[0] https://www.cnbc.com/2020/03/18/zoom-cfo-explains-how-the-co...
A google search confirms that they colocate, apparently with Equinix. This is as far as running a data center as living in an apartment is to building and managing apartment buildings.
(Fun Fact, while Amazon does own and run its own data centers in most places, they're also colocating with Equinix in some regions (though I assume their level of colocation goes beyond traditional colocation)).
They get enough control through their contracts to make sure the hosting provider provides exactly what they need to spec.
Those mean AWS has networking gear in those locations. You order a cross connect and plug into one of their switches.
When you walk around in one of those places, you also typically see racks of AWS gear in a smallish cage with lots of hard drives. Typically a CDN pop.
They buy a lot of space, and they work with lots of providers, but they don't own very many sites. So I guess they don't "have a datacenter" for the purposes of this thread. No one I know in the business thinks this way in the year 2020.
Designing and operating datacenter facilities is specialized work, and it's about compliance, auditing, risk management, electrical, plumbing, hvac and other skilled trades. The datacenter industry actually has very little to do with computers, so there is a natural split between the facility and the server / network equipment it houses.
Basically all commercial datacenter providers operate as REITs, which is tax advantageous but extremely limiting in some ways. Amazon can benefit from this (with lower pricing) without dealing with it themselves.
Owning can offer some advantages, but it also means you're with that site for the long, long haul. Efficiencies of designs are always increasing, so operating in an old facility costs you money. If you built the site to your own spec, good luck exiting -- the next owner will have to do a total overhaul to get it to industry spec and get customers.
Even if you have a 10 year lease, there are always ways to get out if you want to. Especially if you're Amazon.
But they operate at a scale that is very unique.
It's also worth noting that sometimes when a company builds a datacenter in a green field situation, it may be working with a datacenter provider on that project. So the company may own it, but they're paying the provider to use their design elements and potentially to operate it.
I’ve done big datacenter builds and cloud projects. The cloud projects were usually not a big win from a cost POV in my experience. Financially it’s a tax and marginal unit of capacity play.
Definitely easier to manage at a certain level, especially with variable demand or to accommodate growth.
Just about anyone who has significant network connectivity has a footprint in an Equinix datacenter. In the Bay Area you want to be in Equinix SV1 or SV5, at 11, and 9 Great Oaks, San Jose.
If you're there, you can order a cross connect to basically any telco you can imagine, and any other large company. You can also get on the Equinix exchange and connect to many more.
But, Equinix charges you a huge premium for this, typically 2 - 3x other providers for space and power. Also they charge about $300 per month per cross connect.
So your network backbone tends to have a POP here, and maybe you put some CDN nodes here, but you don't build out significant compute. It's too expensive.
On the cheaper, but still highish quality end you have companies like CoreSite, and I'm pretty sure AWS has an entire building leased out at the CoreSite SantaClara campus for portions of us-west-1. (Pretty sure because people are always cagey about this kind of thing.)
I also know that Oracle cloud has been well know for taking lots of retail and wholesale datacenter space from the likes of CoreSite, and Digital Reality Trust, because it was faster to get to market. This is compared to purpose build datacenters, which is what the larger players typically do.
In the case of AWS, I know they generally do a leaseback, where they contract with another company who owns the building shell, and then AWS brings in all their own equipment.
But all these players are also going to have some footprint in various retail datacenters like Equinix and CoreSite for the connectivity, and some extra capacity.
Zoom is probably doing a mix of various colocation providers, and just getting the best deal / quality for the given local market they want to have a PoP in. Seems like they are also making Oracle Cloud part of that story.
I have known people who tried to setup a data center in India and it took them around 2 years to have the first rack installed. Biggest hurdle was to get a license to store fuel in large tanks for their generators. Not to mention many of those permissions have to be renewed annually and if you fail to renew it which can take months, you are not in compliance and hence can't use the generators.
In India you can not start your own power generation plant and you can sell electricity only to the government. Depending on many situations you have to technically register a separate entity, get licenses as a "power company" then on paper sell the electricity to government and then buy it back from government for your own use.
The only actual reason to use AWS is to not divert any energy to doing anything else but scaling the company. The only problem was that by the time you are at some reasonable scale, AWS has you pretty locked in.
The fundamental problem is that AWS (or any major cloud) charges you for the amount of “stuff” you put through the pipe ($/gb), but with colocation you can pay a fixed cost for the size of the pipe ($/gbps). This allows you to do your own traffic shaping and absorb bandwidth costs without needing to pass them onto your customers.
This is the dirty, open secret of cloud pricing models. It’s also their moat, which makes it infeasible to do something like “build AWS on AWS.”
For context, if you were to buy 10Gbps of dedicated internet transit, he.net is currently advertising that for $900/month.
If we convert that to GB per month it's 3,240,000GB, so we can calculate what AWS would charge based on list prices.
Using their pricing calculator: https://calculator.aws/#/createCalculator
Outbound from Cloud Front or US West (Oregon) to the Internet:
$165,891.11
That's a 184 x increase in price!
So yeah, you have to buy networking gear and other stuff, but you can get quite a bit of gear for $165K/month. Now you don't really want to run that 10Gbps link flat out like that, but you get the point.
The AWS markup on bandwidth costs is absolutely insane.
Pro tip: if you have a large enough cloud provider spend, you can negotiate the bandwidth prices down quite a lot, given their markup, they have some room to move.
But the trick is you have to actually use it and need it in real time. An AWS instance costs you nothing if you don't use it, and almost nothing if you let them kill it at their whim.
Zoom's strategy looks pretty optimal to me. Take the 100 fold price reduction on your predicable load, farm the rest out to the lowest bidder.
When we (locally) talk about having your own hardware we use terms like 'bare metal' and 'machines' or even the specific names of the types of machines, like 'the blades' or 'the dells'. We really only use 'datacenter' when we talk about a physical location we own, with power we own, cooling we own, networking we own, and access control we own. Otherwise it's just colo.
I live and work in the Bay area. I was part of the larger org that ran Uber’s datacenter (co-located) and that’s how it was talked about.
Just to be clear - colocation here is in order of thousands of square feet. The datacenter provider provides redundant utilities. The customer does everything else.
If someone says 'I own my house' and they actually mean 'I rent an apartment', no one is going to say 'oh well, english is an imprecise language'.
In all the examples given earlier, the words "I have a datacentre" (or the approximate "I have my own datacenter") vs "I own a datacentre" (or the approximate "I own my own datacentre") have very significant differences.
In the UK, many people would say "I have a flat in this district" and that would be understood as being a renter, since some UK neighborhoods are just too expensive, and renting is the norm rather than ownership.
Similar in North American cities "I have an apartment in a brownstone in Manhattan" - does not necessarily mean they own it, but it could mean ownership or rental or lease or rent-controlled/stabilized tenancy (which could go on for multiple decades/generations of inhabitancy).
If someone says "I have a brownstone in Manhattan" and they actually mean they rent one of seven rooms, it's just a lie.
So, which is it? Is it hard to say what it means exactly or is that Zoom isn’t making a big bet on OCI?
I can understand that you can be skeptical of a company deploying on OCI because of whatever biases you might have, but you’re making quite a leap that doesn’t add anything to the actual discourse on the topic.
If Zoom weren’t making a bet on OCI, they wouldn’t care to put this out into the media. They wouldn’t go on record and provide a quote if they were beholden to AWS or Azure. Zoom is a relatively small fish vs. AWS; they wouldn’t want to piss off their Cloud infrastructure provider for what you’re calling “not a big bet on OCI”.
The point stands that they have physical infrastructure and all their own stuff in cages around the world, not just cloud native AWS tools.