plus ingress/egress costs to our differentiated services" on their commodity products. That is the real reason why AWS egress costs are so high. It prevents you from picking and choosing where to buy each part of your cloud footprint, and locks you into buying AWS. Bandwidth costs are what keep you inside the AWS/GCP/Azure walled garden. Lower-end providers like Linode, DigitalOcean, Vultr, and Cloudflare have parts of the differentiated offering, but not all of it. These people will have lower prices than AWS/GCP/Azure since their offering is less differentiated, but they will still charge you more than you would pay by renting a server, since they offer more products. Finally, hardware rental providers like Hetzner and other operators are competing directly with you buying the hardware and paying for datacenter space and bandwidth. Datacenters typically charge a premium for power, even when they are in areas with low-cost power. Notice that none of these companies are competing with large-scale server buyers who have the same hardware/bandwidth/power costs that they do. As such, they do not need to pass the savings they get onto you. That is where they get their profit.

pessimizer 4y ago
> The whole idea that since they have economies of scale, they must pass those savings on to you is a misunderstanding of how companies work. That idea was not expressed in the comment that you replied to. The comment you replied to was in response to a strong claim that ignored the existence of economies of scale, and therefore concluded that it's so obvious that cloud providers must always be more expensive than self-hosting.
- pclmulqdq 4y ago
  At this point, it should be pretty clear that self-hosting is cheaper, given all of the examples we have seen. AWS's economies of scale have as much to do with its pricing as the phases of the moon, and citing them as a reason why AWS could be cheaper than self-hosting is pretty ignorant in itself.