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Comment by ghshephard | Hacker News Reader

I'm intimately familiar with the decision pattern that took place at Netflix, and what analysis they did, as I know some of their sr. operations staff.

The net-net is that Netflix could have saved 20-30% on their infrastructure costs by not going with Amazon, but then they would have to hire smart operations and infrastructure people. They wanted to focus on Software, and had no Operational leaders in their organization, so they walked away from that 20-30% infrastructure savings - likely because they realized that over time - infrastructure costs are not going to be particularly material to their overall cost of business - which will be dominated by the cost of the content.

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That is a strange way to look at the decision. Clearly the costs of staff have to be included if you want to compare operating your own data centers to using Amazon. It is pretty easy to say that Amazon is more expensive by x% if you are willing to exclude certain costs from the alternative. What is the difference after adding in staffing costs?

Amazon really is that much more expensive. Even among "cloud" providers, they are expensive. Their competitive advantage is extreme flexibility with large amounts of servers (spin up a few hundred instances in a few hours, spin them down again a few hours later).

If you do it yourself, you don't just have to worry about money, but also how to hire good operations people, and what effect all those extra people are going to have on your organizational structure, internal culture, etc.

Do they not offer any kind of bargains for such a huge purchase/company ? I'd think Amazon would work with Netflix to offer at least somewhat competitive prices. I am just talking out of my backside here, but it seems to me like they probably are getting a better deal then the average joe running an EC2 instance.

OK, that's probably true. Even on the EC2 pricing page, if you go over 1PB/mo the price is "contact us" https://aws.amazon.com/ec2/pricing/ so I'm sure they're getting a better price than the "official" quote.

The price difference included the staffing costs - including onsite sysadmins, a NOC, network engineers, systems administrators, DBAs, Facilities Planners, Inventory Tracking Staff, Circuit Managers, Project Managers - fully loaded.

What I meant by "And then they would have to hire smart operations people" is that that is both (a) challenging, (b) fraught with risk, (c) not something anybody at Netflix with a sufficient seniority was interested in doing.

It wasn't that those staff cost a lot of money, though at the time, Netflix was paying a bit more for infrastructure staff, it's just that nobody was interested in building an operations empire. If they'd had a Chief Infrastructure Officer who had a passion for doing it, Netflix would have paid approximately 20% less for their infrastructure costs. But, at the end of the day, given they didn't have that CInfO, and 20% less on infrastructure wasn't that material to their business, they just outsourced it all to Amazon.

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