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I hope to have time to build a google spreadsheet to compare your numbers more closely. Mose people don't realize that an AWS "core" is a threaded core. So th

I hope to have time to build a google spreadsheet to compare your numbers more closely. Mose people don't realize that an AWS "core" is a threaded core. So the example quoted below of 2 processors with 10 cores is not 20 equivalents to amazon cores, but 40 cores. Additionally, you're not depreciating your costs over several years as near as I can tell. Whatever these numbers come out to, it's clear that if you're small and need unpredictable agility, AWS is cheaper. If you're larger and have enough foresight into your usage pattern, AWS is never cheaper at the right economy of scale.

mabbo 12y ago
> Whatever these numbers come out to, it's clear that if you're small and need unpredictable agility, AWS is cheaper. If you're larger and have enough foresight into your usage pattern, AWS is never cheaper at the right economy of scale. Isn't that pretty much just a rule of the economy? Something like "It will always be cheaper to do it yourself, at a sufficient scale"?
- late2part 12y ago
  Probably true. But, I think, and hope to prove, that that inflection point is much lower than represented in the OP's writings.
jasode 12y ago
>, AWS is never cheaper at the right economy of scale. Of course, it's a case-by-case analysis of whether AWS makes financial sense. However, I think some people have a misunderstanding on what the "right" economy scale could be. The smart guys at Netflix (including Adrian Cockcroft) crunched the numbers it and it made more sense to go 100% on AWS rather than spend money on trying to maintain their own datacenters. Is Netflix a small time startup? Did CEO Reed Hastings properly evaluate that his business was the "right" scale? Your answer implies that if Netflix acquires X million more subscribers (whatever "X" happens to be), they should bring everything back in house and run their own bare metal servers. Is that correct?
- late2part 12y ago
  The people that I know that work(ed) at Netflix say they should bring it back in house. My understanding was that Reed+team got snookered by IBM and said 'never again.' To wit, look at their CDN initiative, that's not outsourced to AWS. Agreed that case-by-case makes sense, but we're pattern matchers, and we should group those cases into situational models.
  - late2part 12y ago
    1/ Adrian C. rocks. I had his sun performance book back in the 90s and think it and he is great. 2/ the "should being it back in house" is to save money. They love the abstraction and the in-house methodology and tools; but recognize that they're paying more to AWS than it would cost them to do it.
    - jasode 12y ago
      >but recognize that they're paying more to AWS than it would cost them to do it. Adrian C came to a different conclusion.[1] He said it was cheaper to iterate & fail on AWS than on their own hardware. It was cheaper to expand into foreign markets by using AWS datacenters already there. It was cheaper to do large-scale fallback and disaster recovery with AWS. I don't know who you talked to at Netflix but in my experience, there's an interesting division of opinion on whether AWS makes financial sense. In general, the tech team (admins, etc) think the in-house team can do it cheaper. But the business execs running the numbers in Excel see that AWS makes more sense. First the company tries things out with sandbox, dev, and qa on AWS and they get seduced by the speed and flexibility. (Why are we paying the IT team that takes 5 days to provision a dev box for the programmers?!?!) The business execs see possible value in moving more critical production workloads to AWS. The IT team that tries to keep it in-house can't show a convincing spreadsheet that calculates bare metal+staff is cheaper. Most businesses' internal devops team (including the world-class one at Netflix) cannot match the pace of accumulating infrastructure expertise at AWS. This shouldn't surprise us since most businesses don't consider the babysitting of rack servers to be their core competency. I'm not convinced that Reed Hasting's internal team could execute faster and innovate cheaper than amazon's team. Sure, Netflix internal bare-metal servers will perform better than EC2 instances but there's also a speed to staff execution. Being slower on the admin tasks can negate the savings on the raw cpu hardware. [1]http://www.informationweek.com/cloud/infrastructure-as-a-service/netflixs-5-secrets-for-maximizing-amazon-cloud-value/d/d-id/1109453?print=yes http://www.informationweek.com/cloud/infrastructure-as-a-ser...
late2part 12y ago
It costs roughly the same to build an openstack cluster to server 600 m3.mediums as it does to use AWS. The openstack cluster is not better, but it is good enough. As you add more compute, the DIY solution becomes significantly cheaper, although probably not better. Here's my rough spreadsheet.. http://bit.ly/18KOlyd http://bit.ly/18KOlyd The original poster used a silly piece of hardware, with no disk, 8GB of ram , and by far the most expensive CPU (in $/CPU) possible, with 18 cores. The spreadsheet assumes a sane server with 128G of ram and a 300GB disk, which can fit 34 m3.mediums. I assume you can hire a consultant at $10k/mo on a 3 year contract to spec, install, and operate this system, which, by the way, fits in 1 rack. I assume you buy a 1gbps internet link for $3k/mo; and you have a budget of $10k for the switch, which should include maintenance. These numbers show it would cost $222k in capital; which depreciated over 3 years (or do a 3 year lease) would cost around $6200/mo v. the AWS cost of 30k/mo with on demand. Add $10k for the consultant, and you're at $16k v. $30k (AWS). Assume a 50% discount for using Reserved Instances, and the solutions break out about even. But, notice that 2/3 of your cost is that consultant at $10k/mo. So when you grow larger than the 600 VMs, things get cheaper as marginal costs increase. There's no question AWS is valuable and the right solution a lot of the time. The OP made some properly wrong assumption in how to build a hosted compute system, which, when corrected, show a much better cost comparison. My numbers are also imperfect, but not as imperfect.

mabbo 12y ago

> Whatever these numbers come out to, it's clear that if you're small and need unpredictable agility, AWS is cheaper. If you're larger and have enough foresight into your usage pattern, AWS is never cheaper at the right economy of scale. Isn't that pretty much just a rule of the economy? Something like "It will always be cheaper to do it yourself, at a sufficient scale"?

late2part 12y ago
Probably true. But, I think, and hope to prove, that that inflection point is much lower than represented in the OP's writings.

jasode 12y ago

>, AWS is never cheaper at the right economy of scale. Of course, it's a case-by-case analysis of whether AWS makes financial sense. However, I think some people have a misunderstanding on what the "right" economy scale could be. The smart guys at Netflix (including Adrian Cockcroft) crunched the numbers it and it made more sense to go 100% on AWS rather than spend money on trying to maintain their own datacenters. Is Netflix a small time startup? Did CEO Reed Hastings properly evaluate that his business was the "right" scale? Your answer implies that if Netflix acquires X million more subscribers (whatever "X" happens to be), they should bring everything back in house and run their own bare metal servers. Is that correct?

late2part 12y ago
The people that I know that work(ed) at Netflix say they should bring it back in house. My understanding was that Reed+team got snookered by IBM and said 'never again.' To wit, look at their CDN initiative, that's not outsourced to AWS. Agreed that case-by-case makes sense, but we're pattern matchers, and we should group those cases into situational models.
- late2part 12y ago
  1/ Adrian C. rocks. I had his sun performance book back in the 90s and think it and he is great. 2/ the "should being it back in house" is to save money. They love the abstraction and the in-house methodology and tools; but recognize that they're paying more to AWS than it would cost them to do it.
  - jasode 12y ago
    >but recognize that they're paying more to AWS than it would cost them to do it. Adrian C came to a different conclusion.[1] He said it was cheaper to iterate & fail on AWS than on their own hardware. It was cheaper to expand into foreign markets by using AWS datacenters already there. It was cheaper to do large-scale fallback and disaster recovery with AWS. I don't know who you talked to at Netflix but in my experience, there's an interesting division of opinion on whether AWS makes financial sense. In general, the tech team (admins, etc) think the in-house team can do it cheaper. But the business execs running the numbers in Excel see that AWS makes more sense. First the company tries things out with sandbox, dev, and qa on AWS and they get seduced by the speed and flexibility. (Why are we paying the IT team that takes 5 days to provision a dev box for the programmers?!?!) The business execs see possible value in moving more critical production workloads to AWS. The IT team that tries to keep it in-house can't show a convincing spreadsheet that calculates bare metal+staff is cheaper. Most businesses' internal devops team (including the world-class one at Netflix) cannot match the pace of accumulating infrastructure expertise at AWS. This shouldn't surprise us since most businesses don't consider the babysitting of rack servers to be their core competency. I'm not convinced that Reed Hasting's internal team could execute faster and innovate cheaper than amazon's team. Sure, Netflix internal bare-metal servers will perform better than EC2 instances but there's also a speed to staff execution. Being slower on the admin tasks can negate the savings on the raw cpu hardware. [1]http://www.informationweek.com/cloud/infrastructure-as-a-service/netflixs-5-secrets-for-maximizing-amazon-cloud-value/d/d-id/1109453?print=yes http://www.informationweek.com/cloud/infrastructure-as-a-ser...

late2part 12y ago

It costs roughly the same to build an openstack cluster to server 600 m3.mediums as it does to use AWS. The openstack cluster is not better, but it is good enough. As you add more compute, the DIY solution becomes significantly cheaper, although probably not better. Here's my rough spreadsheet.. http://bit.ly/18KOlyd http://bit.ly/18KOlyd The original poster used a silly piece of hardware, with no disk, 8GB of ram , and by far the most expensive CPU (in $/CPU) possible, with 18 cores. The spreadsheet assumes a sane server with 128G of ram and a 300GB disk, which can fit 34 m3.mediums. I assume you can hire a consultant at $10k/mo on a 3 year contract to spec, install, and operate this system, which, by the way, fits in 1 rack. I assume you buy a 1gbps internet link for $3k/mo; and you have a budget of $10k for the switch, which should include maintenance. These numbers show it would cost $222k in capital; which depreciated over 3 years (or do a 3 year lease) would cost around $6200/mo v. the AWS cost of 30k/mo with on demand. Add $10k for the consultant, and you're at $16k v. $30k (AWS). Assume a 50% discount for using Reserved Instances, and the solutions break out about even. But, notice that 2/3 of your cost is that consultant at $10k/mo. So when you grow larger than the 600 VMs, things get cheaper as marginal costs increase. There's no question AWS is valuable and the right solution a lot of the time. The OP made some properly wrong assumption in how to build a hosted compute system, which, when corrected, show a much better cost comparison. My numbers are also imperfect, but not as imperfect.