6 ms·

If the cloud was truly cost-effective then AWS and its competitors wouldn't be the cash cows that they are.

andrewstuart2 3y ago
This is partly true. The reason AWS et al ever grew in the first place was also that managing data centers well and automatically used to be a lot harder, and was assumed to be a whole org's full-time mostly manual job. AWS, Google, et al showed how well this could be done with software, showed the benefits of making it easier to do even for app engineers, and incentives shifted. Tools have significantly improved, though, and we're getting back to the point where it can be done with OSS and a team or three of engineers who really know the stacks involved.
- Nextgrid 3y ago
  In my opinion, the promised "simplicity" of the cloud never materialized. You've replaced physical hardware that's easy to reason about with opaque, unpleasant and eventually-consistent APIs along unnecessary complexity (VPCs, etc) only designed to vendor-lock you even more into the provider. The staff savings never materialized - every company I've been involved with had at least one "DevOps" engineer, but instead of fighting with hardware he's constantly messing with YAML/Terraform/CDK files.
  - politelemon 3y ago
    The alternative isn't that different however. A company running its own centre may choose to go OpenStack/k8s. It still requires lots of messing about with awful files. The 'cost' then shifts elsewhere, and merely satisfies bean counters. IMO the simplicity promised does exist, it's up to the company how it gets implemented. Like either toolstack, if it's misused, it will cost more than they thought (and then they'll blame the toolstack)
    - SoftTalker 3y ago
      I've tried several times and never got an on-prem k8s working. I use proxmox now and never looked back.
nine_k 3y ago
The cloud is cost-effective when you start, because you can start using a cheap or even a free plan, and get many pre-configured services. The cloud is cost-effective when your load is highly spiky, so you can spin up a ton of capacity during the spike, but not pay for it during the lull. (I worked in a company for which this was a principal case.) If you are a relatively large company and want compute mostly for internal IT needs, especially for sensitive data, it may be cheaper to run your own server room and a private cloud. It won't be cheap in absolute terms though.
- thisisnico 3y ago
  I work as an IT Infrastructure Architect for VMware and Windows Based Enterprise workloads and a lot of the time it's just more cost effective to have the servers in house for many of the workloads. It isn't the case for ALL workloads, for example we move almost all exchange email services to office 365, in combination with Azure AD for active directory service. As far as datacenter space and power usage, a lot of the time the server room is located in the utility room / closets, they already have the space and the building and the power infrastructure. Typically they have vendors that require VM's because the vendor software is not cloud based, many of these enterprise software can consume quite a lot of CPU/RAM/DISK and are very latency sensitive. Having a couple of powerful vmware hosts and an all NVMe SSD SAN is really really nice for performance and speeding up these applications and not paying 4K+$ a month for equivalent hardware in the cloud. You can even argue against the capital investment cost because a lot of this gear you can lease directly from DELL, and have full service contract for 7 years 24x7 4 hour SLA on hardware.
- Nextgrid 3y ago
  The cloud is only cost-effective if your workload fits into their loss leaders where they're actually giving you reasonably-priced services. Anything else and you're still getting scammed. It may be that the amount is too low to matter and the pragmatic decision is to keep going for the time being, but you're still getting scammed. The fast scaling/up down is a good argument but you need to proceed with caution: 1) is your application actually structured to be able to do this? Would the overheads of developing your application in this way negate the savings (a fully distributed service with queues/etc has more development/management overhead than your basic monolithic MVC app, which may eat up all your savings)? You need to do your own numbers here and be pragmatic. You'll have plenty of resume-driven people who see the potential of an engineering playground and will immediately tell you whatever it takes to make this happen, regardless of whether it will benefit the business. 2) how much does it actually cost to run your application at full scale outside of the cloud? I've seen places that do the whole autoscaling thing (and have lots more moving parts as a result) and yet a fully-scaled-up equivalent on bare-metal would cost less than the baseline scale on the cloud, thus removing the business case for it. Keep in mind that the cloud effectively ate all the hardware improvements we've had in the last decade so switching to bare-metal hosting means you'll need a lot less hardware. A cloud "vCPU" is more like a pocket calculator when compared to a real CPU, and same with storage.
goodpoint 3y ago
It's amazing how people don't see this. Using the clouds is just like renting. In the long term it's more expensive. Cloud operators are not charities.
- greggsy 3y ago
  They also need to renew infrastructure on a continual basis
- VirusNewbie 3y ago
  Right and if certain times of the year you need an eight bedroom house for a week, while other times a two bedroom is fine, then renting may be way cheaper than buying an eight bedroom house.
  - Nextgrid 3y ago
    This analogy doesn't really apply because thanks to bandwidth charges, it's uneconomical to have a 2-bed house (outside of the cloud) and occasionally rent the 8-bed in the cloud, so you're forced to also get the 2-bed one in the cloud and pay insane margins on that too.
  - Null-Set 3y ago
    Extending this metaphor, I would then want to own my two bedroom home, and take a vacation to the rented mansion. Is there a well trodden way to serve most of your everyday traffic out of your own datacenter, but scale out to cloud infra when traffic peaks?
    - Nextgrid 3y ago
      It's doable but the egress bandwidth charges (which are there to prevent exactly this) from most clouds may negate any savings.
  - deleted 3y ago
    [deleted]
- jeffbee 3y ago
MattGaiser 3y ago
Or simply that the benefits of economies of scale are enormous in this area.
- goodpoint 3y ago
  They are not.
  - dathinab 3y ago
    it's complicated, but in general server centers can profite enormously from economy at scale, but also handling that many customers at scale adds additional cost compared to just having that much compute for your own use case, so does handing out tones of free credits to startups, and running a company (personal wise) at scale is often highly inefficient, too. Especial if you make things unnecessary complicated. but mainly, AWS and similar do not have a need to lower their raw compute price to that level because even without they get enough customers, e.g. there had been cases of Microsoft Azure in some locations running out of spare compute resources leading to issues for customer.
    - goodpoint 3y ago
      > in general server centers can profite enormously from economy at scale That's plain false.
      - dathinab 3y ago
        no it's not most things compute related once you reach a certain minimal scale (i.e. need room cooling in your server room, etc.) get cheaper with scale sometimes quite massively to list some - hardware cost, sometimes you can't even get the hardware you need/want on smaller scale - electricity cost (through it's complicated, if you can't choose the place for the data center electricity cost only up to some location specific scale) - overhead for reliability (e.g. multiple power connections from different providers, multiple wired fast internet connections from different providers etc.) - fast low latency internet access (what apartments get is often not cutting it at all even for quite small scale) - man power for hardware maintenance (a single person can do hardware maintenance for quite a lot of units, having a team of such people makes handling sick cases, quitting and similar much easier) - custom software tooling (amortizes more) - physical access control (has a pretty high fix cost if you want to get it right, but after which it scales somewhat linearish, assuming we limit ourself to a single building or small complex) - revenue also get's more regulare with more customers, which makes expensive unepxpected revenue drops due to e.g. a customer going insolvent much easyer to handle and as such cheaper - hardware spare part handling gets easier and cheaper on scale - ... And sure there is an upper limit per-data center for scaling which is dependent on locality, but there are enough locations where this limit is quite high. And sure if you run an such a small scale that you don't even have to consider having a "proper" server room with cooling system which is more then just fans moving heat out of racks you often also can cut many other costs, like power redundancy, network redundancy, 24/7 hardware fixing support, etc. Through then if you have some B2B services with reliability guarantees you often can't cut that costs no matter how small the scale (that btw. can be a reason enough to use the cloud, providing the necessary reliability with custom hardware on a small (compute) scale is very expensive as it involves many high fix costs) Idk. if there was a misunderstanding so just to be clear, this is about cost of a data center per-compute unit getting cheaper with scale (up to some limit). Not about running your own ad-hoc reliability nightmare datacenter vs. renting cloud resources.
littlestymaar 3y ago
The expected argument is probably something like “it's economy of scale”, but in practice it absolutely looks the other way round: Amazon is much less profitable than it is more expensive than the alternatives[1], so if anything their seems to be negative economies of scales. [1] if you're twice as expensive than a company that has say 10% margin, then with equal costs you should be with a 55% margin. And Amazon is more often than not more than twice as expensive as the alternatives.
jeffbee 3y ago
That is a bogus economic argument. There’s plenty of room in the equation for cloud operators to be profitable offering a product that is cheaper than on-prem.
- Nextgrid 3y ago
  Which in practice doesn't seem to be happening though. The cloud marketing/misinformation machine is working well enough that there's no point actually becoming cheaper than on-prem since the marketing is successfully convincing people to overpay.
- dathinab 3y ago
  yes but current AWS and similar mainly win through flexibility and services they provide not on cost for a immutable compute capacity. For that nearly always getting your own hardware is cheaper when you look at a time span of multiple years (but running it in a rented rack in a server center, there are services like that).
next_xibalba 3y ago
Economies of scale negate this reasoning. (Among several other factors).
- Nextgrid 3y ago
  AWS charges 90x more for bandwidth than conventional hosting companies. The economies of scale are in Jeff Bezos' pocket instead of being passed to customers.

This is partly true. The reason AWS et al ever grew in the first place was also that managing data centers well and automatically used to be a lot harder, and was assumed to be a whole org's full-time mostly manual job. AWS, Google, et al showed how well this could be done with software, showed the benefits of making it easier to do even for app engineers, and incentives shifted. Tools have significantly improved, though, and we're getting back to the point where it can be done with OSS and a team or three of engineers who really know the stacks involved.

Nextgrid 3y ago
In my opinion, the promised "simplicity" of the cloud never materialized. You've replaced physical hardware that's easy to reason about with opaque, unpleasant and eventually-consistent APIs along unnecessary complexity (VPCs, etc) only designed to vendor-lock you even more into the provider. The staff savings never materialized - every company I've been involved with had at least one "DevOps" engineer, but instead of fighting with hardware he's constantly messing with YAML/Terraform/CDK files.
- politelemon 3y ago
  The alternative isn't that different however. A company running its own centre may choose to go OpenStack/k8s. It still requires lots of messing about with awful files. The 'cost' then shifts elsewhere, and merely satisfies bean counters. IMO the simplicity promised does exist, it's up to the company how it gets implemented. Like either toolstack, if it's misused, it will cost more than they thought (and then they'll blame the toolstack)
  - SoftTalker 3y ago
    I've tried several times and never got an on-prem k8s working. I use proxmox now and never looked back.

nine_k 3y ago

The cloud is cost-effective when you start, because you can start using a cheap or even a free plan, and get many pre-configured services. The cloud is cost-effective when your load is highly spiky, so you can spin up a ton of capacity during the spike, but not pay for it during the lull. (I worked in a company for which this was a principal case.) If you are a relatively large company and want compute mostly for internal IT needs, especially for sensitive data, it may be cheaper to run your own server room and a private cloud. It won't be cheap in absolute terms though.

thisisnico 3y ago
I work as an IT Infrastructure Architect for VMware and Windows Based Enterprise workloads and a lot of the time it's just more cost effective to have the servers in house for many of the workloads. It isn't the case for ALL workloads, for example we move almost all exchange email services to office 365, in combination with Azure AD for active directory service. As far as datacenter space and power usage, a lot of the time the server room is located in the utility room / closets, they already have the space and the building and the power infrastructure. Typically they have vendors that require VM's because the vendor software is not cloud based, many of these enterprise software can consume quite a lot of CPU/RAM/DISK and are very latency sensitive. Having a couple of powerful vmware hosts and an all NVMe SSD SAN is really really nice for performance and speeding up these applications and not paying 4K+$ a month for equivalent hardware in the cloud. You can even argue against the capital investment cost because a lot of this gear you can lease directly from DELL, and have full service contract for 7 years 24x7 4 hour SLA on hardware.
Nextgrid 3y ago
The cloud is only cost-effective if your workload fits into their loss leaders where they're actually giving you reasonably-priced services. Anything else and you're still getting scammed. It may be that the amount is too low to matter and the pragmatic decision is to keep going for the time being, but you're still getting scammed. The fast scaling/up down is a good argument but you need to proceed with caution: 1) is your application actually structured to be able to do this? Would the overheads of developing your application in this way negate the savings (a fully distributed service with queues/etc has more development/management overhead than your basic monolithic MVC app, which may eat up all your savings)? You need to do your own numbers here and be pragmatic. You'll have plenty of resume-driven people who see the potential of an engineering playground and will immediately tell you whatever it takes to make this happen, regardless of whether it will benefit the business. 2) how much does it actually cost to run your application at full scale outside of the cloud? I've seen places that do the whole autoscaling thing (and have lots more moving parts as a result) and yet a fully-scaled-up equivalent on bare-metal would cost less than the baseline scale on the cloud, thus removing the business case for it. Keep in mind that the cloud effectively ate all the hardware improvements we've had in the last decade so switching to bare-metal hosting means you'll need a lot less hardware. A cloud "vCPU" is more like a pocket calculator when compared to a real CPU, and same with storage.

goodpoint 3y ago

It's amazing how people don't see this. Using the clouds is just like renting. In the long term it's more expensive. Cloud operators are not charities.

greggsy 3y ago
They also need to renew infrastructure on a continual basis
VirusNewbie 3y ago
Right and if certain times of the year you need an eight bedroom house for a week, while other times a two bedroom is fine, then renting may be way cheaper than buying an eight bedroom house.
- Nextgrid 3y ago
  This analogy doesn't really apply because thanks to bandwidth charges, it's uneconomical to have a 2-bed house (outside of the cloud) and occasionally rent the 8-bed in the cloud, so you're forced to also get the 2-bed one in the cloud and pay insane margins on that too.
- Null-Set 3y ago
  Extending this metaphor, I would then want to own my two bedroom home, and take a vacation to the rented mansion. Is there a well trodden way to serve most of your everyday traffic out of your own datacenter, but scale out to cloud infra when traffic peaks?
  - Nextgrid 3y ago
    It's doable but the egress bandwidth charges (which are there to prevent exactly this) from most clouds may negate any savings.
- deleted 3y ago
  [deleted]
jeffbee 3y ago

MattGaiser 3y ago

Or simply that the benefits of economies of scale are enormous in this area.

goodpoint 3y ago
They are not.
- dathinab 3y ago
  it's complicated, but in general server centers can profite enormously from economy at scale, but also handling that many customers at scale adds additional cost compared to just having that much compute for your own use case, so does handing out tones of free credits to startups, and running a company (personal wise) at scale is often highly inefficient, too. Especial if you make things unnecessary complicated. but mainly, AWS and similar do not have a need to lower their raw compute price to that level because even without they get enough customers, e.g. there had been cases of Microsoft Azure in some locations running out of spare compute resources leading to issues for customer.
  - goodpoint 3y ago
    > in general server centers can profite enormously from economy at scale That's plain false.
    - dathinab 3y ago
      no it's not most things compute related once you reach a certain minimal scale (i.e. need room cooling in your server room, etc.) get cheaper with scale sometimes quite massively to list some - hardware cost, sometimes you can't even get the hardware you need/want on smaller scale - electricity cost (through it's complicated, if you can't choose the place for the data center electricity cost only up to some location specific scale) - overhead for reliability (e.g. multiple power connections from different providers, multiple wired fast internet connections from different providers etc.) - fast low latency internet access (what apartments get is often not cutting it at all even for quite small scale) - man power for hardware maintenance (a single person can do hardware maintenance for quite a lot of units, having a team of such people makes handling sick cases, quitting and similar much easier) - custom software tooling (amortizes more) - physical access control (has a pretty high fix cost if you want to get it right, but after which it scales somewhat linearish, assuming we limit ourself to a single building or small complex) - revenue also get's more regulare with more customers, which makes expensive unepxpected revenue drops due to e.g. a customer going insolvent much easyer to handle and as such cheaper - hardware spare part handling gets easier and cheaper on scale - ... And sure there is an upper limit per-data center for scaling which is dependent on locality, but there are enough locations where this limit is quite high. And sure if you run an such a small scale that you don't even have to consider having a "proper" server room with cooling system which is more then just fans moving heat out of racks you often also can cut many other costs, like power redundancy, network redundancy, 24/7 hardware fixing support, etc. Through then if you have some B2B services with reliability guarantees you often can't cut that costs no matter how small the scale (that btw. can be a reason enough to use the cloud, providing the necessary reliability with custom hardware on a small (compute) scale is very expensive as it involves many high fix costs) Idk. if there was a misunderstanding so just to be clear, this is about cost of a data center per-compute unit getting cheaper with scale (up to some limit). Not about running your own ad-hoc reliability nightmare datacenter vs. renting cloud resources.

littlestymaar 3y ago

The expected argument is probably something like “it's economy of scale”, but in practice it absolutely looks the other way round: Amazon is much less profitable than it is more expensive than the alternatives[1], so if anything their seems to be negative economies of scales. [1] if you're twice as expensive than a company that has say 10% margin, then with equal costs you should be with a 55% margin. And Amazon is more often than not more than twice as expensive as the alternatives.

jeffbee 3y ago

That is a bogus economic argument. There’s plenty of room in the equation for cloud operators to be profitable offering a product that is cheaper than on-prem.

Nextgrid 3y ago
Which in practice doesn't seem to be happening though. The cloud marketing/misinformation machine is working well enough that there's no point actually becoming cheaper than on-prem since the marketing is successfully convincing people to overpay.
dathinab 3y ago
yes but current AWS and similar mainly win through flexibility and services they provide not on cost for a immutable compute capacity. For that nearly always getting your own hardware is cheaper when you look at a time span of multiple years (but running it in a rented rack in a server center, there are services like that).

next_xibalba 3y ago

Economies of scale negate this reasoning. (Among several other factors).

Nextgrid 3y ago
AWS charges 90x more for bandwidth than conventional hosting companies. The economies of scale are in Jeff Bezos' pocket instead of being passed to customers.