Why Some Startups Say the Cloud Is a Waste of Money
wired.com
wired.com
What about power, cooling, rent in the building for the room you're keeping them in, backup generator, internet connectivity, administration costs (setup, repairs, installation), etc?
>> “The public cloud is phenomenal if you really need its elasticity,” Frenkiel says. “But if you don’t — if you do a consistent amount of workload — it’s far, far better to go in-house.”
Yup.
I think we'll see more companies using a hybrid model where you can run your steady-state workload level on dedicated gear but with the ability burst into a cloud to handle peaks and flash demand.
Also renting dedicated servers can be really fast.
Most companies that I've dealt with just rent space in a colo and those costs, plus bandwidth, are far less than $200k.
>administration costs (setup, repairs, >installation), etc?
It doesn't take that long to rack and stack. Maybe a day for 20 servers if you're doing it alone.
Remember, Amazon built its cloud not for the public, but for itself! The cloud gave them a clean separation of duties and cost management between application development and operations. That sort of thing can save large amounts of money and bureaucratic headache. They started selling AWS to the public only after they had a stable system that could produce excess capacity, which could then be resold.
Instant snowflake, just add expensive and archaic enterprise middleware.
Disclaimer: I work for AWS.
You could triple your provisions with the savings of not being on the cloud, so it's hard to believe you won't see the train coming, if the concern is having to rack more than 20-60 servers a day. Arguably, that would be a good problem to have!
TBH you should be doing this with all aspects of the business. Start in a room/garage, move to serviced offices, then rent your own building, then buy your own building (should it become financially viable).
I think this is basic Return On Investment analysis.
I see a false dichotomy here: start off with the cloud, then move to bare metal servers. If you've got an OLTP database that demands high-performance, you may need bare metal. Many companies don't, though.
I've been a consultant to companies who've over-extended themselves on EC2 and ended up with huge monthly bills they didn't anticipate; in every instance, it was because they hand-built servers, cloned them, and then hand-modified them. The result was a set of servers they would like to be able to destroy (when they didn't need them) and then respawn (when they did), but couldn't because of the modifications. So, yeah, you can get in trouble with cloud services. But that doesn't mean you can't use it cost-effectively on a permanent basis. Like anything else, it requires planning.
Switching to bare metal? Sure: as hypervisors to your private cloud. Projects like OpenStack, an EC2 clone supported by Rackspace and Red Hat (among others) make it straightforward and compelling to virtualize your environment.
edit: content
Content owners can and do screw Netflix with hardball negotiation tactics. Unlike cable companies, Netflix doesn't have a utility billing regime or local monopoly on services. So at any time, the need for large swaths of their IT infrastructure can disappear.
So what do you do? Put lots of liabilities on your books (datacenters, computers, SANs, etc)? Or rent it from someone?
I honestly don't want to insult the publication or author here. I'm sure for many people who don't use math, the cloud might seem like the best choice at all times.
However I'd really like to believe that if you're creating a product involving technology, and you're busy creating a business model, that at some point you're going to be figuring out things like cost of a new customer acquisition, or overhead cost per user. This stuff isn't exactly arcane or even terribly complicated.
So can bare metal. And what's worse, bare metal means a whole lot of care and feeding that you may not be prepared for.
There is no one prescription that will fit every company in every situation. But this article describes an anecdotal situation, not something typical. And, "the cloud" does not automatically mean someone else's services. For the vast majority of typical computing applications, companies should be using private virtualization (OpenStack, Vsphere, what-have-you) rather than just buying a bunch of pizza boxes or blades.
I guess "casual dress code" at startups these days means exposed feet on the table, right where your co-workers can see (and perhaps smell) them.
And why does he have a roll of toilet paper under his monitor?
For use as facial tissues.
Having a roll of toilet paper on your desk is incredibly tacky.
To deal with crappy code?
I live in New York. If I go to the West coast 2-3 times a year for a few days, I rent a car by the day. It costs like $120/day because I don't book in advance.
If instead I fly to the west coast every month for a week or more, it may actually be more cost effective to rent the car by the month OR lease one and park it in California. By committing to a full month of use, I can actually save money versus paying the day rate for 7-12 days.
If I move to California, I move my car, or buy a car there.
If you have limited funds and aspirational goals, renting IT infrastructure from Amazon makes alot of sense... you pay as you go and reduce your upfront overhead. If you have a solid customer/utilization base, it may be cheaper to build your own.
The article completely ignores this point, but if you're comparing a cloud offering to colo or building a datacenter, the extent to which the cloud system corresponds to the nature of your workload is critical. Cloud gives you one sort of flexibility (size-over-time and provisioning) and takes away another (physical architecture design).
This is the main reason we stopped using the cloud and built our own server infrastructure. We could get 2-3x performance out of the same hardware simply by taking control of the physical machines and the network topology. The combined performance loss and high markup made it difficult to justify the cloud price performance relative to our own clusters.
There is no panacea for infrastructure. Every company needs to consider their own requirements.
My question is, how large is large enough to warrant owning your own hardware? What's the breaking point?
the REAL problem is it takes experience in running your own datacenter or at least colocated hardware to perform this analysis, and almost nobody does this because they all work for large internal IT orgs or the cloud providers themselves.
a half cabinet + sufficient power and smart power distribution + real networking + remote hardware level access + backup is where it starts to get complicated, but profitable.
For example: The Obama campaign famously ran almost entirely in the cloud, because it was run like a startup that knew exactly when it would be shutting down. But the DNC runs mostly on physical hardware, because it's expected to function indefinitely.
Certain applications with lower uptime requirements (test environments) can be run on decommissioned older prod server hardware if you have that.
Legacy enterprise applications that rely on extremely fast database access with large relational databases and poor caching are better suited to bare metal DB servers than virtual servers of any kind (public or private).
New companies also rent office space but at a certain point they buy/build their own. Should we say 'Why some companies say office rental is a waste of money'?
Cloud services are marketed as extremely scalable solutions that grow with your business. I doubt that everybody starting out realizes that the costs can grow at a much faster rate than your revenue.
(http://www.wired.com/wiredenterprise/wp-content/uploads/2013...)
If you only need five servers on the net, VPS' make sense (cheap, easy to spin new ones, etc...).
If you need 10, physicals (aka dedicated), might make sense. They're cheaper per Ghz, but take longer and need more skills to bring online.
Nees more? Colo might make sense.
Also, as you expand to physicals and colo, using some of the other options for specific needs might make sense.
For the business person:
- Heroku first (if your dev hasn't setup a VPS, dedicated server before)
- Once something like Heroku starts costing you more than $500 a month, it's time to pay to move it to a VPS like Linode or digital ocean (new than Linode but cheaper). You can start out with just a server for the app and one for the DB
With hosted you get:
- 24h availability of mixed skills sets (e.g. Cisco at 4am)
- ability to expand if under load/attack
- costs in proportion to revenue (sales go down you can have lower opex next month)
- ability to move resource around the globe in days
Some of this becomes critical if you get to point that SLAs matter.
If you want to maintain that flexibility, you can't use reserved and therefore your costs rise proportionally.
That is why i have been asking why all these Cloud Providers dont offer dedicated machines.