29 ms·

Well, the main difference that comes to mind is that in the airline business, the denominator in your "cost function" is probably going to be keeping $30-100 mi

by phillmv 14y ago

Well, the main difference that comes to mind is that in the airline business, the denominator in your "cost function" is probably going to be keeping $30-100 million dollar planes in the air all the time. Whereas in low-end VPS services, the labour cost for Great, Responsive Service will quickly begin to approach your capital outlay. Amazon on the other hand, doesnt make any money - http://www.slate.com/blogs/moneybox/2013/01/29/amazon_q4_profits_fall_45_percent.html http://www.slate.com/blogs/moneybox/2013/01/29/amazon_q4_pro...

josh2600 14y ago
Amazon makes a ton of money. They don't make profit because Amazon's horizon is 100 years from now. They are trying to slowly drive all other retails into starvation by forcing them to operate at unreasonable margins (margins amazon is only able to break even at because of scale). Talking about amazon as if they're a charity is not apt. Amazon makes a great deal of money and judiciously reinvests it.
- phillmv 14y ago
  They're a publicly traded company. However you want to characterize their strategy – and I think everyone agrees with your summary of their strategy – as a shareholder I'm not interested in 100 year time horizons because I will be dead by then. The argument goes, no other company gets such a free pass from their shareholders. Amazon could be amazingly profitable right now; in real terms, shareholders are subsidizing their current strategy in ways that Apple or Microsoft or Walmart could never get away with.
  - ios84dev 14y ago
    So why are you a shareholder? Or why haven't you attempted to change the policies from long term thinking to quarterly thinking like most companies these days?
- lsc 14y ago
  >They are trying to slowly drive all other retails into starvation by forcing them to operate at unreasonable margins (margins amazon is only able to break even at because of scale). This is not true in the hosting arena, at least. Amazon is like everyone else in this industry; when they came out, they came out with very compelling prices. Well, costs fall with moores law. Amazon prices (especially bandwidth prices) have not. There are... a lot of new entrants to the market, and they /all/ have prices that are dramatically cheaper than amazon.com. hell, most of them make me look overpriced, and it wasn't so long ago that I was the unreasonably cheap option.
lsc 14y ago
>Whereas in low-end VPS services, the labour cost for Great, Responsive Service will quickly begin to approach your capital outlay. begin to approach? You need... dramatic scale to spend more money on hardware than on support, even when you have pretty minimal support. I spend rather more on labour than on hardware.
- phillmv 14y ago
  I'm so far removed from hardware pricing these days that I didn't want to pretend that I knew how that business functions while pontificating about it on the internet. Also, to be fair to airlines, they have immense labour costs.
  - lsc 14y ago
    >Also, to be fair to airlines, they have immense labour costs. yeah. I also think that it's a good example of how some things? you can skimp on, while other things? not so much. I mean, if the airlines show that you can eliminate (or charge extra for) in-flight meals without disturbing anyone too much. You can even pack 'em in tighter (though, some people will pay extra for a little room.) - but yeah, you've still gotta keep the planes in the air. Another interesting bit is that I'm not sure that it'd be cheaper to maintain airplanes to a lower standard, even without the customer backlash. That's the thing; sometimes, the cheaper part is just as good- (for example, I think going supermicro is just as good as going dell, assuming the person assembling uses ESD protection.) - but other things? non-ecc ram, for instance, in my unscientific opinion, usually ends up being more expensive in terms of downtime and technician hours than ecc ram. Of course, airlines are also almost all unionized; The hosting market is almost the opposite. Generally more is expected for less pay in the hosting market than of the same technical roles in other sectors. Traditionally, this means that many people start in the hosting market, then move up (certainly in terms of pay) into a corporate networking or corporate sysadmin role.

by phillmv 14y ago

josh2600 14y ago

Amazon makes a ton of money. They don't make profit because Amazon's horizon is 100 years from now. They are trying to slowly drive all other retails into starvation by forcing them to operate at unreasonable margins (margins amazon is only able to break even at because of scale). Talking about amazon as if they're a charity is not apt. Amazon makes a great deal of money and judiciously reinvests it.

phillmv 14y ago
They're a publicly traded company. However you want to characterize their strategy – and I think everyone agrees with your summary of their strategy – as a shareholder I'm not interested in 100 year time horizons because I will be dead by then. The argument goes, no other company gets such a free pass from their shareholders. Amazon could be amazingly profitable right now; in real terms, shareholders are subsidizing their current strategy in ways that Apple or Microsoft or Walmart could never get away with.
- ios84dev 14y ago
  So why are you a shareholder? Or why haven't you attempted to change the policies from long term thinking to quarterly thinking like most companies these days?
lsc 14y ago
>They are trying to slowly drive all other retails into starvation by forcing them to operate at unreasonable margins (margins amazon is only able to break even at because of scale). This is not true in the hosting arena, at least. Amazon is like everyone else in this industry; when they came out, they came out with very compelling prices. Well, costs fall with moores law. Amazon prices (especially bandwidth prices) have not. There are... a lot of new entrants to the market, and they /all/ have prices that are dramatically cheaper than amazon.com. hell, most of them make me look overpriced, and it wasn't so long ago that I was the unreasonably cheap option.

lsc 14y ago

>Whereas in low-end VPS services, the labour cost for Great, Responsive Service will quickly begin to approach your capital outlay. begin to approach? You need... dramatic scale to spend more money on hardware than on support, even when you have pretty minimal support. I spend rather more on labour than on hardware.

phillmv 14y ago
I'm so far removed from hardware pricing these days that I didn't want to pretend that I knew how that business functions while pontificating about it on the internet. Also, to be fair to airlines, they have immense labour costs.
- lsc 14y ago
  >Also, to be fair to airlines, they have immense labour costs. yeah. I also think that it's a good example of how some things? you can skimp on, while other things? not so much. I mean, if the airlines show that you can eliminate (or charge extra for) in-flight meals without disturbing anyone too much. You can even pack 'em in tighter (though, some people will pay extra for a little room.) - but yeah, you've still gotta keep the planes in the air. Another interesting bit is that I'm not sure that it'd be cheaper to maintain airplanes to a lower standard, even without the customer backlash. That's the thing; sometimes, the cheaper part is just as good- (for example, I think going supermicro is just as good as going dell, assuming the person assembling uses ESD protection.) - but other things? non-ecc ram, for instance, in my unscientific opinion, usually ends up being more expensive in terms of downtime and technician hours than ecc ram. Of course, airlines are also almost all unionized; The hosting market is almost the opposite. Generally more is expected for less pay in the hosting market than of the same technical roles in other sectors. Traditionally, this means that many people start in the hosting market, then move up (certainly in terms of pay) into a corporate networking or corporate sysadmin role.