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The cost of cloud, a trillion dollar paradox (2021)

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Re: The cost of cloud, a trillion dollar paradox (2021)

#11

Post by sgt101 »

Glyptodon wrote: post #6

I've always thought the mysterious bit was that cloud doesn't seem like it ever gets cheaper while the cost difference between cloud and own infra and profit associated with AWS suggest it could be. Is there something structurally wrong with competition in cloud?

Yes, massive cross subsidies from core business to cloud business to exclude and destroy competition - aws=books, azure=windows, gcp=search.

There are three companies doing monopolistic things, they have got away with it because of that plurality.

Re: The cost of cloud, a trillion dollar paradox (2021)

#12

Post by senderista »

sgt101 wrote: post #11
Glyptodon wrote: post #6

I've always thought the mysterious bit was that cloud doesn't seem like it ever gets cheaper while the cost difference between cloud and own infra and profit associated with AWS suggest it could be. Is there something structurally wrong with competition in cloud?

Yes, massive cross subsidies from core business to cloud business to exclude and destroy competition - aws=books, azure=windows, gcp=search. There are three companies doing monopolistic things, they have got away with it because of that plurality.

AWS is vastly more profitable than Amazon's retail business.

Re: The cost of cloud, a trillion dollar paradox (2021)

#13

Post by sgt101 »

Look - if you can optimise your workload over a capital cycle cloud is not for you. Especially if you are a technology company and have the bandwidth to deal with servers and ISV's properly.

If you are a changing, growing, non-technology company then cloud is the place you should be. You will get screwed by Oracle, you will get screwed by Accenture. You will not be able to optimise your workload and you may as well get screwed by aws/azure/gcp and not think about infrastructure that much instead.

Re: The cost of cloud, a trillion dollar paradox (2021)

#14

Post by sgt101 »

senderista wrote: post #12
sgt101 wrote: post #11

Earlier quoted context omitted.

Yes, massive cross subsidies from core business to cloud business to exclude and destroy competition - aws=books, azure=windows, gcp=search. There are three companies doing monopolistic things, they have got away with it because of that plurality.

AWS is vastly more profitable than Amazon's retail business.

It is now.

It wasn't in the past.

It wouldn't be if they had to compete with providers that also wanted to compete.

Re: The cost of cloud, a trillion dollar paradox (2021)

#15

Post by epberry »

This post, along with this Simon Wardley thread, https://twitter.com/swardley/status/1088780650860158978?s=20, attracted me to finops as an engineering problem. Consumption based pricing is really tough for a lot of orgs to handle at the $1M+ range, so much so that it requires dedicated software to line things up.

I started helping maintain https://ec2instances.info in my spare time and the code base is literally full of IF statements to paper over AWS billing quirks. Later, I joined Vantage, one of the companies linked in the article.

It's a little bit undecided whether finops will have the growth that devops did but the problem is seemingly felt very acutely.

Re: The cost of cloud, a trillion dollar paradox (2021)

#16

Post by vlovich123 »

Glyptodon wrote: post #6

I've always thought the mysterious bit was that cloud doesn't seem like it ever gets cheaper while the cost difference between cloud and own infra and profit associated with AWS suggest it could be. Is there something structurally wrong with competition in cloud?

I suspect a few factors.

* Egress pricing margins ensure lock-in which makes it hard to builds competitors to “commodity” services (eg you can’t spin up your own price-competitive S3 within AWS). Lack of competition means less innovation and more expensive pricing.

* While compute costs don’t necessarily come down, the CPUs get more powerful. At scale, this should be the same as prices coming down. However, it’s not exact and cloud provides pocket this difference as profit / R&D investment.

* SRE costs are a huge chunk of own infra (managing servers at scale). If you’re small, this is a negligible cost. If you’re a large business this is a huge cost. Cloud providers target large businesses so the savings when you’re smaller are less obvious.

* Elasticity is a huge part of cloud capabilities. Most people use dynamic paygo pricing which is more expensive than baseload demand which cloud provides typically discount because baseload revenues can be used for purchasing additional capacity.

Re: The cost of cloud, a trillion dollar paradox (2021)

#18

Post by michaelt »

> A billion dollar private software company told us that their public cloud spend amounted to 81% of COR, and that “cloud spend ranging from 75 to 80% of cost of revenue was common among software companies”

I find that quite hard to believe.

I mean, I can see that if you were selling cloud backup services and stored customer data on S3, I can understand S3 costs being a big part of your budget.

But for the vast majority of businesses - I'd expect a supermarket selling a $50 basket of groceries to spend maybe $0.01 on database storage and CPU and whatnot.

I don't see that a company like Slack, which has revenue of about $8.75/user/month would need to spend anything like that much on cloud costs.

Re: The cost of cloud, a trillion dollar paradox (2021)

#20

Post by p1necone »

bamazizi wrote: post #10

Interesting to see this article again since it was the trigger of starting a homelab for me. After realizing cloud services are putting a major dent in my pocket to get a lousy startup idea off the ground, I started to wonder if there's "The Cheapest" way? (I'm not cheap but I'm very frugal) Nowadays internet speed is great to do self hosting. I have a business line internet at home with ~1gb up&down! Bought couple o…

Yeah the delta in cost/CPU/memory/storage between self hosting on second hand stuff and paying cloud services is insane. It's a no brainer if your use case needs beefier hardware than the typical $5/month VPS host and you don't have enterprise level liability/uptime expectations.

With stuff like proxmox you get a pretty similar level of ease of use to managed VM services too.

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