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Snap commits $2B over 5 years for Google Cloud infrastructure

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Re: Snap commits $2B over 5 years for Google Cloud infrastructure

#301

Post by erichocean »

vidarh wrote: post #234
andrewstuart2 wrote: post #91

Earlier quoted context omitted.

Facebook reported $27 billion in revenue in 2016. Snap reported $400 million. You're talking two orders of magnitude lower than Facebook and almost three lower than Google. Snap simply does not have the resources to pour into custom data centers, even if they can raise $2 billion for infra over 5 years. Unless they have serious talent already, they're not going to match Google's massive 15 year investments by a long…

You don't need to have $400 million revenue and do custom data centres to pay less than the published rates for any of the public cloud providers. Heck, you don't need a million in revenue to be able to save on going managed hosting or bare metal colocated. The key here is: Compared to published rates. They'll not be paying published rates, the same as there's no way Netflix is paying published rates at AWS. They'll…

> You don't need to have $400 million revenue and do custom data centres to pay less than the published rates for any of the public cloud providers.

Out of curiosity, at what point should someone look into negotiating lower rates with AWS (in particular)? And how would they go about that?

Re: Snap commits $2B over 5 years for Google Cloud infrastructure

#302

Post by erichocean »

andrewstuart2 wrote: post #179
fulafel wrote: post #115

Earlier quoted context omitted.

Is the comparison to Google's investments a good benchmark? Sometimes it's better to make something custom than to buy from a big corporation doing a more general thing at 100x your scale.

Sometimes. But look at Netflix. $8.8 billion revenue in 2016 and a good third of Internet traffic and nearly every single server they have is in AWS. They had their own custom data centers and made the choice to migrate to somebody else's infrastructure. I'm pretty sure they're doing just fine with that decision.

> nearly every single server they have is in AWS

That's…not true. Netflix has a huge CDN[0] running their own custom-built servers that sits near customer endpoints.

I shudder to think of how much bandwidth they'd be paying to AWS if they didn't…

[0] https://openconnect.netflix.com/

Re: Snap commits $2B over 5 years for Google Cloud infrastructure

#303

Post by patrickg_zill »

zhengyi13 wrote: post #279
bogomipz wrote: post #250

Earlier quoted context omitted.

>"Snap simply does not have the resources to pour into custom data centers, even if they can raise $2 billion for infra over 5 years." They have 1800+ employees as disclosed in their filing. So clearly people resources are not a problem for SNAP. Do you believe its not possible to build 4 datacenter - 2 US, 1 EU and 1 APAC datacenter for 2 billion dollars? These are tangible assets that you can depreciate as well. Th…

Disclosure: I work for Google, but nowhere near Cloud, and I have no knowledge of this deal. Quite apart from the dollar costs and human capital required to build and maintain a DC, there's the lead time required to build the thing, and I'd speculate that that's potentially a significant factor in Snap's decision. Perhaps Snap are looking at e.g. how quickly Pokemon GO scaled their operation, and they're thinking for…

There are datacenters for sale, every day of the year, in the USA, that are already operational, lit with fiber, already staffed with the needed people, etc.

Thinking about it more, there must be some other strategic reason behind their decision to go with Google.

Re: Snap commits $2B over 5 years for Google Cloud infrastructure

#304

Post by londons_explore »

randartie wrote: post #50

Needing this amount of resources implies that Snap is expecting huge growth. This sounds like a really bad move on their part and they should have committed to building out their own infrastructure on 'bare metal' over the next 5 years instead. If you read their S-1, they list a dependence on Google cloud as one of their big risk factors. Yet they then go ahead and make this commitment instead of working towards elim…

You can bet that guaranteeing such a large future investment, they will have bought themselves a pretty hefty discount too.

Perhaps a discount large enough that prices match or are even better than bare metal servers.

Remember, Google builds its own custom hardware and probably gets much better performance per dollar than you would get from HP/dell/IBM/etc.

Re: Snap commits $2B over 5 years for Google Cloud infrastructure

#305

Post by simonebrunozzi »

alexnewman wrote: post #271
simonebrunozzi wrote: post #32

Earlier quoted context omitted.

Easily move? It seems to me that you have no serious experience in the real world. There's something called "data gravity", and the non-secondary issue of how to migrate a "live" system (in production) from one cloud to another over the course of typically several weeks. Moving from one cloud to another, even with containers, is never easy at large scale. (source: I have worked at AWS for 6 years, at VMware for 2, an…

Actually it is. I just moved about 35k instances and 6PB in s3, multiple many TB pg instamces from AWS to google. It is not that bad anymore. Containers and fast internet make it easyish

Alex, I'm curious to hear more about this experience. Did you use any physical device (Snowball, etc), or simply a very fast internet connection between the two? What made you move to Google?

Re: Snap commits $2B over 5 years for Google Cloud infrastructure

#306

Post by CamelCaseName »

asperous wrote: post #43
andrenotgiant wrote: post #35

Earlier quoted context omitted.

I think Techcrunch read: We have committed to spend $2 billion with Google Cloud over the next five years and decided "that's $2B/5=$400M per year." In reality, it's probably more like $200M, $300M, $400M, $500M, $600M

The filing says: > On January 30, 2017, we entered into the Google Cloud Platform License Agreement. Under the agreement, we were granted a license to access and use certain cloud services. The agreement has an initial term of five years and we are required to purchase at least $400.0 million of cloud services in each year of the agreement, though for each of the first four years, up to 15% of this amount may be move…

Interesting, so more like 340MM, 391MM, 399MM, 400MM, 471MM.

That's a lot for the first year. Not much scaling at all. Why would they structure it like this?

Re: Snap commits $2B over 5 years for Google Cloud infrastructure

#307

Post by matt_wulfeck »

Alex3917 wrote: post #96
matt_wulfeck wrote: post #89

Earlier quoted context omitted.

I've never heard of anyone buying excess cloud capacity from a private party. Is this a thing? Is there a market for this? Sounds like a security nightmare.

AWS reserved marketplace? Security wise it's no different than any other instance; specific machines aren't associated with the party who originally reserved the capacity in any way.

They're still just buying it from Amazon.

Re: Snap commits $2B over 5 years for Google Cloud infrastructure

#308

Post by vidarh »

erichocean wrote: post #301
vidarh wrote: post #234

Earlier quoted context omitted.

You don't need to have $400 million revenue and do custom data centres to pay less than the published rates for any of the public cloud providers. Heck, you don't need a million in revenue to be able to save on going managed hosting or bare metal colocated. The key here is: Compared to published rates. They'll not be paying published rates, the same as there's no way Netflix is paying published rates at AWS. They'll…

> You don't need to have $400 million revenue and do custom data centres to pay less than the published rates for any of the public cloud providers. Out of curiosity, at what point should someone look into negotiating lower rates with AWS (in particular)? And how would they go about that?

Anything more than a few tens of thousands per year, I'd say. I'm not sure where the lower threshold would be of when they'd offer it, but I know once you get into a couple hundred k a year, getting massive discounts is at least possible (know of specific cases). I'd say do your homework on what renting managed hosting would cost, and what using reserved instances would cost, and talk to your account manager and use the managed hosting prices as the argument (they will be far lower).

A lot of my consulting is on cutting hosting costs, and I've yet to have a client where we couldn't come up with substantially cheaper alternatives than AWS, but sometimes being able to show your account manager that you know how insanely high their margins actually are and that you have a credible alternative makes enough of a difference for them to end up sticking with AWS.

It also depends on ease of cutting the cost, I'd say. E.g. if 90% of your cost is bandwidth, and it's mostly serving up static assets, it's trivial to cut the cost dramatically by rolling your own mini-CDN outside of AWS (bandwidth prices at AWS are between 10x and 50x higher than the cheapest competitors depending on region if looking only at managed hosting or other cloud providers - more if you're large enough to look at peering options).

Re: Snap commits $2B over 5 years for Google Cloud infrastructure

#309

Post by erichocean »

vidarh wrote: post #308
erichocean wrote: post #301

Earlier quoted context omitted.

> You don't need to have $400 million revenue and do custom data centres to pay less than the published rates for any of the public cloud providers. Out of curiosity, at what point should someone look into negotiating lower rates with AWS (in particular)? And how would they go about that?

Anything more than a few tens of thousands per year, I'd say. I'm not sure where the lower threshold would be of when they'd offer it, but I know once you get into a couple hundred k a year, getting massive discounts is at least possible (know of specific cases). I'd say do your homework on what renting managed hosting would cost, and what using reserved instances would cost, and talk to your account manager and use…

Thank you.

Re: Snap commits $2B over 5 years for Google Cloud infrastructure

#310

Post by partiallypro »

stale2002 wrote: post #181
partiallypro wrote: post #171

Earlier quoted context omitted.

They'll exist, doesn't mean they'll be relevant, or profitable. If I were asked to bet against the stock, I probably would. Everything about their valuation and IPO smells to high heavens.

Fortunately for you, you can take that bet! As soon as Snap goes public, you can short the stock. Go for it!

I prefer to deal in options, and options won't trade on the symbol for a while.
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