6 ms·

As has happened many times throughout history (back to mainframes and thin clients of the 90s) there are swings/trends in how infrastructure is hosted. Listeni

As has happened many times throughout history (back to mainframes and thin clients of the 90s) there are swings/trends in how infrastructure is hosted. Listening to the “All In Podcast” yesterday even those guys were talking about revenue drops in the big cloud services and noting we’re currently in the midst of a swing back to self-hosting/co-location/whatever thinking and migrations out. IMHO those building greenfield solution today should take a hard look at whether the default approach from the last ~10 years “of course you build in $BIGCLOUD” makes sense for the application - in many cases it does not. It also has the added benefit of de-centralizing the internet a bit (even if only a little).

knorker 4y ago
Revenue drop? Google Cloud is still growing 30-40% year on year.
- rcme 4y ago
  AWS also had 20% revenue growth last quarter.
  - knorker 4y ago
    Yeah. Google Cloud was the only one I knew off the top of my head. I'm sure other clouds (not just MSFT) are growing too. Maybe the second derivative is going down, but it's absolutely not even close to a drop. Public cloud will grow a lot more. I'd expect a slowdown when they're all ~10x what they are now.
deleted 4y ago
[deleted]
camhart 4y ago
All in podcast mentioned growth slowing, but not revenue dropping.
lolinder 4y ago
As others have mentioned, there was no revenue drop, there's been a reduction in growth. AWS's 20% growth rate is still very respectable, more than double the 9% growth rate the company had overall. I would be hesitant to attribute slowed growth to a return to self hosting, it's much more likely that it's caused by companies dialing back their cloud growth after spending a few years going ham digitizing everything during the pandemic.
- kkielhofner 4y ago
  Ah yes, sorry, slower than expected growth was the data point. In my defense I had a screaming toddler in the car! That said I think the point generally remains - one could argue slower than expected growth in cloud services is a revenue drop (in a way) vs expectations. The market responded accordingly[0] - "However, Azure growth is decelerating." Note that this is all including the explosion in "2023 AI hotness" which is almost certainly offsetting what would be larger losses due to the shift I'm arguing. As the All In Guys noted "you won't see a pitch deck without the letters AI in it" - and a good chunk of that is still going to cloud providers as (in my opinion) there are long tails to these changes and many existing solutions/applications getting "AI" slapped on them are effectively trapped in $BIGCLOUD. Self-hosting AI is also significantly more difficult and upfront more expensive when you start looking at dealing with (typically) Nvidia hardware costs and software stack complexity. I can definitely see many of these "pivots" to "something AI, we need to throw AI in this" the more well understood and initially faster and "cheaper" utilization of cloud services will continue until the AI trend stabilizes. From what I could hear (and process) over the screaming the All In Guys presented the argument I tend to agree with - a resurgence of self-hosted infrastructure. Companies are also dialing back cloud spend because they're realizing for many applications it's very expensive relatively and can actually be limiting compared to self-hosting[1]. Per usual when the cheap money and economic boom retracts they start actually looking at costs they were once happy to just keep writing checks for. I'd like to reiterate there's a lot of calculation and strategy when it comes down to selecting infrastructure hosting. Again, I think we're in a period where there's a bit of a sea change/wakeup from the past decade of "of course you always build and host everything in $BIGCLOUD" - without even remotely considering alternatives. It's been the default for a while and it isn't as much anymore - and I'd argue that trend is accelerating. There is no "one size fits all". [0] - https://www.investors.com/news/technology/msft-stock-microsoft-cloud-services-fuel-earnings-beat/ https://www.investors.com/news/technology/msft-stock-microso... [1] - https://www.linkedin.com/pulse/snapchat-earnings-case-runaway-cloud-costs-leon-kuperman/?trk=public_post https://www.linkedin.com/pulse/snapchat-earnings-case-runawa...
outworlder 4y ago
> IMHO those building greenfield solution today should take a hard look at whether the default approach from the last ~10 years “of course you build in $BIGCLOUD” makes sense for the application - in many cases it does not. When one buys a house, they should take a hard loo at whether the default approach of paying for utilities makes sense, versus generating their own power. While that's a bit snarky, the reasoning is similar. You can: * Use "bigcloud"(TM) with the whole kit: VMs, their managed services, etc * Use bigcloud, but just VM or storage * Rent VMs from a smaller provider * Rent actual servers * Buy your servers and ship to a colo * Buy your servers and build a datacenter Every level you drop, you need more work. And it grows(I suspect, not linearly). Sure, if you have all the required experts (or you rent them) you can do everything yourself. If not, you'll have to defer to vendors. You will pay some premium for this, but it's either that, or payroll. What also needs to be factored in is how static your system is. If a single machine works for your use-case, great. One of the systems I manage has hundreds of millions of dollars in contracts on the line, thousands of VMs. I do not care if any single VM goes down; the system will kill it and provision a new one. A big cloud provider availability zone often spans across multiple datacenters too, each datacenter with their own redundancies. Even if an entire AZ goes down, we can survive on the other two (with possibly some temporary degradation for a few minutes). If the whole region goes down, we fallback to another. We certainly don't have the time to discuss individual servers or rack and stack anything. It does not come cheap. AWS specifically has egregious networking fees and you end up paying multiple times (AZ to AZ traffic, NAT gateways, and a myriad services that also charge by GB, like GuardDuty). It adds up if you are not careful. From time to time, management comes with the idea of migrating to 'on-prem', because that's reportedly cheaper. Sure, ignoring the hundreds of engineers that will be involved in this migration, and also ignoring all the engineers that will be required to maintain this on-premises, it might be cheaper. But that's also ignoring the main reason why cloud deployments tend to become so expensive: they are easy. Confronted with the option of spinning up more machines versus possibly missing a deadline, middle managers will ask for more resources. Maybe it's "just" 1k a month extra (those developers would cost more!). It gets approved. 50 other groups are doing the same. Now it's 50k. Rinse, repeat. If more emphasis would be placed into optimization, most cloud deployments could be shrunk spectacularly. The microservices fad doesn't help(your architecture might require that, but often the reason it does is because you want to ship your org chart, not for technical reasons).
ctvo 4y ago
AWS is a 75 bln a year business still growing 20%+ YoY. It’ll break 100 bln this year. I would examine the numbers yourself.
- kkielhofner 4y ago
  I have - and the numbers show that much of the big cloud growth is in AI services. The "we need to throw in AI somewhere" concurrent trend is heavily bolstering what would other wise be much more drastic retractions in growth. I would argue as the AI trend (eventually) wanes and many AI startups and projects within existing companies inevitably eventually fail to materialize the much longer and more general trend of migration out of $BIGCLOUD will be more drastic and obvious. I don't buy individual stocks but I would happily bet a dinner on big cloud growth showing substantial reductions/losses in coming years as the overall situation stabilizes.
  - ctvo 4y ago
    > I have - and the numbers show that much of the big cloud growth is in AI services. The "we need to throw in AI somewhere" concurrent trend is heavily bolstering what would other wise be much more drastic retractions in growth. Can you share where you got this? Which numbers? I didn't think AWS (or any cloud provider) released details of their operation at that level of granularity.
    - kkielhofner 4y ago
      While the clouds don't break-out revenue numbers at that level of granularity the communication from many of the big cloud providers (to the investment/financial communities at least) acknowledges lower than expected revenue growth overall while pointing to the explosion in "AI" (ML) as a rapidly growing area that will (hopefully, to them) turn that ship around - with already realized promise. I tend to agree with this (obviously). As one example, the headline here is actually "Microsoft points to AI to drive the next wave of cloud, revenues"[0]. While not hard revenue breakout numbers Microsoft is investing heavily in OpenAI and rapidly (already) integrating it everywhere they can - search, Azure, etc. The investment, utilization, and published pricing are the numbers I'm talking about here. The real hard numbers and position that supports my thesis (unsurprisingly) comes from Nvidia[1]. Since at least May 2022 Nvidia has been touting their revenues attributed to big cloud demand. Interestingly, Nvidia is rapidly moving to disintermediating big cloud in launching their own "AI cloud"[2]. It's going to be interesting to see how that shakes out... Google has also been caught somewhat flat-footed and is simultaneously investing even more in "AI" with what will almost certainly be significant revenue opportunity with GCP. I don't follow AWS as closely but I don't see how they could be excluded from this trend - other than having first-mover advantage in cloud services with many more (at this point legacy) customers forever trapped in AWS. I tend not to try to prognosticate on things like this but it's one of the rare instances I'm very confident in my thesis here. Obviously I'm just some random HN guy but like I said I'd make a friendly bet here. People need to remember AWS is over 20 years old. There's not a good historical track record of any computing platform/architecture/approach maintaining a strangle hold much longer than that (except maybe Windows, which I'm not sure is comparable). [0] - https://archive.is/tKLOz https://archive.is/tKLOz [1] - https://www.reuters.com/technology/nvidia-forecasts-fourth-quarter-revenue-below-expectations-2022-11-16/ https://www.reuters.com/technology/nvidia-forecasts-fourth-q... [2] - https://www.crn.com/news/components-peripherals/nvidia-teases-dgx-cloud-ai-as-a-service-as-earnings-wow-wall-street https://www.crn.com/news/components-peripherals/nvidia-tease...
ranman 4y ago
The parent comment is neither factual nor advisable. You build greenfield in cloud precisely because it is greenfield and the utilization isn't well understood. Cloud options let you adjust and experiment quickly. Once a workload is well understood it's a good candidate for optimization, including a move to self managed hardware / on prem. Buying hardware is a great option once you actually understand the utilization of your product. Just make sure you also have competent operators.
- deleted 4y ago
  [deleted]

knorker 4y ago

Revenue drop? Google Cloud is still growing 30-40% year on year.

rcme 4y ago
AWS also had 20% revenue growth last quarter.
- knorker 4y ago
  Yeah. Google Cloud was the only one I knew off the top of my head. I'm sure other clouds (not just MSFT) are growing too. Maybe the second derivative is going down, but it's absolutely not even close to a drop. Public cloud will grow a lot more. I'd expect a slowdown when they're all ~10x what they are now.

deleted 4y ago

[deleted]

camhart 4y ago

All in podcast mentioned growth slowing, but not revenue dropping.

lolinder 4y ago

As others have mentioned, there was no revenue drop, there's been a reduction in growth. AWS's 20% growth rate is still very respectable, more than double the 9% growth rate the company had overall. I would be hesitant to attribute slowed growth to a return to self hosting, it's much more likely that it's caused by companies dialing back their cloud growth after spending a few years going ham digitizing everything during the pandemic.

kkielhofner 4y ago
Ah yes, sorry, slower than expected growth was the data point. In my defense I had a screaming toddler in the car! That said I think the point generally remains - one could argue slower than expected growth in cloud services is a revenue drop (in a way) vs expectations. The market responded accordingly[0] - "However, Azure growth is decelerating." Note that this is all including the explosion in "2023 AI hotness" which is almost certainly offsetting what would be larger losses due to the shift I'm arguing. As the All In Guys noted "you won't see a pitch deck without the letters AI in it" - and a good chunk of that is still going to cloud providers as (in my opinion) there are long tails to these changes and many existing solutions/applications getting "AI" slapped on them are effectively trapped in $BIGCLOUD. Self-hosting AI is also significantly more difficult and upfront more expensive when you start looking at dealing with (typically) Nvidia hardware costs and software stack complexity. I can definitely see many of these "pivots" to "something AI, we need to throw AI in this" the more well understood and initially faster and "cheaper" utilization of cloud services will continue until the AI trend stabilizes. From what I could hear (and process) over the screaming the All In Guys presented the argument I tend to agree with - a resurgence of self-hosted infrastructure. Companies are also dialing back cloud spend because they're realizing for many applications it's very expensive relatively and can actually be limiting compared to self-hosting[1]. Per usual when the cheap money and economic boom retracts they start actually looking at costs they were once happy to just keep writing checks for. I'd like to reiterate there's a lot of calculation and strategy when it comes down to selecting infrastructure hosting. Again, I think we're in a period where there's a bit of a sea change/wakeup from the past decade of "of course you always build and host everything in $BIGCLOUD" - without even remotely considering alternatives. It's been the default for a while and it isn't as much anymore - and I'd argue that trend is accelerating. There is no "one size fits all". [0] - https://www.investors.com/news/technology/msft-stock-microsoft-cloud-services-fuel-earnings-beat/ https://www.investors.com/news/technology/msft-stock-microso... [1] - https://www.linkedin.com/pulse/snapchat-earnings-case-runaway-cloud-costs-leon-kuperman/?trk=public_post https://www.linkedin.com/pulse/snapchat-earnings-case-runawa...

outworlder 4y ago

> IMHO those building greenfield solution today should take a hard look at whether the default approach from the last ~10 years “of course you build in $BIGCLOUD” makes sense for the application - in many cases it does not. When one buys a house, they should take a hard loo at whether the default approach of paying for utilities makes sense, versus generating their own power. While that's a bit snarky, the reasoning is similar. You can: * Use "bigcloud"(TM) with the whole kit: VMs, their managed services, etc * Use bigcloud, but just VM or storage * Rent VMs from a smaller provider * Rent actual servers * Buy your servers and ship to a colo * Buy your servers and build a datacenter Every level you drop, you need more work. And it grows(I suspect, not linearly). Sure, if you have all the required experts (or you rent them) you can do everything yourself. If not, you'll have to defer to vendors. You will pay some premium for this, but it's either that, or payroll. What also needs to be factored in is how static your system is. If a single machine works for your use-case, great. One of the systems I manage has hundreds of millions of dollars in contracts on the line, thousands of VMs. I do not care if any single VM goes down; the system will kill it and provision a new one. A big cloud provider availability zone often spans across multiple datacenters too, each datacenter with their own redundancies. Even if an entire AZ goes down, we can survive on the other two (with possibly some temporary degradation for a few minutes). If the whole region goes down, we fallback to another. We certainly don't have the time to discuss individual servers or rack and stack anything. It does not come cheap. AWS specifically has egregious networking fees and you end up paying multiple times (AZ to AZ traffic, NAT gateways, and a myriad services that also charge by GB, like GuardDuty). It adds up if you are not careful. From time to time, management comes with the idea of migrating to 'on-prem', because that's reportedly cheaper. Sure, ignoring the hundreds of engineers that will be involved in this migration, and also ignoring all the engineers that will be required to maintain this on-premises, it might be cheaper. But that's also ignoring the main reason why cloud deployments tend to become so expensive: they are easy. Confronted with the option of spinning up more machines versus possibly missing a deadline, middle managers will ask for more resources. Maybe it's "just" 1k a month extra (those developers would cost more!). It gets approved. 50 other groups are doing the same. Now it's 50k. Rinse, repeat. If more emphasis would be placed into optimization, most cloud deployments could be shrunk spectacularly. The microservices fad doesn't help(your architecture might require that, but often the reason it does is because you want to ship your org chart, not for technical reasons).

ctvo 4y ago

AWS is a 75 bln a year business still growing 20%+ YoY. It’ll break 100 bln this year. I would examine the numbers yourself.

kkielhofner 4y ago
I have - and the numbers show that much of the big cloud growth is in AI services. The "we need to throw in AI somewhere" concurrent trend is heavily bolstering what would other wise be much more drastic retractions in growth. I would argue as the AI trend (eventually) wanes and many AI startups and projects within existing companies inevitably eventually fail to materialize the much longer and more general trend of migration out of $BIGCLOUD will be more drastic and obvious. I don't buy individual stocks but I would happily bet a dinner on big cloud growth showing substantial reductions/losses in coming years as the overall situation stabilizes.
- ctvo 4y ago
  > I have - and the numbers show that much of the big cloud growth is in AI services. The "we need to throw in AI somewhere" concurrent trend is heavily bolstering what would other wise be much more drastic retractions in growth. Can you share where you got this? Which numbers? I didn't think AWS (or any cloud provider) released details of their operation at that level of granularity.
  - kkielhofner 4y ago
    While the clouds don't break-out revenue numbers at that level of granularity the communication from many of the big cloud providers (to the investment/financial communities at least) acknowledges lower than expected revenue growth overall while pointing to the explosion in "AI" (ML) as a rapidly growing area that will (hopefully, to them) turn that ship around - with already realized promise. I tend to agree with this (obviously). As one example, the headline here is actually "Microsoft points to AI to drive the next wave of cloud, revenues"[0]. While not hard revenue breakout numbers Microsoft is investing heavily in OpenAI and rapidly (already) integrating it everywhere they can - search, Azure, etc. The investment, utilization, and published pricing are the numbers I'm talking about here. The real hard numbers and position that supports my thesis (unsurprisingly) comes from Nvidia[1]. Since at least May 2022 Nvidia has been touting their revenues attributed to big cloud demand. Interestingly, Nvidia is rapidly moving to disintermediating big cloud in launching their own "AI cloud"[2]. It's going to be interesting to see how that shakes out... Google has also been caught somewhat flat-footed and is simultaneously investing even more in "AI" with what will almost certainly be significant revenue opportunity with GCP. I don't follow AWS as closely but I don't see how they could be excluded from this trend - other than having first-mover advantage in cloud services with many more (at this point legacy) customers forever trapped in AWS. I tend not to try to prognosticate on things like this but it's one of the rare instances I'm very confident in my thesis here. Obviously I'm just some random HN guy but like I said I'd make a friendly bet here. People need to remember AWS is over 20 years old. There's not a good historical track record of any computing platform/architecture/approach maintaining a strangle hold much longer than that (except maybe Windows, which I'm not sure is comparable). [0] - https://archive.is/tKLOz https://archive.is/tKLOz [1] - https://www.reuters.com/technology/nvidia-forecasts-fourth-quarter-revenue-below-expectations-2022-11-16/ https://www.reuters.com/technology/nvidia-forecasts-fourth-q... [2] - https://www.crn.com/news/components-peripherals/nvidia-teases-dgx-cloud-ai-as-a-service-as-earnings-wow-wall-street https://www.crn.com/news/components-peripherals/nvidia-tease...

ranman 4y ago

The parent comment is neither factual nor advisable. You build greenfield in cloud precisely because it is greenfield and the utilization isn't well understood. Cloud options let you adjust and experiment quickly. Once a workload is well understood it's a good candidate for optimization, including a move to self managed hardware / on prem. Buying hardware is a great option once you actually understand the utilization of your product. Just make sure you also have competent operators.

deleted 4y ago
[deleted]