Hacker News Reader

Comment by gist | Hacker News Reader

AWS currently improves product and cuts prices. My feeling is that as they mature over time and get even more of a lock on the market (and their customers) with the obvious lock in they have that will reverse and prices will increase over time resulting in even more profit than they reported today. Impossible to think this won't happen, especially with the differentiation they have with their product as well as the FUD of changing to a marginally less expensive provider (who will probably follow suit).

View on HN

Or another future - as more people see Google and Azure can compete... they build cloud agnostic software that treats providers as a utility, and profit margins fall and fall.

> they build cloud agnostic software that treats providers as a utility

It's like browsers all over again. As long as each provider is offering different things or different implementations of the same thing we will either need to choose one or be forced to go through a lowest common denominator translation layer.

MSFT, GOOG, and AMZN are all smart enough to not turn this into a race to the bottom of who can provide the cheapest scalable instances. They'll all try to differentiate on features and so it's going to be a long time until you can treat these as a utility.

I think you're right in that Amazon Machine Learning and Azure Machine Learning will never be drop-in replacements for eachother.

However, I would argue that VPSs are already drop-in replacements and I bet (though I have no proof) that VPSs are the majority of the market. The cloud providers may not have a viable way to provide even the perception of vendor lock-in when it comes to VPSs.

Now it could be that prices and profits stay high anyways as the market is an oligopoly. The U.S. has experienced the same thing with mobile operators. This is also far from obvious though because entrance barriers for VPSs don't seem steep.

Sure, a basic VPS could be a drop-in replacement, but think of all the stuff that goes on with managing that. If you want to automate the creation of new servers then you have to script it or use something like CloudFormation or Troposphere. Either way you are immediately off the "drop-in replacement" path unless you build a middleware layer for your scripts.

These guys make their money off the companies that need to be able to automate infrastructure and that stuff is becoming more, not less, fragmented.

Terraform works with whatever cloud provider https://www.terraform.io/intro/vs/cloudformation.html

hint hint

Even bigger than VPS is storage, which is the closest thing you will get to a commodity/drop in replacement in the cloud.

It was recently reported that Apple was spending hundreds of millions of dollars on S3 (before they switched). I think it's safe to assume that a couple of billion dollars of AWS revenue is cheap commodity storage.... which has low switching costs.

Well so far MSFT and GOOG are regularly slashing prices to keep up with AMZN's price cuts. So we're in the price war stage still, not much at the differentiation stage.

This isn't correct.

Amazon has not matched our May 2015 price cut for GCE (they instead have tossed a couple 5% cuts). They responded to our 2014 cut a day later. We saw a similar reaction with Nearline last year; a few months later they introduced S3 Infrequent Access, but it has plenty of caveats (rounding up to 128 KB per object) and still a 25% higher price per byte.

In the meantime we introduced custom shapes for GCE giving our customers a measured 20% savings. Finally, even Microsoft has per-minute billing.

If you're looking for the best price/performance you'll have to come to Google Cloud.

Disclosure: I work on Google Cloud, so of course I want your business ;)

> So we're in the price war stage still, not much at the differentiation stage.

Depends what you're looking for I suppose. If all you need is basic compute instances then, yes, it's a price war. Any products beyond that have a tenuous relationship between the different providers.

Even something as simple as using a columnar DB pretty much locks you into one of the providers because you have to build around all the nuances of SQL Server vs. RedShift (Postgres) vs. BigQuery.

Forget talking about things like infrastructure automation once you're trying to manage this on demand across many environments in a reproducible way.

You have it backwards. It's Google that's slashing prices. The others are begrudgingly reacting.

One issue with this is the idea of competition from physical hardware.

At some price point, if the prices are too high, it will be cheaper to hire extra people, and get a cage in a few datacenters and some physical hardware.

The problem is people who arent big enough to have a whole data center. Or dont have the upfront capital even if its benefital in the longterm. They will still rely on Amazon.

You don't need to own a whole datacenter to own machines located in a datacenter, my company keeps machines in a 4 rack cage in a datacenter. (and plans to empty that cage by the time our contract runs out in September to finish the migration to AWS). Our AWS bill is just a bit higher than what we were paying for the cage rental + internet connectivity alone.

That doesn't sound possible. Are you saying your raw bill for _just_ colo (ie. space and power) and bandwidth (ie. IP transit) was less than your _entire_ AWS bill? I've never heard of anyone take such an extreme stance.

The 4 rack cage plus extra power plus redundant network at a Tier I datacenter costs us close to $6K/month (including some block of remote hands hours). Even at our peak we didn't have the racks full, allowed room for expansion. Note that this cost includes only coloc costs, not server or network leases/purchases.

We have very bursty traffic and run our baseload of ~ 30 severs (mostly m4.larges, with a few smaller utility servers as well as larger servers for back end services) most of the time, but when we need to scale, we ramp up to about 2 - 4 times that, but usually only for a few hours at a time. We also do some batch processing that takes a few high-memory servers for about a day each week.

We monitor costs pretty closely and our monthly AWS spend is still less than the coloc fees, and we are much more scalable now and have multi-datacenter (AZ) redundancy, and by the end of the year, we will have a cold spare in a second region (which will cost us very little since it will be mostly powered off)

We no longer need to vastly over-provision servers to handle our peak load and batch processing needs.

One significant advantage of AWS is that they have a very large, built-in retail customer with relatively demanding requirements. I've always been under the impression that Microsoft doesn't really have a business that would lend itself to consuming its own services[0] and it's unclear to me whether or not Google uses their stuff internally.

0 - as an anecdote, I recall their salesmen coming to sell my employer their caching solution around 2008. I asked the rep I'd Microsoft was using their caching product on any of Microsofts web properties and he replied that they were not.

Azure dumped its internal caching product in 2014 and switched to Redis.

https://azure.microsoft.com/en-us/blog/lap-around-azure-redi...

Office 365 relies on Azure as well (unclear how much of it, though)

A number of Microsoft's own services -- including Office 365 business, Office 365 consumer, Bing and Xbox Live -- are not running on its Azure cloud backbone. They are still running on their own custom stacks and datacenters.http://www.zdnet.com/article/microsoft-is-on-a-quest-to-move...

Sentence immediately after the two you quoted:

Certain, newer pieces of some of these services, such as the Azure Active Directory service at the heart of Office 365 and some of the newer, complementary Xbox Live services are hosted on Azure.

Xbox live runs on azure

So does iCloud ;) (and also runs on AWS)

http://9to5mac.com/2016/04/11/apple-icloud-in-house-inspur/

Certain, newer pieces of some of these services, such as the Azure Active Directory service at the heart of Office 365 and some of the newer, complementary Xbox Live services are hosted on Azure. But the core Bing, Office 365 Commercial and Consumer offerings and Xbox Live services are not hosted on Azure. (same article as above)

It seems like amazon is using an "all in" strategy which seems to be working out pretty well. They first focused on porting the entire amazon retail website onto AWS which I believe they completed in 2011. They also went "all in" with the service oriented architecture for AWS. Both of these have paid off quite handsomely.

Granted, that hasn't always paid off (we all know how the fire phone turned out), but the wins have definitely made up for the losses.

Reply on news.ycombinator.com