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Comment by sergiotapia | Hacker News Reader

When you're just starting out the cloud is significantly cheaper. When you're growing, it's good to have that support network. When you get large enough, it's more cost effective to actually own hardware.

My question is, how large is large enough to warrant owning your own hardware? What's the breaking point?

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I found the break even to be less than 1 complete server. The monthly expense of a dedicated cloud server at RackSpace, the performance one gets from it, versus a single $2400 server with 8 cores realized as 16 cpus placed into a colo... there is no comparison. Colo price to performance buries RackSpace. Equivalent performance from RackSpace requires 4 of their dedicated servers, with no where near the disk space. Difficulty of setup? Pretty much none. After a few months, we bought a hardware firewall due to paranoia. Now we have a full rack of fully paid for servers, with a monthly expense of $600 and actual unlimited bandwidth. (We've had periods where briefly delivered 10 gigs of data to the public per minute from our server rack.) We are 2 geek and 1 biz dev guy. Smart geeks, but still. The cloud is an expensive joke.

Owning your hardware? Quite high. Renting dedicated servers rather than paying by the hour for cloud servers? That's cheaper pretty much from day 1.

false.

There's also the matter of how long you expect to maintain certain things, and how fast you're changing stuff around. The cloud is optimized for changing things really quickly, where hardware is optimized for long-term cost effectiveness of relatively static assets.

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.

well, it's actually a very easy thing to quantify, but the cost/benefit analysis is different for every kind of company and computing requirement -

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.

You'd be surprized how fast that experience is gained. Try putting a server in colo and you'll be surprised. There is nothing to it. NOTHING. Don't buy the hype. Try it and see for yourself.

1 or 2 is easy, but that's the sweet spot for cloud services.

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.

Usually when you want to have a positive P&L and buying servers is CAPEX while cloud is OPEX (and you have no cashflow problem).

What I look at is how consistent your demand is: if you're spinning cloud instances up based on bursty traffic, it'll probably make sense to buy servers only to meet the consistent load and figure out the best way to share data with on-demand instances.

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