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I wonder how come Amazon didn't mop up the floor with his competitors (e.g. DigitalOcean, Rackspace) price-wise if AWS infrastructure is so optimized? Of course

I wonder how come Amazon didn't mop up the floor with his competitors (e.g. DigitalOcean, Rackspace) price-wise if AWS infrastructure is so optimized? Of course, they have more features, but that's all kinda software-related, and they say software doesn't cost them that much.

eloff 13y ago
In high-end servers they blow the competition away on price. I did a comparison recently and they came out over 4x cheaper than Rackspace for two 256GB of RAM servers + heavy bandwidth.
- vidarh 13y ago
  Blowing Rackspace away on price is trivial - they're one of the most expensive hosting options I've ever looked at.
- adventured 13y ago
  This isn't even remotely accurate. I could give you a dozen examples, but one will suffice. From a hosting provider I've used for many years, WebNX. Here are two example configurations from them: E5-1650v2, 64gb ram, 4x 450gb SAS 15,000 rpm enterprise drives and hardware raid 10 with battery backup, 20tb of bandwidth - $289 / month, no setup fee Dual 2690v2, 256gb ram, 6x 600GB 15k sas raid 10 w/ 2x SSD Cache - $950 / month, no setup fee The bandwidth alone would cost you $2,300 at Amazon. And 20tb is nothing these days, countless quality providers offer 100mbps standard with $150 machines. The AWS cr1.8xlarge with just 20tb of bandwidth is $5,134 per month. A one year locked in contract gets it down to $2,815 ($7,200 up front) - three times more expensive. And there are far cheaper providers than WebNX. AWS is almost interesting, if you never need any bandwidth.
  - eloff 13y ago
    That's also an over-simplification. For example at AWS you can get a fully bidirectional 10gbps link, regardless of what other tenants are doing on the network. Nobody else that I'm aware of can match that. And you'll quickly find that 20TB of bandwidth at those network speeds are nothing, you can cross into petabytes without breaking a sweat (1 petabyte at 50% of bandwidth 24x7 for a month for just one server.) At that kind of network volume bandwidth costs dominate everything (about $65K for an petabyte of bandwidth at Amazon.) I challenge you to beat that anywhere. Also if you have bursty traffic patterns, AWS comes out a lot cheaper because it's designed around quickly scaling up and down capacity. In the end it depends on matching a provider to your particular needs because they vary wildy in strengths and weaknesses and costs.
wmf 13y ago
Is AWS actually low-margin or is it willing to become low-margin in the future, while taking as much profit as they can in the short term to reinvest in new features?
- aquadrop 13y ago
  That's a good question. They've been lowering prices regularly. Does it come from infrastructure improvement or from smaller margins? Pretty hard to know from the outside.
sseveran 13y ago
I don't see them as equivalent at all. DO serves a completely different market that doesn't need large deployments. I can't imagine trying to do some of what we do without not just EC2 but all the other APIs Amazon offers.
- aquadrop 13y ago
  Yes, but all that features like S3, ELB, RedShift etc. are just a software layer based on their top-notch hardware infrastructure. And fro the original article: 'The cost of delivering a service at scale is all in the infrastructure. The software engineering costs “round to zero,” Hamilton said'
  - sseveran 13y ago
    Yes it does. Assuming you can pay for highly talented people who know how to build at scale distributed systems. There aren't enough of those to go around.
gaadd33 13y ago
Can you spin up say 10K instances at once on Digital Ocean? Just curious since I know a few people who do that on AWS on a regular basis.
donavanm 13y ago
> they say software doesn't cost them that much. Just because someone says it does not mean it's true. The Internet says SDE comp at amazon is $90-130K. Seems safe to estimate total cost per employee to $125K on average. They're building enough office space for an additional 12,000 employees in Seattle. Assuming there are already 8,000 SDEs that's $1B dollars. I wouldn't call that "not much." Installing a dense rack of servers is in the neighborhood of $150K. How many racks per year would you have to buy to make $1B "round to zero"? What's actually important, and not being explained, is the relationship between the different types of costs and revenue. Developing & operating a service is roughly flat. It doesn't take 10x as much human resources to go from 10,000 requests per second or 100,000. However you will need roughly 10x the hardware resources to serve those requests. The other important property of infrastructure, which is mentioned, is scale. The cost to service each request can actually decrease due to increased utilization and efficiencies. The 10x requests might only require 8x infrastructure, for example.

eloff 13y ago

In high-end servers they blow the competition away on price. I did a comparison recently and they came out over 4x cheaper than Rackspace for two 256GB of RAM servers + heavy bandwidth.

vidarh 13y ago
Blowing Rackspace away on price is trivial - they're one of the most expensive hosting options I've ever looked at.
adventured 13y ago
This isn't even remotely accurate. I could give you a dozen examples, but one will suffice. From a hosting provider I've used for many years, WebNX. Here are two example configurations from them: E5-1650v2, 64gb ram, 4x 450gb SAS 15,000 rpm enterprise drives and hardware raid 10 with battery backup, 20tb of bandwidth - $289 / month, no setup fee Dual 2690v2, 256gb ram, 6x 600GB 15k sas raid 10 w/ 2x SSD Cache - $950 / month, no setup fee The bandwidth alone would cost you $2,300 at Amazon. And 20tb is nothing these days, countless quality providers offer 100mbps standard with $150 machines. The AWS cr1.8xlarge with just 20tb of bandwidth is $5,134 per month. A one year locked in contract gets it down to $2,815 ($7,200 up front) - three times more expensive. And there are far cheaper providers than WebNX. AWS is almost interesting, if you never need any bandwidth.
- eloff 13y ago
  That's also an over-simplification. For example at AWS you can get a fully bidirectional 10gbps link, regardless of what other tenants are doing on the network. Nobody else that I'm aware of can match that. And you'll quickly find that 20TB of bandwidth at those network speeds are nothing, you can cross into petabytes without breaking a sweat (1 petabyte at 50% of bandwidth 24x7 for a month for just one server.) At that kind of network volume bandwidth costs dominate everything (about $65K for an petabyte of bandwidth at Amazon.) I challenge you to beat that anywhere. Also if you have bursty traffic patterns, AWS comes out a lot cheaper because it's designed around quickly scaling up and down capacity. In the end it depends on matching a provider to your particular needs because they vary wildy in strengths and weaknesses and costs.

wmf 13y ago

Is AWS actually low-margin or is it willing to become low-margin in the future, while taking as much profit as they can in the short term to reinvest in new features?

aquadrop 13y ago
That's a good question. They've been lowering prices regularly. Does it come from infrastructure improvement or from smaller margins? Pretty hard to know from the outside.

sseveran 13y ago

I don't see them as equivalent at all. DO serves a completely different market that doesn't need large deployments. I can't imagine trying to do some of what we do without not just EC2 but all the other APIs Amazon offers.

aquadrop 13y ago
Yes, but all that features like S3, ELB, RedShift etc. are just a software layer based on their top-notch hardware infrastructure. And fro the original article: 'The cost of delivering a service at scale is all in the infrastructure. The software engineering costs “round to zero,” Hamilton said'
- sseveran 13y ago
  Yes it does. Assuming you can pay for highly talented people who know how to build at scale distributed systems. There aren't enough of those to go around.

gaadd33 13y ago

Can you spin up say 10K instances at once on Digital Ocean? Just curious since I know a few people who do that on AWS on a regular basis.

donavanm 13y ago

> they say software doesn't cost them that much. Just because someone says it does not mean it's true. The Internet says SDE comp at amazon is $90-130K. Seems safe to estimate total cost per employee to $125K on average. They're building enough office space for an additional 12,000 employees in Seattle. Assuming there are already 8,000 SDEs that's $1B dollars. I wouldn't call that "not much." Installing a dense rack of servers is in the neighborhood of $150K. How many racks per year would you have to buy to make $1B "round to zero"? What's actually important, and not being explained, is the relationship between the different types of costs and revenue. Developing & operating a service is roughly flat. It doesn't take 10x as much human resources to go from 10,000 requests per second or 100,000. However you will need roughly 10x the hardware resources to serve those requests. The other important property of infrastructure, which is mentioned, is scale. The cost to service each request can actually decrease due to increased utilization and efficiencies. The 10x requests might only require 8x infrastructure, for example.