In my experience, the highest operational cost with running services is managing the application itself - deployment, scaling, and troubleshooting. None of that goes away with the cloud.
In my experience, the highest operational cost with running services is managing the application itself - deployment, scaling, and troubleshooting. None of that goes away with the cloud.
The costs are dirt cheap these days. You can get a full rack, power and a gigabit feed for about $800 in many colos in texas. We opted for equinix in san jose, which is all fancy with work areas, meeting rooms, etc when you are there, but the funny part is, we're never there!
I do like the virtualization for some maintenance/flexibility so we have a few servers that are hosts and we run our own private cloud where we get to decide where/what runs. Database servers on bare metal with ssd drives in other cases. Best of both worlds.
It's so cheap you get a second colo in a different part of the country to house a second copy of your backups, and some redundant systems just in case something really bad happens.
Oh yeah and don't get me started on storage. We store about 100TB of data. How much is that on S3 per month? $12,000/month! A fancy enterprise storage system pays for itself every couple of month of s3 fees.
Consider yourself lucky. We thought the same thing, but when a RAID controller died on us recently we really didn't know what hit us. It didn't just stop working, it started by hanging the server every now and then, then after a day slowly corrupting drives, then after a day or two it stopped completely.
When you get evicted from an EC2 instance you just switch to a new one, the cost is constant. When your piece of hardware at the datacenter goes down, unless you had the ressources for a spare one, you are hosed.