FedEx to close data centers, retire mainframes
datacenterdynamics.com
datacenterdynamics.com
Renting your information infrastructure is a great way to reduce startup costs, but down the road, that information infrastructure runs your company. Trying to outsource it is like trying to outsource upper management.
To be clear, I'm not saying that the optimal amount of cloud services for an established company like FedEx to buy is 0. They bring in management consultants, too. But it sure isn't 100%.
That sort of guy. Well he once told me something about executives and upper managers working for corporations that I have never forgotten. He said to me, and of course I am paraphrasing:
"Change gives the illusion of progress". I asked him what he meant and he responded with something to the effect of "They have the habit of changing big things every 5-10 years on purpose to make it look like they are productive, and to justify their own roles, one guy will come in and 'cut costs', the new guy after him will 'invest'".
Well, six months later sales and profits were still way down and the new CEO was catching a lot of heat. He began to panic but then he remembered the envelopes. He went to his drawer and took out the first envelope. The message read, “Blame your predecessor.” The new CEO called a press conference and explained that the previous CEO had left him with a real mess and it was taking a bit longer to clean it up than expected, but everything was on the right track. Satisfied with his comments, the press – and Wall Street – responded positively.
Another year went by and the company continued to struggle. Having learned from his previous experience, the CEO quickly opened the second envelope. The message read, “Reorganize.” So he fired key people, consolidated divisions and cut costs everywhere he could. This he did and Wall Street, and the press, applauded his efforts.
Another year passed and the company was still short on sales and profits. The CEO would have to figure out how to get through another tough earnings call. The CEO went to his office, closed the door and opened the third envelope. The message began, “Prepare three envelopes...” "
IN PARTICULAR, at one Fortune 250 (which no longer exists), we implemented OneWorld to replace the mainframe. After 7 years, we still had the mainframe, AND a badly-implemented version of OneWorld. Then the company got bought by another Fortune 250, moves were made to "commonize" the IT systems, and then the parent company sold everything. But I'm positive that everyone involved in the project to retire the mainframe made the project look very successful on their resumes.
That's a very succinct way to put it. I think that observation also applies to consumer technology (e.g. regularly re-doing UIs to "improve" them when the changes are either in fact regressions or just different but not better). We've had it drilled in our heads throughout the modern era that new == better (e.g. the ubiquitous "new and improved!" marketing language), but that's not actually always true. Change for change's sake justifies itself through that misunderstanding.
In the recent past, we had a really high rate of genuine technological progress. But at some point we'll have picked most of low hanging fruit and will enter a period of slower progress, where faking progress will become more an more tempting for producers than the real thing.
Depending where, the real-estate and energy prices are nuts in most places. And, the engineers are expensive right now, and the services are cheaper.
It's not about giving it up, or change for the sake of change, it's about seeing the writing on the wall. These managers see the larger trends, rising energy costs, maintenance costs rising, hiring difficult, and retention of existing engineers impossible. Once you see those trends and a department is underwater and it's getting worse, you have to move. At another point in the market, when you may find engineers are less expensive, easier to hiring, technologies and space are less costly and easy to deploy. You move back.
That's deep and 100% makes sense, I can see how the cloud is both of these "things."
In exchange I offer two relevant quotes from my quote file:
> The empire long united must divide, long divided must unite; this is how it has always been. (Luo Guanzhong)
> When cuffs disappeared from men’s trousers, fashion designers gave interviews explaining that the cuff was archaic and ill-suited to contemporary living. It collected dust, contributed nothing. When the trouser cuff returned, did it collect less dust and begin at last to make a contribution? Probably no fashion designer would argue the point; but the question never came up. Designers got rid of the cuff because there aren’t many options for making trousers different. They restored it for the same reason. (Ralph Caplan)
That sounds ... dystopian.
Do you think it's "don't change"? Cause that gives right up on progress anyway. So good luck on getting large shareholders to give you the reins with that message. They're looking for ROI, not the status quo - if you don't evolve, your competitor will, barring monopolies and such. And even there... Microsoft of today is much less dominant than the MS of 25 years ago, and arguably could be worth a lot more had they made better moves. If that's not a compelling example, maybe check out Sears...
Maybe most people in these positions know that change doesn't guarantee improvement, but they know that sitting still is the same as just waiting to be defeated. So maybe there's something less-than-stupid about these "short-sighted" "illusory" changes.
But maybe if you want to be a wise executive, the key is to recognize that change might not just fail to improve your position - it might actually actively harm it. So the good executive is the one who chooses to try to change things according to reasonable calculations about both potential upside benefit and downside risk...
This is one of the biggest reasons many jobs are so miserable. You want to be in the job at the beginning of the"invest" decision. Unfortunately most people get little say in when they join because the information about this is kept internally to the company.
That itself is based on the belief that (historical) progress is an improvement.
Mostly true over the last few centuries - aspirin is nice - except for those occasions where it was mass murder.
I'm curious whether the folks claiming that have any data center ops experience.
Because, personally, I'd rather retire than deal with Dell, HP, Cisco, fibers, cooling issues, physical security, hardware failling... And that's just the hardware. Then you still need to pay VMWare for a decent virtualization platform, monitoring tools, etc.... Seriously, no amount of money would make me work in a DC again.
I believe companies selling bare metal as a service are a happy compromise of cost and convenience, though.
Also, that's just compute. What about data? Sure cloud accepts your data cheaply, but they also charge you for egress of that data. Yes you should have your data in more than one location, but if you depend on just cloud then you need it in different AZ which costs even more money to keep in sync and available for training runs.
I think for simple workloads and renting compute for a startup, cloud definitely makes sense. But the moment you try to do some serious compute for ML workloads, good luck and hope you have deep pockets.
Data center ops is ultimately a supply chain management problem, but most people don't treat it as such. That was my primary learning from doing data center ops at a few different companies. If you get the supply chain management right, and are technically competent, there can be a lot to recommend running your own data centers.
If the AC breaks at 3am it neds to be fixed. It doesn't matter if you have your own HVAC people on sight 24x7, your own people on call to service it, a local HVAC service to come in, or you outsource the entire operations and so you have no idea how that is handled. In the end the important part of this story is that whatever you are doing with the AC continues to work. Different operations demand different levels of service (I doubt that anyone keeps HVAC techs on staff 24x7, but if the AC is that critical it is mandatory). The only case where the CEO is up at 3am is if the CEO is the owner of the local HVAC service company, not the CEO of the building with the problem.
Once you realize that to management the cost is outsourced no matter what the only question is do it with your own people and HR, or outsource it. There are pros and cons to both approaches, but for most companies it isn't their business and so the only reason to do it in house is they can't trust any company they hire.
If your compute installation is big enough that payroll is a small fraction of the operating cost, then it's way cheaper than cloud. (that payroll has to include people who actually know how to build and run a huge compute installation)
The problem is that people come in integer units, you need a bunch of them to cover a bunch of different areas of expertise, and the particular ones you need are expensive. If you've got $1M worth of computers, you're almost certainly better off scrapping them and going to cloud, although the folks you're currently paying to run them might disagree. If you have $100M+ worth of machines it's a whole different ballgame; I'm not sure where the exact crossover is.
Note - that's assuming a single data center, and that you're big enough to build your own data center instead of renting colo space. If you need your machines to be geographically dispersed, you'll need to be even bigger before it's cheaper than cloud, and I'm not sure whether you'll ever hit crossover if you're renting colo space.
If you are sophisticated enough to engage an ODM, build your own facilities, and put hvac and electricians on 24-hour payroll, go on-prem. Otherwise, cloud all the way.
This is what I do. I rent bare metal from Hetzner and OVH. I also have some hosting hardware right at my place. It saves me a ton of money and no I do not spend any meaningful time to administer. All done by a couple of shell scripts. I can re-create fresh service from the backup on a clean rented machine in no time.
As for cloud - if I need to run some simulation once a month on some bazillion core computer then sure. Cloud makes much sense in this particular case. I am sure there are other cases that can be cost effective. Bot for the average business I believe cloud is a waste of resources and money.
I enjoyed server admin, "back in the day", when your servers were pets and not cattle. But of course we have to make tech just as expendable as our workers, business school demands it! What if your pet server gets hit by a digital bus?!
This isn’t really a meaningful analysis though. It’s just “when you do things in house there are things you have to do”.
It’s like saying, “I would rather retire than clean the toilets, restock the toilet paper, etc” in a discussion about whether to outsource your bathroom maintenance. Doesn’t tell you what’s cost effective.
The promise is to be able to pay up front for a rack that will function as a highly capable VM, storage, and/or compute host, without any of the overhead that Dell, HP, and IBM bring. Just plug it in and start giving it workloads to do. All config can be done through the web-based management console or via the API, just like AWS.
All of that can be handled by your colocation facility. In most cases you won't ever reach the scale where building your own DC makes sense.
> Then you still need to pay VMWare for a decent virtualization platform
Should still be cheaper than paying the AWS premium including for bandwidth, not to mention that you don't always need virtualization. If all you need the bare-metal for is a handful of machines to do a very specific task that's too expensive on AWS then running directly on the metal is an option (and leave on AWS the stuff that does require the convenience of virtualization).
> I believe companies selling bare metal as a service are a happy compromise of cost and convenience, though.
Agreed. Most companies shouldn't ever deal with hardware directly - just rent it from a provider and let them do the maintenance.
One of the visible signs of an unrecognized (and therefore, unresolved) dilemma is oscillation between two poles.
I got this from the late Eli Goldratt and the problem-solving tools he created. One of those tools is the "Evaporating Cloud," which is a way to visualize a dilemma of some kind.
I'd suggest that there is an unresolved dilemma here: Should we rent or own data centers?
Over a period of years or decades, you can watch these things flip-flop between two extremes.
It's interesting to me that this dilemma is kind of like a specialization (in OO terminology) of a more generic dilemma, which might be something like: "In general, do we want to own or rent the things we need to run our business?"
If your turn your head a bit, close your eyes a bit and squint, you can see how a dilemma like this can apply to things like "What should be our policy regarding employees vs. contractors? Should we try to hire and retain over a long period of time, or should we rent the people we need to get the job done and release them as soon as we are done with them?"
The overall point is that whenever you see flip-flopping between two poles, think "Unrecognized dilemma."
Sorry if this is vague.
If not for the rent seeking behavior of AWS and its cohort, the answer to ”own or rent” would be clear. The answer is “yes”.
Running a data center means you have your own sheep, which means you need shepherds. Shepherds are very useful to have when you have a question about sheep, especially when those questions are about how to manage or use sheep to best effect.
An approachable shepherd can save the rest of the company a lot of money on missteps and bad assumptions, but if you start getting rid of all the sheep, the shepherd will leave too.
We should be using cloud providers for DR, and for regional load balancing. But the company should be maintaining at least one data center of their own, in the same time zones as most of their developers.
I mostly blame Dell and IBM for this. IBM experimented with making server rooms easier to maintain 15-20 years ago and didn’t make it stick. Others ran with some of those ideas. Dell… I don’t know what Dell has done but I know nobody has been writing about it, so from a visibility standpoint they have done nothing.
If/when someone makes it easier (reduced labor) to manage your own servers, the pendulum will swing back.
Most of them were renting most of the infra anyway:
- Co-location (physical space rented)
- Managed service to keep the lights on (power, back-up generators)
- Leased hardware that gets replaced every 3 years
- Managed service for switch, firewall, etc. monitoring
- ISP, back-up generators, etc.
> but that will likely be many, many years down the road
They're going to explain to their future bosses that buying land, building a huge building, buying servers, figuring out cooling, setting up redundant ISPs, etc. etc. is somehow going to be smarter? Explain that one to me?
If you are big enough to have your own datacenter, you are paying Amazon enough to buy that much physical space, power, bandwidth, IT staff, etc. plus funding Bezos' trips to space.
There's a justifiable niche where you're too small to justify running your own server/below the need of one full-time IT staff where the cloud makes sense, and startups temporarily benefit from the ability to rapidly scale on cloud platforms. But any Fortune 500 transitioning to the cloud is literally just taking their money and burning it, because the alleged cost savings of efficiencies of scale are being completely absorbed by the cloud provider's profit margins. And they're still going to end up paying their own IT staff to handle the cloud management in addition to (by proxy) paying the cloud provider's IT staff to manage the hardware.
It's really just like the utilities these days, 98% people will not dig their own well and install some sewage system and buy a generator, but big companies can still opt to have them on-premise installed, even though some of those are just backup systems.
there is no return for the cloud for 98% of us.
There is no grand plan, there's just evolution.
One of the things that bother me about AWS is that I still need to manage their risk of a data center going down by using multiple availability zones and managing the complexity of extra resilience. There is a conflict of interest: AWS has a perverse incentive in keeping a single AZ robust and unless there is a natural calamity, it should not go down.
I thought one of the major reasons of going to cloud is that you need not manage risk and offloading it from on-prem.
Now, they might find that software is a differentiator for them, but that's different.
HNers need to get their heads around this: the economies of the could represent a fundamental, secular shift.
Imagine if Fedex designed and made their own delivery vehicles. Then they 'outsourced' that to Ford/GM. You might say 'look at Ford's amazing margins, look at the money being left on the table' - but in reality, it's still more cost effective to 'buy vehicles' the to 'DIY' them.
In the 'long run' those Azure/AWS margins will erode - and/or - the long tail will creep up on them. Basically data centers offering less, for less, and companies realizing they don't need the complexity of AWS do do basic things.
What that will look like is hard to say.
With hardware it meant 'pivot to Asia'.
Will this happen again? Chinese companies creating large data centres in the US with minimal staffing, monitored and operated out of China?
If we were not in a giant geostrategic kerfluffle with them, then yes, I would say that is the future. But given security issues etc. it's probably not.
Can India do that? Maybe.
By contrast, generally speaking, cloud providers are in an excellent position to use price discrimination to extract the entire surplus value of every transaction. And the flexibility and reliability provided by FedEx will to a significant extent simply be that of their computers.
(As chrisseaton pointed out, Boeing is in a cloudier position.)
And this is where people in my age range (20-30) will get to swoop in if we invest the next 10-20 years learning about and tinkering with server hardware.
I highly recommend it for everyone.
https://www.reddit.com/r/AskHistorians/comments/vqr30e/jack_...
"Jack Welch extracted record profits from GE for 20 years, but left it a hollowed-out "pile of shit," according to his successor. What exactly did Welch do that was so damaging, and how did he get away with it for so long?"
from the post reply, in case it's not available from the URL:
alecsliu · 2 days ago · edited 2 days ago Gold2Eureka!Bravo!Today I Learned
Welch took over a GE that was at the time, a major company. At the time, he viewed GE as bloated and needing to change. While he might've been right about that, the approach he took was perhaps less ideal.
One of the worst things he helped make commonplace among American companies is the concept of stack ranking. The way it worked was like this: people were divided into three groups: A, B and C. A's were the top performers who needed to be rewarded generously, B were adequate performers who should be allowed to stay, and then C were those who needed to be fired.
So far so good right? Well, not exactly. For Welch, these three buckets could be separated into the top 20%, the middle 70%, and the bottom 10% (20/70/10). Based on the above points, the bottom 10% would thus need to be fired annually.
In the short term, this helped in making the company lean and look more productive, increasing the bottom-line and portraying an image of success. However, the long term consequences of such a change was cultural degradation and the introduction of new bloat and waste (running all of those performance reviews and firing and rehiring so many people takes a lot of money.) Consider the case of a perfectly adequate team: the entire team has achieved their targets and has contributed to the company as per their job description. The issue? In stack ranking, 10% of this team would still have to be fired even though everyone did their job. Unsurprisingly, the introduction of this competitive atmosphere where it isn't enough to succeed, one must be better than their peers, results in backstabbing, competition, and a host of issues which eventually weaken a company's competitive edge.
This was only a part of Welch's general treatment of workers as numbers rather than humans. Aggressive cost-cutting, offshoring, etc. were the norm under Welch's regime and he would destroy entire divisions. This again, was great in the short-term but bad in the long term. Welch clearly had a dim view of company culture and believed it to be unimportant.
The other major issue of Welch's was the acquisition of hundreds and hundreds of businesses, as part of Welch's goal of acquiring his way to the top. On the surface, this is what Welch did; on paper, he didn't destroy the main profit makers of GE so much as create new ones, primarily in the form of its financial arm.
The result was that this allowed GE to play with the numbers in a way that allowed him to make sure that GE was always meeting targets set by Wall Street; in order to generate the right earnings, simply buy or sell certain assets, write-off others, etc. and when your company is an acquisition machine, it's not too hard to find the right numbers. This process helped expand GE into a mega-conglomerate but again, ultimately left the company in a weaker than expected state. In particular, on paper the core business of GE became its financial arm, as that was where all the funny business with the numbers was happening (nothing explicitly illegal though). Ignoring the damage the Welch did to GE's profit centers through his horrible business practices, this was a huge part of why GE declined so rapidly in the years following. GE's valuation was based on an inaccurate picture of its profits and value, so when the truth started coming out (especially with the Great Recession collapsing financial services profits), GE was quick to follow.
As for why Welch was able to get away with it all? Well, the answer was because he was delivering. He hit the earnings targets, he made the board and shareholders very happy, by all accounts GE was the paragon of success and everything was going right. What Welch did was unprecedented, and it's hard to really understate that. For all of his faults, he had America tricked into believing that what he could do was unique and that he could avoid the realities of the economy and cyclical markets, that no matter what was going on, GE was special. Welch died a rich, rich man and many, many people profited greatly off of GE during its 20 year bull-run.
Edit: My off-the-cuff writing is always horrible wrt to grammar and structure so I'll probably edit it later haha
For example FedEx flies Boeing jets. It's completely reliant on Boeing for parts for those jets. Presumably Boeing can charge whatever it wants.
Your company is always going to be reliant on other suppliers and contracts. Unless you're planning on building your own independent country in some location that has all the natural resources you need.
Non-argument.
Nobody said that FedEx should build their own server hardware. And that's what you are comparing it too.
FedEx could just buy server appliances from e.g. Dell (buying the Boeing jet) and operating it. Because paying some other air cargo company will eat a lot of their margin, the same with Cloud infrastructure. They are not a startup which could better invest their time in development, they can without any problems hire some people to administer their server fleet. When they switch to a cloud they will likewise hire some engineers only managing e.g. AWS to administer it.
FedEx might have a viable alternative to Boeing for repair parts, but not for planes, and more broadly I think you could make that argument about US airlines in general in the late 20th century: despite things like the MD-80 (before the merger) they really had no alternative to Boeing. It is perhaps not a coincidence that the net profits of US airlines in the late 20th century were almost exactly zero, while Boeing was and is one of the most profitable companies in the world. So far Boeing isn't squeezing FedEx that way, but not because it can't.
(I do note, though, that FedEx owns its own jets rather than renting them.)
But I think there's a different sense in which informatics are more core to FedEx than even flying. FedEx is a corporation, which in its essence is a set of business processes: relationships, practices, and information; unlike a 19th-century railroad, its physical assets like airplanes are relatively expendable by comparison. Historically, those processes happened mostly in people's heads, especially the heads of its managers, but today the vast majority of FedEx's business processes are automated, which means they happen in FedEx's data centers.
And whether those automated business processes happen at all, and how well they happen, is a matter of competence in informatics. Dan Luu argues convincingly that Twitter's kernel team has been key to their ability to execute in https://danluu.com/in-house/; FedEx needs not only data centers but a kernel team and a convex optimization algorithms team.
It's extremely common for companies that are deeply dependent on a single supplier or customer to end up either merged into that other company or bankrupted by the situation.
As for the country, when I set it up I'll be needing yeomanry regiments. You in?
Edit: removed rude phrasing.
No that’s not what I wrote.
You don’t buy a jet outright and forget about the supplier - you’re eternally reliant on their service, certification, parts, etc, as regulation is so high.
And believe me, I know a thing or two about being discourteous.
In fact, FedEx likes to buy out Boeing facilities so that they're not "completely reliant" on Boeing for anything.[1]
As for the more general cloud v. on-prem debate, I usually don't like analogies, but the plane analogy is good because jets and logistics-management systems are two things that FedEx needs to handle extremely well to compete.
So, what does FedEx actually do wrt jets?
FedEx both owns and leases them. It mostly owns them outright. Its owned jets are a mix of new-ish to very old (think DC-9s). It also leases and some financing magic (such as some big lease agreements for new 777s a couple years ago).
The reason is that FedEx generally gets excess value from owning rather than leasing, but there are some circumstances where leasing makes sense.
Same goes for "cloud" deployments. The correct answers to cloud "versus" on prem for large organizations like FedEx - "it depends," "that's a false dichotomy," and "it's almost certainly a mix of both" - are neither interesting nor simple, and so those answers don't get execs' attention...or headlines.
For FedEx to brag about taking an extreme position on cloud deployment is breathtakingly foolish. If I were an investor, I'd want to hear something like, "Based on a careful analysis, we've decided to shift certain specific operations to cloud-based systems. We plan to maintain control over the infrastructure and operations of mission-critical systems that have demonstrated resilience." (I'm assuming the latter are systems like the financial institutions rely on, where purpose-built stuff like mainframes using IMS have demonstrated near-zero downtime and darn-near-bug-free software for decades, because FedEx, like banks, needs to handle lots of simultaneous transactions in real time without error or deadlock.)
[1] Example: https://www.ch-aviation.com/portal/news/102874-fedex-to-take...
This, in particular, is a bad argument since jets are replaceable and interchangeable.
Possibly, the only thing that is not replaceable in FedEx is their information system.
This isn't a one size fits all thing. For a company like FedEx I don't see the advantage of owning their own data centers. They just don't have the scaling challenges that would require that. Data centers or information infrastructure as you put it does't fall within the core competency of FedEx, so I don't think it's a fair comparison to say its like outsourcing upper management. I think its more fair to so that FedEx building their own datacenters is like building their own roads to deliver packages on.
For a company like Facebook or Google, the difference is clear. They need to handle such a high scale of traffic and volume of data that they need custom infrastructure to be able to scale efficiently at significantly reduced costs. The same reason it made sense for them to invest in building their own databases, because the existing options didn't meet the scaling requirements. FedEx won't realistically be needing their own database or infrastructure any time soon.
I don’t know about that. They are a global logistics organization that rivals Amazon in scale. They are not parsing web scale data like Google, but as far as meatspace data goes they are they seem to be about as big as it gets?
Your metaphor is a little bit off. This is more comparable to FedEx renting vs owning their fleet vehicles.
Obviously they aren't going to be setting up foundries to to scratch-build engines and network switches. But it probably makes as much sense for them to own the buildings & computers running their logistics software as it does for them to own the buildings and vehicles running their logistics hardware.
As an aside, I'm sure FedEx would LOVE to get customers locked in to private FedEx roads with private FedEx addresses that no one else is allowed to deliver too. Thankfully, our system of public infrastructure is robust enough to make this infeasible.
Scaling is one of the big cloud advantages. Static Known workloads will almost always be cheaper on Prem than dynamic workloads that need automated scaling
One of the big ways an organization can save money is if they can scale up and down their loads on demand
But if you have a static 24/7 workload almost universally I can build a onprem solution that is be 50% or more cheaper than cloud
Depends how seriously they're locked onto the postman/route inspection problem. Which is a factor for delivery companies and, depending on how hard you chase it, a driver for almost infinite compute. Once you're playing that game, the economics look very different to most 'not an IT company' IT needs.
That is really not true at least in the USA. There are all kinds of taxes and fees for using the roads with large trucks. Have you ever seen the weigh stations on the sides of the highway in the US? Those are there to fine the trucks for what they are carrying if it is beyond what is allowed among other things. You said km though so you probably are not in the US.
In this case, if a cloud provider gets too monopolistic then the BATNA for fedex is to re-hire (or train) enough sysadmins to run their own systems again. That puts an upper limit to how much a cloud provider can charge for their services, in addition the competition between Azure/AWS/GCP will also keep prices somewhat down. The cloud providers know this and will price accordingly.
I don't think FedEx re-hiring a competent sysadmin team and rebuilding data centers once they've lost that knowledge is merely a question of spending enough money on the problem; it's the kind of high-risk IT project that often sinks companies.
Uh yes, exactly?
Clouds give small customers the first hit free as a loss leader. With very large customers, clouds have to be price competitive because if you're at a large scale, it is totally worth spending millions of dollars for a 5 year plan to change clouds. The people who get screwed are the medium to large customers for whom the cost of changing clouds is too high to recoup in a reasonable timeframe. The moral of the story is be very small or very large, but avoid being medium sized.
You've literally just explained why a large company would be perfectly willing to be overcharged by a cloud provider in order of millions of dollars. They would have to pay that for migration anyway and there is always a risk of creating disruptions in the process.
It's a huge project but there's not a lot of actual redesigning.
Once your start up has become an established company and are so busy that you are no longer able to scale down regularly, it seems that's the time to start having your own compute vs continuing to line the pockets of the cloud providers.
This makes me think computer infra could potentially become a commodity.
Most cloud providers do let you run your own software on a managed substrate of infrastructure. But they also let you, nay, encourage you to build on top of their abstractions instead.
This "ultimate" endgame has been predicted since at least 2006 and we've yet to see anything but price decreases on cloud services. Tons of labor has been invested into deliberate cloud agnosticism with no apparent results. I am fully on board with economic arguments that favor data centers over cloud for some organizations. I don't think the capture-and-increase argument holds evidential water or ever will in a competitive environment, and the environment is more competitive than ever.
The cloud market is so large ($ TAM; also growing rapidly) I think there will always be a tailwind of investment and innovation that prevents monopolistic stagnation.
vendor relationships do not have to be hostile. AWS has been around for a while and has never raised prices, some services have gotten 99% cheaper.
yes there's some hypothetical day where they say "tricked you, all that stuff about margin being opportunity was a lie" and they try to extract value short term while burning their reputation
but every day that goes by where this doesn't happen is $$$ wasted on trying to avoid it
I'm betting it is not this kind of thinking exactly that causes the problem.
(Oh, and do take a look at the vertical consolidation of the Japanese industry.)
This is silly. There is a lot more to FedEx than hosting physical compute infrastructure. FedEx doesn’t own all its own airports. A CSP is just another vendor.
That's a competitive environment.
How many major cloud providers exist, and what could they do to make it difficult for FedEx to leaving for another one?
Plenty! AWS is HUGE but hardly a monopoly.
>what could they do to make it difficult for FedEx to leaving for another one
If the guys running this at FedEx are smart, not much. There are ways to deploy all of this in a platform-agnostic way.
I think the digital transformation to watch is the US Government's IRS Tax Cloud. Never been into taxation law & policy wonkery myself, but Tax Cloud is purported to Save Trillions in TCO!
> Clown Computing is an elegant, distributed, breach of trust.
> Take customers, as many as you like, convince them to hand you all their data, the management of said data, the authentication and, while you are at it, the DNS. Oh, and they pay for it too!
> If this was done in real life it would be called a robbery, possibly at gunpoint, definitely in broad daylight. It used to be the case that Oracle licensing was deemed the pinnacle of IT robbery ('90s) but it looks positively quaint now.
But by the time this becomes a problem the executive team will have cash out nice bonuses from the short term gains from cost savings...
Apple fairly notoriously hosts iCloud in other company’s clouds, and they’re a computer hardware and software company! If you’re less sophisticated than Apple, it’s a no-brainer to go with clouds.
They’re in the datacenter game long term. In no universe does Apple “host iCloud in other company’s clouds”. Apple is notoriously a control freak and would never place their strategic services at the whim of cloud AZs. That idea was proposed and quickly eliminated. (Believe it or not, it is possible to spend that much on Azure/GCP and still only use it for basically blobs. How do you think they moved so easily in 2018ish?)
My argument is not that specialization in informatics operations is unprofitable; rather, it's that specialization in informatics operations is indispensable for maintaining the negotiating position required to earn a profit. I'm not arguing that there isn't room in the system for the cloud operator to earn a profit; I'm arguing that after committing themselves completely and irrevocably to cloud operators, FedEx will no longer be allowed to earn a profit, or rather, just enough profit to keep their stock price from collapsing.
Now, it may be that the advantage of specializing in informatics is so powerful that this situation is unavoidable, and the only viable option for companies like FedEx is to become, in a sense, franchises of Amazon, Microsoft, Google, or Baidu. You remember when this happened to companies like Intergraph in the 01990s: they were reduced to undifferentiated Microsoft resellers. And it's not clear they really had another option. I'm not confident that the situation is currently so extreme, but maybe it is.
As other commenters have noted, you were pretty comprehensively wrong about iCloud, but that's a minor supporting point.
Is the expectation data centre operators will see margin expansion? (Genuine question.) I had thought data centres were increasingly becoming commoditised.
Balancing vendor lock-in against efficiency is the remit of a half-competent CIO or equivalent. Going cloud doesn’t require using every niche AWS feature.
Data center/SaaS is somewhat naturally monopolistic due to cost of switching though. Legislation should target "high cost of switching" areas to make them more competitive. Translates to lower prices, better for society in the end
That is, all companies ever.
The opposite of what you're proposing is "do your core business".
Why would fedex be better at running computers than Azure is?
Why does FedEx use vans built by a car company? They should build their own vans. The tires should clearly be made from rubber that FedEx vulcanized themselves.
I've seen huge insurance companies outsource not just their hardware, but their ops too.
McDonalds may be in the real estate business (and not the burger business), but FedEx is not.
The cloud is the only reasonable way to keep up with exploding compute demands.
The question is how much of the savings end up in whose pockets, or whether the price at which they actually sell exceeds the TCO of running it yourself.
Outsourcing at least the commodity part (dumb hardware) seems reasonable, and migrating to a competitor doesn't seem like too bad of a BANTA if you aren't locked in.
If they're building it on AWS only kit and locking in, then they open themselves to risk. If they build it on standard VMs running on AWS, Azure, Digital Ocean, then they can shop around at contract renewal time, just like they can with Mercedes vs Ford vs VW trucks
As long as they stick to services that have overlap been providers (postgres, mongodb, nfs/cifs, etc) or transformers (s3, azure blob storage) and package their code in somewhat agnostic format (docker images, wars, what have you) they'll be fine.
Big organizations often do things that seem wasteful as a way of dumping organizational cruft.
I agree with you, that the hype train "cloud = total freedom" (whatever that means) is rubbish. More and more it seems, that a cloud model is just yet another option between Mainframe, AWS, Google Cloud etc.
Far as I can see the only arguments here are that either cloud compute is naturally monopolistic, which seems a stretch, or there's another factor that will lead to ruin here (e.g. long-term connectivity loss between your and your compute in a particularly nasty disaster scenario). Like, I don't care* if my baker's goals are orthogonal to my own. They just provide crullers for the morning stand up and I can get them from other places despite the insurrection that would occur if staff ever went without. I can likewise not care if my cloud provider's goals are not aligned, because if they screw me I can just shop at another bakery, so speak.
All of this said, outsource to cloud isn't free. You have to have an exit, or at least transition, plan. You have to architect into the configuration, not just transpose what you have. You have to maintain platform-agnostic restorable backups of the information that's critical to your organization, and have an operable proven plan to bring in online. Failure to do these things, which I think is the case for a scary number of organizations that have 'gone cloud', could indeed lead to ruin.
I know this comment is weird. I'm in an odd space here of agreeing with your conclusion but mostly disagreeing with the premises on which you reached it.
*until we see a cloud provider that also owns major fab i.e. if Intel or AMD went into direct cloud provision and took it seriously for about a decade I'm pretty sure it's game and over the world itself would implode from the sheer monopoly that would ensue. Until then, however...
As long as they have backups, yep, that's a quite possible alternative. And backups cost very little, and don't need to run flawlessly 24x7.
They will probably pay through their nose either way (backups or not, migrating or not), because that's how the cloud works. But well, that's for their bean-counters to count. As long as they have backups, it's not strategy defining or an existential risk.
(Anyway, nobody goes around talking about BATNA of the proprietary, rented mainframes. I wonder why.)
That's correct assuming monopolistic behavior. I believe pricing in information infra will be a race to the bottom. We've not seen a lack of competition in this space.
But there will surely be a backlash and an - at least partial - return to operating your own datacenter for some companies in the future.
This is permanent secular shift.
The advantages of the cloud are just starting to be realized.
That said, for some kinds of operations, they may want a lower cost cloud provider with a more basic stack.
Secondary operators of the world need to get together and start offering a standard stack for basic things so that people can wean off of Azure and AWS.
Over time competition between the 3 major clouds combined with hardware getting cheaper will mean there is not going to be a massive jump in prices, if any at all.
It is not impossible to design relatively cloud-portable server software.
Also I think FedEx, and companies in general, would prefer to increase revenue rather than reduce costs (by running their own data center) in order to increase their net profit.
If AWS et all get too greedy, competitors will pop up saying 'your margin is my opportunity' and market competition happens for something that is a commodity, and becoming more so as time goes on.
Cloud setups are useful, as are many ways of their associated architecture/infrastructure elements. Saying no to these is problematic too.
It is true that cloud computing has become a monopolistic, categorically non-neutral sector. They'll have you over a barrell.
So, dilemmas. Difficult strategic choices.
I think the reality in this case is that the cloud providers are little different than the incumbent (ie IBM or some other dead platform). Mainframe is a sole source solution, and IBM is always trying to extract their own pound of flesh as they manage that business down to zero.
At scale, you’re better off managing a handful of suppliers (probably Microsoft, Oracle, Azure, IBM) than dealing with one, and figuring out how to sustain the business as the workforce literally dies off. Nobody with half a brain is getting mainframe skills.
I’m not a fan of FedEx, but they seem to be a company well aware of its limitations and able to take action to correct. For example, they went to “outsourcing” the last mile delivery to independent contractors first when they figured out (almost too late) that e-commerce needed ground shipping. They sort of did Uber, except they didn’t have the ability to just break the law.
they can rent hardware only, and still run their own infra (kubernets and all stuff on top on it), then they can negotiate reasonable prices and migrate away if they want to.
Cloud services are about to evolve in ways that non tech-specialized companies can replicate on their own. Cybersecurity requirements will grow and bandwidths will be pushed to the limits. Just leave it to the professionals.
You say that like it's bad.
The optimal amount of cloud services for an established company like FedEx is 100%, not merely with a "disaster recovery plan" but with live, 99.99% redundancy by which I mean two almost exact systems running nearly simultaneously (within a second or two of one another) on two completely different networks.
FedEx enjoys almost all of its competitive advantage from its physical network. IT is not core to its business.
Here's the problem... almost no company actually does disaster recovery and "parallel redundancy" properly because most C-level executives only pay lip service to it.
Therefore, the whole notion that disaster recovery and "parallel redundancy" don't work is predicated on the false notion that companies actually have proper disaster recovery and "parallel redundancy" in the first place.
If FedEx is not large enough to be one of those companies, how large do you actually have to be? Or has cloud pricing changed to the point where this is no longer true, and even huge corporations can save money in moving away from their own premises?
Take FedEx, their operations are highly dynamic - per day but also per period. The number of packages sent, and being transported, vary greatly between a random Tuesday 15:00 and the weeks before holidays.
In such a scenario, with your own infrastructure, you need to overprovision, by a lot, to be able to handle the heaviest load possible, and then some margin on top. And that capacity is wasted what, 90% of the year?
Meanwhile if you subcontract that part on AWS, it's their problem, and they can afford to handle it, and you only pay for what you actually use when you use it.
Taxis are "only pay for what you use", but owning your own car is often cheaper (even if you only use it, what, 1/12 of the day?) and more convenient.
The same routing algorithms have to run either they have one package or 1 million packages.
Plus you need to keep the history of the operations for months if not years (meaning that you will store both holiday and random Tuesday data anyway).
So where is this flexible cost exactly?
Perhaps there isn't the mindset/ability to actually execute this though.
This works great for everyone, the hyperscalars have much lower costs than even the biggest enterprise customers so the company get a good deal. And the cloud company makes some revenue off the minimum spend (making capacity planning a lot easier) and they know once the compute and storage there it will be very likely the company starts using extra managed services.
The dollars-and-cents are details. Those matter, of course, but don't base your entire analysis there. Staying vertically integrated may help fedex be 4.713% more profitable today, but might miss out on important growth areas and become a dinosaur. Or maybe the important growth areas involve data center innovations, and staying vertically integrated allows them to exploit those opportunities. So it's not always an easy decision, but it involves more than the present-day costs.
Ultimately, this is an opex vs. capex decision. Data centers are expensive, and require a lot of up front capital to go into the ground. FedEx is worldwide and moving more technology to the edge, so buying land, designing and constructing buildings, and then operating them for 10 years or more in a large number of locales requires a huge investment. They can take that money now and solve their problems immediately.
They are also not saying what they mean by "closing its data centers". FedEx announced a 10-year partnership with Switch last year to build and operate edge facilities. FedEx may be moving out of data centers it operates on its own into facilities built and run by others, and using "cloud-native" designs deployed on hardware in those facilities.
I don't think this sentence has meaning
The Mainframe is a sort of cloud, each one has usually double the spare capacity and you call IBM to unlock it.
The cost of running a Mainframe is measured in terms of MIPS based on amount of compute used and there's compute reserved for offloading things like JITs (zAAPS). Essentially a version of cloud compute costs.
I can understand if you're locked into COBOL with EBCDIC and can't find talent, but Z runs freaking Ubuntu now! I know IBM works furiously on modern ecosystem support.
Not shill for IBM, but what exactly is it that they're expecting to be so different from their cloud migrations? Or is everyone here caught up in the "Mainframe old" falsehood.
Here's the thing: A mainframe may have spare capacity, but you still have to call IBM to unlock it. In order to make a Z run in a cost-effective manner, you need to run at 90%+ utilization at all times - which is excellent for batch jobs that can be scheduled, but is difficult to achieve with on-demand loads.
You're paying based on compute available, not just compute used (unless I'm misremembering our contracts back in the day). Sure, the amount of available capacity can be changed, but a phone call to big blue is not automated. Cloud autoscaling is.
You're right that IBM mainframes are far more modern and cost effective than we assume. Sadly, they are still behind the curve of cloud hosting.
Respectfully, the hell you say. Cloud 'autoscaling' is something that has to be tenderly maintained by software engineers, who expect to be paid salaries and benefits and so on. It's not like FedEx can just rsync their data into the cloud and have all their software run forever. Instead, they need the engineering team that manages their existing data workflows, and now they also need cloud engineers to translate that into something that won't bankrupt the company, since they're moving from the mainframe world (where you keep your system loaded to an efficient price point) to the cloud world (where you are billed by the second).
Moving your compute spend from capex to opex is a perfectly valid move, but pretending the reason is that someone has to make a phone call once in a while is kind of bizarre, when the alternative is having to hire a whole new cadre of techincal talent.
Ever work for a company with their own datacenters that were NOT cutting edge? The work to provision resources can be so painful that it severely inhibits prototyping. Being able to spin up resources in seconds with some API calls is very valuable.
It's probably this. I've spent time trying to advocate for the benefits of these systems, but its like shooting a super soaker into the sun.
I get my pick of a billion different hardware vendors, they’re all interchangeable and interoperable, every problem I can possibly dream up has been solved a hundred times before. The skills are commonplace and transferable so hiring doesn’t mean convincing some poor desperate grad to get trained in the company script, hires will actually want the skills, and you can find senior people.
Mainframes are still king when it comes to transaction processing but having such a closed off ecosystem has screwed them.
Even FPGA's are more accessible to learn. On AWS you can spin up eg; an F1 instance and get a dev environment.
you don't need to call AWS. Negotiate a blanket deal and do whatever you need. Run whatever you want. Unsure? Check billing page.
If you go to the cloud you don't need to fire anyone for choosing IBM, you're not getting strangled by any Oracle contracts, you're not gonna lose all your data because of security holes in your use of Microsoft products.
You're also not going to be dealing with downtime because you couldn't find staff talented off to properly configure your Cisco networking equipment.
Your system administrators department is not gonna block any innovative employee initiatives because of the strain maintaining more projects puts on a deployment stack carrying 150 different projects but which was architected to solve a single business goal 15 years ago.
Imagine being a 67 yr old manager who just wants to be in the business of getting letters printed on tree pulp from Bumfuck, Idaho delivered to Louisville, Alabama reasonably effectively. Knowing nothing about computers or information technology, imagine the insane stack of perfect decisions that have to be made to get the IT infrastructure of a company like FedEX running.
Not saying going to the cloud is the best decision. Not even saying it's the decision I would make. But it does sound very enticing to just have all of those problems go away by throwing a couple hundred million dollars a year at Google, Microsoft or Amazon (btw lol if they go with Oracle or IBM instead).
I'm sure they'll save many millions.
Earlier this year I left FedEx after 15 1/2 years of service. Every single day I used an IBM AS/400 terminal to interact with several systems to do my job, the bulk of my job was done via that terminal. Yeah, that's how old most of FedEx's tech is. A few months before I left they had just migrated one of our in-house systems over to Oracle likely as part of this. That said, the mission-critical system was having almost daily errors/downtime once migrated to Oracle soooo...
I imagine some of this is the simple fact that they need to replace these severely aging, no longer supported, IBM AS/400 servers throughout the company. They lost hardware support around 2020 and, if I'm not mistaken, haven't been made since like 2008 or something. That alone is going to save a pretty penny in new hardware and energy costs as well as free up physical space at often already crowded areas.
It'll also save time-lost costs. Any time power would go out at our building, the servers would usually be done for tens of minutes even with the generator kicking on. We'd lose a couple of hours a year usually to the servers that were in our building coming back online. A couple of hours, times 100~ employees at one site, equals a LOT of backlog being created which ripples through the company. While that few thousand dollars they're paying employees during that downtime isn't much, it would cascade and disrupt the freight handling. If a single package didn't clear customs in time, then it might end up as an overage and have to go to a bonded cage, that's now 2 extra movements added, that's freight planning for possibly multiple trucks that will be part of the delivery once the package landed in the United States, you might see a thousand or more shipments (that may or may not be single package shipments) now needing to be handled extra at a half dozen ports, even more sort facilities, and even more local facilities. That's just from 1 office losing power for say a half hour.
Moving those servers to a cloud provider should provide a much better uptime which should translate to a notable savings in the above situations.
But also, mainframes are extremely expensive, so they can probably do better on commodity hardware. The cloud is a way to rent a lot of commodity hardware.
The big-brained move that they are almost certainly not doing is to use cloud services to bridge the retirement of their mainframes and move everything back on-prem with Linux boxes in 5 years.
Either way, it's definitely not the cost difference between on-premise and cloud. Cloud providers are not charities, and their buildings and staff are not cheaper than yours.
* edited from million (meant to type billion)
https://www.businessinsider.com/bank-of-americas-350-million...
With modern open source tooling, ridiculously powerful graphics cards, easily accessible FPGAs and free data center hosting software like OpenStack, Kubernetes, and glusterfs you can replicate many of the features that made mainframes enticing many years ago.
It'll require a heck of a lot of work to get the same performance out of a custom built solution, but long term it's probably cheaper than relying on IBM.
I doubt that they'll be saving any money by moving to the cloud unless they're horribly inefficient with their contracts right now. Just moving away from mainframes alone should save a significant buck, but if they were planning on restructuring their digital infrastructure anyway then now is probably the best time.
Granted, the footprint per sim bay isn't huge (1-2 racks, usually, sometimes 3), but it can add up at the larger sim facilities. Several of the major airlines are running 30+ bays simultaneously, with United poised to come in with the most at 40+ in the near future.
It... was an experience.
I imagine that is going to take quite a bit of work to migrate over to someone else's servers, as I doubt they're going to be like "sure, we can accommodate your decade and a half old, mission-critical, systems"
- Build middleware (REST API endpoint) in front of the mainframe that was 1:1 mainframe functions. It initially does nothing except auth and routing.
- Re-write/migrate all other software from using the mainframe directly to using the new middleware.
- Work to further restrict anything directly connecting to the mainframe aside from the middleware, including staff's terminal access by building management solutions (e.g. new UIs, new management middleware).
- Once the mainframe is completely isolated, start building drop-in replacements for business segments and then switch the middleware(s) to point at the new solution from the mainframe. This should be invisible to all external consumers. You can "hot test" it by having the API execute on the mainframe + new solution, and checking for 1:1 responses.
The hardest part about the above isn't the tech, it is the internal norms that you're fighting against (e.g. staff have had terminal access for tens of years, and know the commands to get their work done by memory). So you have to create very compelling alternatives using the new API middleware/web/apps, "export to Microsoft Excel," graphing, mobile support, and similar that a terminal cannot directly offer is clutch here.
But one of the easiest way to retire anything, is to stop doing new work on the older systems. Any new project should go on the new tech.
Soon enough you will see the older systems gone. It won't happen in weeks or months, but 1 - 2 years is enough.
At one point the whole banking industry used to de-facto run on Java. Eventually people just started doing new work on Python. These days Java is just another tech there.
Can their existing mainframe software and databases simply migrate into a cloud offering? If not, then if their planned transition has delays or technical hurdles, how much of that cost savings is affected?
If their cloud providers change pricing structures in future contract negotiations or if the amount of data they transfer in/out of each cloud provider location changes dramatically in order to better serve their customers, how much of that cost savings is affected?
It's clear that you can run a business with minimal amount of physical plant for servers. It's still not entirely clear to me that large established businesses can actually save money this way.
Let's assume for a moment that modernization is good. It probably is wrt mainframes. For every team that refused to modernize, you can now drive them to the 2024 date, absolutely no exceptions.
If it drops all the way to the bottom line, that would boost their 2022 profits by 35% and 2021 profits by about 45%. Seems like a decision you have to consider, even with possible failure modes.
* In-house development teams have more agility in standing up new services, since they can just use EC2/ECS/one of the other 1500 container runtimes AWS has, rather than having to wait for someone to provision new physical servers for them.
* An extensive suite of complementary products are available from cloud providers, it's not just about being able to start a VM, in many cases you don't even need to because you've got Lambda, and the various managed services.
* Less training/hiring overhead, since people who can use AWS are pretty much a commodity at this point, whereas people who can manage a mainframe are an increasingly rare breed.
* Redundancy becomes easier. As does data locality, let's say Singapore declare all services delivered in Singapore must be hosted there. That's a lot easier to handle if you don't have to go and build/acquire a data centre first.
* The aforementioned 400 million dollars per year.
EDIT: I used to be like that, too.
However if they were to undercut UPS and others they might be able snap up UPS business, dropping the profit to $1, but on 200 million deliveries, and thus they'll make $200m instead, you the customer will have a cheaper delivery, and everybody wins
I'm not being facetious.
Are they really going to close all their on-prem datacenters in the next 2 years? Maybe.
More likely, this is a way to build momentum around the transition to cloud. Not a bad strategy, and not uncommon from what I've seen in the enterprise.
With Amazon being a formidable logistics competitor, I can see why Fedex might be loath to fund a major competitor.
Surely FedEx would have a metric shit ton of data?
Really, not the first example I’d reach for.
But when I spoke to a CTO of a F500 company. This was the take he had. He feels one of the major driving force is to reduce the carbon foot print of the company. His company is designing the system to have the crucial data on their own infrastructure but keep they other data & do the processing of cloud service. Instead of relying on 1 provider, they are using multiple. Also supporting some small local cloud providers.
This seems very relevant for a logistics company with a huge of fleet of air craft. Especially considering the upcoming carbon tax.
Also, from my understanding, it can take a tremendous number of distributed x86 systems to supplement the scale, speed and reliability of a mainframe. It's possible that unless FedEx gets away from managing storage arrays and hypervisor farms, they wouldn't have enough staff to operate the datacenters once they're full of enough servers to replace the mainframes.
Just like many other industries, the market for mainframe operators that want to earn less than technologists in modern stacks has been drying up. A lot of mainframe operators refuse to bring their pay scales in line with what developers in modern stacks are earning. Why take a pay cut to go work on a 40 year-old system when you can work on modern stuff with more money?
They keep the pay low and complain about a labor shortage to deflect from the fact that they're simply choosing to ignore market forces.
What sort of work is typically done on such machines these days.
A company then have two options: (a) replace/pressure top/middle management to get costs down and processes streamlined or, (b) move to the cloud. Its easier (and possibly good for your resume) to move to the cloud and then a few yours later -- decide again.
So moving to the cloud is sometimes an indicator of an inflexible/stale/mature company.
But perhaps they're talking about engineering velocity, reliability, etc. Of course everyone knows Dropbox's story with this: https://www.datacenterknowledge.com/manage/dropbox-s-reverse...
Does that truly sound achievable, when they have the most difficult to migrate part of their mainframe applications still on their mainframe? The easy stuff they have already moved off.
In light of this, it's easier to outsource the network and data infrastructure to a provider that actually does it day in and day out and put the limited engineering resources to something that is more impactful.
Just reaffirms that quite a few companies do not want to run their own servers unless they absolutely have to.
Surely this is just one ingredient to a successful company and there are myriad factors involved. The core business of Boeing isn't to make planes its to sell them.
I imagine Twitter could also be built over a weekend, right? :-)
But yeah... old company, they might still have stuff written in cobol virtualized somewhere.
That seems implausible: where did they keep their mainframes before 2008?
Is that power. Or something else?
It sounds like Switch Inc. advertise their datacentres by Wattage. I am not sure how common that is.
[0]https://investors.switch.com/company-profile/default.aspx
They. Own. The. Data center(s).
Well, in some sense or another. They might not be completely paid for but you get the idea, there's got to be a certain amount of worthwhile assets that could be leveraged.
Too bad there's not any business executives who have any experience at making money from a data center itself.
I've seen lots of companies announce their intentions to move off of their mainframes, but I'm not sure I've ever actually seen one pull it off.
Related to that, one funny thing I remember from Robert Heinlein's "The Moon Is A Harsh Mistress" is that the Lunie protagonist didn't understand why Terrans bothered with insurance companies. Are there no bookies?
In the very short term. Data centers are expensive as hell to operate, but so is the cloud. I think colo would have been the way to go.
But labor costs keep going up and cloud computing costs keep going down.
So I don't see how this is short-termism.
Paul: They tried and failed?
Reverend Mother Mohiam: They tried and died.
Either there are a lot of Fortune-500 CTO's on Hacker News that know better than FedEx, or there is a deep-seated fear of the cloud, specifically PaaS.