Accounting for Clouds: Stop Saying CapEx Vs. OpEx

He lost me much earlier:

In other words, let's say you're buying a server from Dell for $5,800 dollars and you expect to use that server for 3 years. You also have to pay a 10% annual maintenance fee on that server, so the total cost over three years is $7,540.

So a running server costs a measly 48 dollars per month in maintance?

This may be true when you're operating on amazon scales (when you are amazon) but for the average website-owner power, cooling, rackspace and hardware failures!! normally amount to a tiny bit more than that.

And once you take human<->machine facetime into the equation (by sending your admins over or by hiring remote hands) amazon begins to look not too shabby anymore.

You guys seem to think that I was making an argument against using the Amazon service and in favor of buying servers. That was not what I'm saying in that post. I was making an argument that moving expenses from upfront costs to ongoing expenses is not necessarily a good thing. It may or may not be. You're also assuming start-ups or small companies as customers. I'm also thinking of larger enterprises.

Many of the issues raised in your comments are addressed in the blog post itself and in the comment thread.

Um, I'm sure he's right about the terminology, but his conclusions are whack. There certainly is a benefit to moving from capex to opex if your customers have frozen capex, which is something we're seeing happening right now.

A previous employer, during the "nuclear winter" of Internet service providers in 2001-2002, built a whole sales strategy around making an appliance-based(!) shrink-wrap product work as OpEx.

The author seems to be thinking that people making the distinction between capex and opex aren't making the assumptions of lower utilization, agility, etc. that are mentioned at the end of the post. On top of this, when I use this terminology, it comes with the understanding that opex is better because moving costs to opex means breakeven for the customer is much easier to achieve. Clouds = on-demand = only pay for what you need = customer makes revenue directly on costs, rather than not.