One year of a a1.2xlarge 8vcpu 16gb RAM costs $1782.144 excluding storage. I could build a pretty decent server with that money that would last easily half a decade if not longer.
I could double the cores and mem probably too.
I could double the cores and mem probably too.
If you operate at sufficient scales to amortize the fixed overhead of operations (which is not that large of a scale), you can break even running your own server infrastructure within 12 months versus AWS if you know what you are doing. That last part is a big caveat, but not a large hurdle.
There are other considerations but in pure hardware terms, on AWS you've bought the hardware after 6 months of utilization.
So in reality I will always times the cost of server ( over X months period ) + colocation / month by 2.5. And Double that to give them Margin for support etc.
That is roughly 5x the cost. And in most cases seems to be what AWS is charging for.
Not saying I agree with their pricing.
Or you could get an eight core / 32GB ram machine for under $230 on eBay.
Oh and you need a DR site too, so double it.
And staff up 4x for 24x7 operations and build an orchestration layer yourself.
I’ve done the math in a lot of scenarios, including (especially) staff time. Running your own real data center doesn’t make long-term financial sense unless you are in the mid-hundreds of physical servers.
Colo might make a bit more sense for some situations, but there’s a reason so much is being moved to cloud providers. The people doing it aren’t stupid.
My guess is the advantage evaporates.
A bit of browsing on Geekbench suggests that one a1.4xlarge instance (i.e. two a1.2xlarges) is roughly comparable to a Ryzen 3400G. Adding in rough costs for the other components (motherboard, power supply, case, and 32GB of RAM), a bare-metal system equivalent to an a1.4xlarge looks like it would cost maybe $500-600 to buy outright.
In other words, if all you care about is raw CPU performance, then over long periods of time AWS costs more than 10x as much as bare-metal per unit of performance, even with up-front reserved instances.