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>“All of our engineers are focused” on reducing the costs of computing If this is so, how is it that a startup like Digital Ocean that's only 2 years old find

• walshemj 13y ago
  MM yes I was at silicon milk about today ad everyone was on AWS - which is slightly worying. I think that a lot of the start ups around silicon roundabout woudl be a bit lost if they had to pivot and run their own kit. the CTO says the VC says we have to switch to self hosting we have 4 racks of dual core 1u 's arriving - anyone know how to put them together :-)
  • dmourati 13y ago
    Just find a sysadmin with > 5 years experience, ie, pre-cloud. We all know how it's done.
• beachstartup 13y ago
  right, amazon's engineers are focused on reducing the costs ... for amazon.
  • gtaylor 13y ago
    They cut prices for customers many times a year. Seems like we get 2-3 EC2 price cuts every year, and S3 continues to get cheaper. They are one of the few vendors we use that regularly passes on savings to us.
    • imbriaco 13y ago
      Compare their cost reductions with the decrease in computing costs and you'll very rapidly discover that they don't actually pass on savings to customers. Quite the opposite.
      • dmourati 13y ago
        E.g.: http://diversitynet.zippykidcdn.com/wp-content/uploads/2013/07/image.png http://diversitynet.zippykidcdn.com/wp-content/uploads/2013/...
        • kbenson 13y ago
          Is that assuming they are replacing all existing hardware with newer models as they become available, or is it based on some reported replacement schedule Amazon has stated? Also, is it based on Moore, or the actual market prices? I would expect their costs are based on the mixture of systems they have in place and for it to go down somewhat similar to the market cost for the component, but with a somewhat large lag time as older systems are phased out and newer ones phased in.
          • gtaylor 13y ago
            You're paying for a lot more than just the hardware your instance runs on with EC2. You're also indirectly paying for the other systems they make available to you within EC2 (auto-scaling, ELB, EBS, CloudWatch, etc). If you don't need these additional services, AWS is indeed a bad value. If you use a good chunk of them like we do, it's money well spent, though it won't fit neatly into graphs like the previously mentioned one.
      • gtaylor 13y ago
        I mentioned this elsewhere in the thread, but you pay the premium with EC2 for flexibility, not so much for raw computing power. If you don't need to be able to scale up AND down with regularity, EC2 is indeed a lot more expensive (since you're not considering the core advantage of EC2 in that case). There are a ton of simple VPS providers that would probably get you closer to the baseline for computing costs, but to be fair, those providers are a completely different beast.
    • deleted 13y ago
      [deleted]
• gaadd33 13y ago
  Is it possible to spin up a few thousand of those on DO? Sure most people use AWS as a glorified VPS provider, and for that it is rather expensive. The fact that DO is only 2 years old actually scares me more since they probably haven't faced as many unique challenges as a company who has been in the business for a longer period of time has.
  • gtaylor 13y ago
    This is something that I feel so many people don't understand about EC2 (ELASTIC Cloud Compute). If you are using it like a traditional VPS provider, you are likely over-paying for something you could get cheaper elsewhere. If you are just looking at a price comparison to another VPS provider or even the private cloud, you are doing it wrong. One must consider how much (or little) ability they need to scale/up AND down at very short notice. EC2 is a boon for those that need to add and remove capacity quickly. This is the appeal of EC2. It's not going to blow your socks off as far as performance per dollar. It is going to blow you away with its flexibility. If you don't need to scale up AND down quickly and regularly, EC2 is probably not a good fit for you. With EC2, you are paying for that flexibility. Netflix is one of the penultimate examples of "doing EC2 correctly". Their traffic is extremely bursty. They are constantly automatically scaling up/down, and they do this and so many other things without human intervention.
    • dmourati 13y ago
      I don't think penultimate means what you think it means.
    • vidarh 13y ago
      > If you don't need to scale up AND down quickly and regularly, EC2 is probably not a good fit for you. With EC2, you are paying for that flexibility. If EC2 customers realised this, they'd lose 90%+ of their customer base.
      • gtaylor 13y ago
        Right now, probably so. Though, to AWS' credit, they've been "diversifying" in developing some of these other complementary services (RDS, Route53, ElastiCache, Search, DynamoDB, Elastic Transcoder). It's getting to the point where EC2 is a good fit for those who want less infrastructure responsibility (and are willing to pay for it). If RDS/ElastiCache were cheaper, I think it'd be a lot easier to make the case for EC2 for startups and smaller companies that don't need the auto-scaling features. Even as a smaller business, it's a lot better for us to spend a little more on infrastructure in order to avoid hiring additional people to keep us running.
• justincormack 13y ago
  Amazon is highly profitable compared to DO. They could cut their prices but why do it?
  • abalone 13y ago
    Nope. Amazon is not profitable. http://www.nytimes.com/2013/10/25/technology/amazons-revenue-soars-but-no-profit-in-sight.html?_r=0 http://www.nytimes.com/2013/10/25/technology/amazons-revenue...
    • dangrossman 13y ago
      In a sense, if you only care about net profit, where you can always reinvest gross profits to drive the net to zero. Analysts estimate Amazon Web Services will have $3.8 billion in revenue in 2013, with a 100% gross margin. It's big enough that it's raising the gross margin of the whole company.
      • ddeck 13y ago
        Perhaps, but discussing profitability of AWS in gross margin terms is somewhat pointless. At 100%, that means not a single cost of operating the business has been accounted for. No computers, no engineers, no data centers, no electricity, nothing. It's a meaningless number. I'm not suggesting the business is not profitable, by all accounts it is, but to understand how it's benefiting the company as a whole, you need to look at the operating line.
        • dangrossman 13y ago
          I'm not sure what you think gross margin means. It's revenue minus COGS (computers, data centers, electricity) divided by revenue.
          • ddeck 13y ago
            Yes, gross margin is (revenue - COGS) / revenue. But per your parent comment, Amazon is not accounting for their AWS costs in COGS. Instead, it is primarily included in the technology and content expense line, which is below the gross margin. If gross margin = 100%, then by definition COGS = 0. Thus, gross margin is a meaningless number in this case.
• mattbillenstein 13y ago
  Cloud is great when you're in the discovery phase as it provides loads of flexibility for a small startup to try stuff out without investing in hardware, but at the point you're spending $50k/month in the cloud, racking servers and building a private cloud can give you better performance at 20-30% of the cloud cost... The main problem here is most startups don't have the expertise in house to make it happen. Everyone thinks cloud is cheaper, but it's more about flexibility and avoiding capex, but at a certain scale, it makes sense to host it yourself - or pay someone to build it out for you. I'm working in this cloud -> private-cloud migration space currently if anyone is interested in discussing.
  • gtaylor 13y ago
    This obviously depends on your specific scenario, but paying the maintenance/flexibility premium for something like AWS can be cheaper than something more rigid (see Netflix). I hesitate to make any generalizations like "building a private cloud can give you better performance at 20-30% of the cloud cost", because this is not true for all applications/businesses (it's certainly not for ours). For example, those with incredibly bursty traffic (Netflix, Amazon, other online retailers), can see some big wins with AWS. Not having lots of idle capacity that still has to be managed and paid for, not having to beef up the Ops/IT staff, not having to own your own/manage/maintain hardware, etc. My advice to others is to be wary about generalized figures like "20-30% of cloud cost" from anyone with a vested interest in getting you to switch. Generalizations are dangerous when every usage case is different. Also keep in mind that there is a lot of room for middle ground (even with AWS). For some (but not all), going hybrid can be the best of both worlds.
    • vidarh 13y ago
      It can be cheaper for very limited situations, sure. I have never seen a case where AWS makes financial sense for the base load, or for anyone without that severely bursty traffic, though. For batch jobs or handling peaks of less than 6-8 hours, sure. But fewer people have peaks that are economical to handle that way than they think. And for those who do - e.g. retailers that needs to handle the christmas rush, depending on a system where servers can in theory become unavailable at any time is a high risk game. Most of the time you can get to 30% of AWS with rented managed servers. Racking your own kit can get substantially below that. Going hybrid is interesting, though, as it actually makes the case for actually using AWS much even weaker for most people: Whereas previously you'd need your managed servers to be able to handle sufficient peaks to give you time to spin up more servers, once you have support for spinning up cloud instances for peaks, you can often aim for near 100% utilisation during normal days peaks, which magnifies the price difference substantially. Even for most e-commerce sites, unless your site has a very localised audience, peaks are rarely high enough or sharp enough to make AWS economical if you have a system that's prepped for a hybrid situation - you can let things get very close to the wire, and start spinning up VMs, but you very rarely will find situations where it's worth doing for more than a few days before it'll be apparent it'll be cheaper to spin up a managed machine billed monthly, and/or putting in an order for more kit to put in your own rack. > Not having lots of idle capacity that still has to be managed and paid for, You are still paying for it with AWS with every single hour of VM's you pay for - it's one of the reasons AWS is so expensive: You have to fund all the spare capacity they need to have on standby to prevent running out of hardware during peaks. > not having to beef up the Ops/IT staff, This attitude scares me. You have to be prepared to deal with outages of pretty much every kind with AWS too. If you run managed servers, there's pretty much no difference, other than that you have to account for whatever the hosts turnaround time in bringing up new servers is (which one of those places where a hybrid setup might help you - especially if you're using a host like e.g. Softlayer or Iweb that offers the full range from managed servers to cloud servers in the same data centres). The one thing you don't have to deal with is if you use a colo and it saves you people to cable up and rack servers and install the OS. But you can hire people to do that too. > not having to own your own/manage/maintain hardware, etc. ... but you don't need to do this to beat AWS hands down, either: If you rent managed servers on a month by month basis, with no contracted minimum term, you can still easily come out vastly cheaper for the base load and most peaks. > My advice to others is to be wary about generalized figures like "20-30% of cloud cost" from anyone with a vested interest in getting you to switch. Generalizations are dangerous when every usage case is different. Sure. It's sound advice to do your own maths. But every time I have, for a variety of different sites, AWS has come out ludicrously expensive for anything but batch jobs and very short, sharp peaks.
• chaz 13y ago
  I use DO and AWS for different projects because they meet different needs. Of course there are going to be places where one is better suited than the other in both performance and price. For example, one of my projects requires 1TB of drive space. At DO, I have no choice but to go to the $960/mo 1 TB plan. But I don't need the SSD speed, 96 GB of RAM, 24 cores, or the 10 TB of monthly transfer. But with EC2, I can just use EBS @ $100/mo/TB and pair it with the right-size EC2 instance for the jobs at hand. As an aside, the real question for me is to decide whether I want to invest in a proper dedicated server where I can get good performance and online storage at a lower cost. DO has done a fantastic job at finding a spot in the VPS market, which is why I'm one of their customers. It doesn't mean Amazon is doing it wrong.
  • erichocean 13y ago
    I have a similar need for memcached, but I'm still using DO. I'm running the $5 instances running Twitter's fatcache. For $250/month, I can cheaply get 1TB of memcached storage online and available in our cluster (out of NY2). Thrown in a some consistent hashing and I can scale up/down as needed. Fatcache is completely kick ass.
  • vidarh 13y ago
    > But with EC2, I can just use EBS @ $100/mo/TB If all you're after is the storage, that is very expensive unless you keep moving your storage tiers up and down very rapidly. E.g. Hetzner has servers at 49 euro (ca. 66 USD) per month for 2TB.