Bechtolsheim: AWS, open source rewrite rules for startups
gigaom.com
gigaom.com
At the moment, owning dedicated servers and coloing them yourself is orders of magnitude cheaper then a cloud provider. It's only "cheaper" if your cost of money is stupidly high, ie. you're a startup, or other factors dominate your TCO, ie. you're a startup.
What is interesting is that supply side there is no reason for this to be so. Furthermore there are reasons to expect that the equilibrium price for cloud to be below the cost of dedicated hardware/colocation.
Of course not to take away from Andy's point, if you're deploying the equivalent of Slashdot (which ran on like a dozen servers) then you're silly to spend a couple employee slots on keeping that running in a co-hosted scenario. And these days, given the power of a machine, a LOT of things can be done on a relatively small handful of machines.
A friend of mine is currently an operations manager at a company with thousands of physical servers. This is a guy who has spent most of his career in and around datacenters. He's convinced that it's no longer worth whatever "savings" might be seen in owning the hardware, the surrounding and sometimes hidden costs are just too high.
Basically, he's already past the point where letting specialists deal with the hardware/provisioning is well worth the cost.
Isn't this friend of yours one of the "specialists", that some company has hired to provide these services? So he wants to subcontract the work?
(and I say this as someone who is in an arguably similar situation and career history as your friend).
Those of us in operations need to start managing and deploying our resources like cloud providers do in order to further increase the savings one can (admittedly potentially, if done right) see from keeping things in-house, and keep the control, customization, and choice that one gets from doing things in-house. It's all about scale. If you have thousands of machines and you're still buying hardware one machine at a time and don't have dedicated people just to do things like swap out failed hardware then you aren't scaling effectively.
I should mention I was briefly working for him at this company, but ran away screaming for reasons not really related to him or the hardware, so I'm fairly familiar with what the deal is. It's not just grunt-level operations, it's operations engineering, complete with in-depth troubleshooting of application problems. This is what Google calls SRE.
And they're not buying systems one at a time, they buy them by the truckload from Rackable/SGI, and do have dedicated staff for the things you're talking about. That's the whole problem. The dedicated staff together with the other costs I mentioned end up being more than they would spend being a major customer of a dedicated "cloud" provider.
How is this news? Anyone in the startup space already knows about AWS and open-source.
Thanks, Andy Bechtolsheim, for confirming what many of us have already known for a long time.