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Don't rent the cloud, own instead

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Re: Don't rent the cloud, own instead

#121

Post by lelanthran »

NitpickLawyer wrote: post #18
hyperbovine wrote: post #12

Earlier quoted context omitted.

I agree, and cloud compute is poised to become even more commoditized in the coming years (gazillion new data centers + AI plateauing + efficiency gains, the writing is on the wall). There’s no way this makes sense for most companies.

> AI plateauing Ummm is that plateauing with us in the room? The advantage of renting vs. owning is that you can always get the latest gen, and that brings you newer capabilities (i.e. fp8, fp4, etc) and cheaper prices for current_gen-1. But betting on something plateauing when all the signs point towards the exact opposite is not one of the bets i'd make.

> Ummm is that plateauing with us in the room?

Well, the capabilities have already plateaued as far as I can tell :-/

Over the next few yeas we can probably wring out some performance improvements, maybe some efficiency improvements.

A lot of the current AI users right now are businesses trying to on-sell AI (code reviewers/code generators, recipe apps, assistant apps, etc), and there's way too many of them in the supply/demand ratio, so you can expect maybe 90% of these companies to disappear in the next few years, taking the demand for capacity with them.

Re: Don't rent the cloud, own instead

#122

Post by panick21_ »

rvz wrote: post #51

Not long ago Railway moved from GCP to their own infrastructure since it was very expensive for them. [0] Some go for a Oxide rack [1] for a full stack solution (both hardware and software) for intense GPU workloads, instead of building it themselves. It's very expensive and only makes sense if you really need infrastructure sovereignty. It makes more sense if you're profitable in the tens of millions after raising h…

Oxide racks don't yet have a GPU solution. But it is a good options for general compute and even with GPU required, general compute hasn't gone away.

Re: Don't rent the cloud, own instead

#123

Post by geocar »

weavie wrote: post #110
adamcharnock wrote: post #74

This is an industry we're[0] in. Owning is at one end of the spectrum, with cloud at the other, and a broadly couple of options in-between: 1 - Cloud – This is minimising cap-ex, hiring, and risk, while largely maximising operational costs (its expensive) and cost variability (usage based). 2 - Managed Private Cloud - What we do. Still minimal-to-no cap-ex, hiring, risk, and medium-sized operational cost (around 50%…

What is the upper limit of Hertzner? Say you have an AWS bill in the $100s of millions, could Hertzner realistically take on that scale?

Who are you thinking of?

Netflix might be spending as much as $120m (but probably a little less), and I thought they were probably Amazon's biggest customer. Does someone (single-buyer) spend more than that with AWS?

Hertzner's revenue is somewhere around $400m, so probably a little scary taking on an additional 30% revenue from a single customer, and Netflix's shareholders would probably be worried about risk relying on a vendor that is much smaller than them.

Sometimes if the companies are friendly to the idea, they could form a joint venture or maybe Netflix could just acquire Hertzner (and compete with Amazon?), but I think it unlikely Hertzner could take on Netflix-sized for nontechnical reasons.

However increasing pop capacity by 30% within 6mo is pretty realistic, so I think they'd probably be able to physically service Netflix without changing too much if management could get comfortable with the idea

Re: Don't rent the cloud, own instead

#124

Post by direwolf20 »

geocar wrote: post #123
weavie wrote: post #110

Earlier quoted context omitted.

What is the upper limit of Hertzner? Say you have an AWS bill in the $100s of millions, could Hertzner realistically take on that scale?

Who are you thinking of? Netflix might be spending as much as $120m (but probably a little less), and I thought they were probably Amazon's biggest customer. Does someone (single-buyer) spend more than that with AWS? Hertzner's revenue is somewhere around $400m, so probably a little scary taking on an additional 30% revenue from a single customer, and Netflix's shareholders would probably be worried about risk relyin…

That $120m will become $12m when they're not using AWS.

Re: Don't rent the cloud, own instead

#125

Post by direwolf20 »

adamcharnock wrote: post #89
mgaunard wrote: post #80

Earlier quoted context omitted.

you're missing 5, what they are doing. There is a world of difference between renting some cabinets in an Equinix datacenter and operating your own.

Fair point! 5 - Datacenter (DC) - Like 4, except also take control of the space/power/HVAC/transit/security side of the equation. Makes sense either at scale, or if you have specific needs. Specific needs could be: specific location, reliability (higher or lower than a DC), resilience (conflict planning). There are actually some really interesting use cases here. For example, reliability: If your company is in a phys…

If you have less than a rack of hardware, if you have physical security requirements, and/or your hardware is used in the office more than from the internet, it can make sense.

Re: Don't rent the cloud, own instead

#126

Post by aragilar »

d1sxeyes wrote: post #14
simianwords wrote: post #13

The reason companies don’t go with on premises even if cloud is way more expensive is because of the risk involved in on premises. You can see it quite clearly here that there’s so many steps to take. Now a good company would concentrate risk on their differentiating factor or the specific part they have competitive advantage in. It’s never about “is the expected cost in on premises less than cloud”, it’s about the r…

It’s also opex vs capex, which is a battle opex wins most of the time.

It depends. Grant funding (e.g. in academia) makes capex easier to manage than opex (because when the grant runs out you still have device).

Re: Don't rent the cloud, own instead

#127

Post by phiresky »

geocar wrote: post #123
weavie wrote: post #110

Earlier quoted context omitted.

What is the upper limit of Hertzner? Say you have an AWS bill in the $100s of millions, could Hertzner realistically take on that scale?

Who are you thinking of? Netflix might be spending as much as $120m (but probably a little less), and I thought they were probably Amazon's biggest customer. Does someone (single-buyer) spend more than that with AWS? Hertzner's revenue is somewhere around $400m, so probably a little scary taking on an additional 30% revenue from a single customer, and Netflix's shareholders would probably be worried about risk relyin…

A $120M spend on AWS is equivalent to around a $12M spend on Hetzner Dedicated (likely even less, the factor is 10-20x in my experience), so that would be 3% of their revenue from a single customer.

Re: Don't rent the cloud, own instead

#128

Post by direwolf20 »

theodric wrote: post #113
DyslexicAtheist wrote: post #88

Earlier quoted context omitted.

this is what we did in the 90ies into mid 2000: > Buy and colocate the hardware yourself – Certainly the cheapest option if you have the skills back then this type of "skill" was abundant. You could easily get sysadmin contractors who would take a drive down to the data-center (probably rented facilities in a real-estate that belonged to a bank or insurance) to exchange some disks that died for some reason. such a pe…

> ancient skills https://youtu.be/ZtYU87QNjPw?&t=10 It baffles me that my career trajectory somehow managed to insulate me from ever having to deal with the cloud, while such esoteric skills as swapping a hot swap disk or racking and cabling a new blade chassis are apparently on the order of finding a COBOL developer now. Really? I can promise you that large financial institutions still have datacenters. Many, many,…

we had two racks in our office of mostly developers. If you have an office you already have a rack for switches and patch panels. Adding a few servers is obvious.

Software development isn't a typical SME however. Mike's Fish and Chips will not buy a server and that's fine.

Re: Don't rent the cloud, own instead

#129

Post by rudolph9 »

yomismoaqui wrote: post #119

This quote is gold: The cloud requires expertise in company-specific APIs and billing systems. A data center requires knowledge of Watts, bits, and FLOPs. I know which one I rather think about.

> Having your own data center is cool

This company sounds more like a hobby interest than a business focused on solving genuine problems.

Re: Don't rent the cloud, own instead

#130

Post by dagi3d »

> San Diego power cost is over 40c/kWh, ~3x the global average. It’s a ripoff, and overpriced simply due to political dysfunction.

Mind anyone elaborate? Always thought this is was a direct cause of the free market. Not sure if by dysfunction the op means lack of intervention.

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