[ifightcrime]

Cloud has always been more expensive. I remember being quoted 250k/month for bandwidth when I was paying 15k with rackspace 10+ years ago. You’re paying for convenience and speed. The Math stops working when you grow to a certain point.

You can mitigate this to some extent by making some key architecture + vendor decisions upfront when first building… or just consider that some day you’ll need to do things like this. It’s not a novel problem.

[vidarh]

It's horrifyingly hard to convince people of this, though, even you can present them with actual numbers.

A lot of people have convinced themselves that cloud is cheap, to the point that they don't even do a cursory investigation.

A lot of those even don't do the bare minimum to reduce hosting costs within the cloud they choose, or choose one of the cheaper clouds (AWS is absolutely extortionate for anything that requires significant amount of outbound bandwith), or put caching/CDN's in front (you can trivially slash your AWS egress costs dramatically).

Most of my consultancy work is on driving cost efficiencies for cloud, and I can usually safely guarantee the fee will pay for itself within months because people don't fix even the most low hanging fruit.

[tialaramex]

Periodically management says we shouldn't have a DC, just put everything in the cloud.

OK says HPC, here's the quote for replacing one of the (currently three) supercomputers with a cloud service. Oh dear, that's bigger than your entire IT budget isn't it? So I guess we do need the DC for housing the supercomputers.

If we'd done that once I'd feel like well management weren't to know, but it recurs with about a 3-5 year periodicity. The perception seems to be "Cloud exists, therefore it must be cheaper, because if it wasn't cheaper why would it exist?" which reminds me of how people persuade themselves the $50 "genuine Apple" part must be better because if it wasn't better than this $15 part why would Apple charge $50 for it? Because you are a sucker is why.

[diggan]

> A lot of people have convinced themselves that cloud is cheap

I've noticed this too, freelancing/consulting around in companies. I'm not sure where this idea even comes from, because when cloud first started making the news, the reasoning went something like "We're OK paying more since it's flexible, so we can scale up/down quickly", and that made sense. But somehow today a bunch of people (even engineers) are under the belief that cloud somehow is cheaper than the alternatives. That never made sense to me, even when you take into account hiring people specifically for running the infrastructure, unless you're a one-person team or have to aggressively scale up/down during a normal day.

[jinjin2]

Yes. We saved ridiculous amounts of money (and made it a lot faster) by moving our analytics workloads from Snowflake to a few bare-metal nodes running Exasol. But it took months to convince management even though we had clear numbers showing the sheer magnitude of the cost reduction. They had drunk the cloud kool-aid, and were adamant that it would be cheaper, numbers be damned.

[mbreese]

I think one business argument for cloud is capital expenses vs operational expenses. If you’re (over) paying for cloud resources vs an in house option (or colo), those are numbers that are a straight expense. When you own hardware, those are on your books until they depreciate off. For some businesses, that can make sense.

Now, a good accountant probably wouldn’t care one way or the other. Debits and credits balance either way. And spending more still means less profit in the long term, no matter how it looks on the books. But, in addition to the flexibility, that was what I always thought of as the main cloud benefit. It’s the same with leasing vs buying cars/computers/etc…

[ksec]

Partly because AWS give out a lot of free credit for start ups, and basically allow them to grow without planning any infrastructure. VCs who are invested into Amazon also wants to push the cloud narrative. Starts up who dont want to deal with servers, want massive scale when they think the website and later an app went viral.

That was in the late 00s and early 10s. PHP, Python, Ruby and even Java were slow. Every single language and framework has had massive performance improvements in the past 15 to 20 years. Anywhere from Java 2x to Ruby 3 - 10x.

When a server max out at 6 - 8 with Xeon core, compare to today at 192 Core. Every Core is at leats 2 - 3x faster per clock, with higher clock speed we are talking about 100x difference. Especially when IO used to be on HDD, SSD is easily 1000x faster. What used to wait for I/O is no longer an issue, the aggregate difference when all things added together including software could be 300x to 500x.

What you would need 500 2U server in 2010, you could now do it in one.

Modern web developers are so abstracted with hardware I dont think many realise what sort of difference in hardware improvements. I remember someone posted before 2016 Basecamp had dozens of Racks before moving to cloud. Now they have grown a lot bigger with Hey and they are only doing it with 8 racks and room to spare.

AWS on the other hand is trying to move more workload to ARM Graviton where they have a cost advantage. Given Amazon's stock price are now dependent on AWS, I dont think they will lower their price by much in the future. And we desperately need some competition in that area.

[graemep]

For smaller businesses it seems to be its the safe option because its what everyone does.

I have even had it suggested that it might make selling a business or attracting investors harder if you used your own servers (not at the scale of having your own datacentre, just rented servers - smaller businesses still).

Another thing that comes up is that it might be more expensive but its a small fraction of operational expenses so no one really cares.

[j45]

You have a great point about finding cost efficiencies - there was a time cloud was cheaper.

Maybe it's an understanding that doesn't change because the decision makers were non-techincal people (when finance oversees IT despite not understanding it)

Virtualizing and then sharing a dedicated server as a VPS was a big step forward.

Only, hardware kept getting cheaper and faster, as well as internet.

[peeters]

The reality is when you get to another certain point (larger than the point you describe) you start negotiating directly with those cloud providers and bypass their standard pricing models entirely.

It's the time in between that's the most awkward. When the potential savings are there that hiring an engineering team to internalize infrastructure will give a good return (were current pricing to stay), but you're not so big that just threatening to leave will cause the provider to offer you low margin pricing.

All I'd say is don't assume you're getting the best price you can get. Engineers are often terrible negotiators, we'd rather spend months solving a problem than have an awkward conversation. Before you commit to leaving, take that leverage into a conversation with your cloud sales rep.

[aleph_minus_one]

> Engineers are often terrible negotiators, we'd rather spend months solving a problem than have an awkward conversation.

My experience is the opposite: lots of software developers ("engineers") would love to do "brutal" negotiations to fight against the "choking" done by the cloud vendors.

The reason why you commonly don't let software developers do these negotiations is thus the complete opposite: they apply (for the mentioned reasons) an ultra-hardball negotiation style (lacking all the diplomatic and business customs of politeness) that leads to vast lands of burnt soil. Thus, many (company) customers of the cloud providers fear that this hardball negotiation style destroys any future business relationship with the respective (and perhaps for reputation reasons a lot of other) cloud service provider(s).

[TrueDuality]

Even with the discounts of volume pricing cloud prices are still quite inflated unless you need to inherit specific controls like the P&E ones from FedRAMP High/GovCloud. The catch there is lock-in technologies that may require to re-develop large swaths of your applications if you're heavily reliant on cloud-native tools.

Even going multi-region, hiring dedicated 24/7 data center staff, and purchasing your own hardware amortizes out pretty quickly and can you a serious competitive advantage in pricing against others. This is especially true if you are a large consumer of bandwidth.

[diggan]

> The reality is when you get to another certain point (larger than the point you describe) you start negotiating directly with those cloud providers and bypass their standard pricing models entirely.

And even if you do, you still end up with pretty horrible pricing, still paying per GB of "premium" traffic for some outrageously stupid reason, instead of going the route of unmetered connections and actually planning your infrastructure.

[selfhoster]

> It's the time in between that's the most awkward.

That's an odd way to describe hemorrhaging money.

[dbbk]

But the article states they negotiated.

[jonatron]

At what sort of scale can you do that? $1M, $10M, $100M, $1B?

[ksec]

Sounds like the trap for Middle Class.

[binarymax]

Even without your own rack or colo, The math with AWS stops working as soon as you no longer fit in the free tier, since providers like Hetzner are 40% cheaper.

[gizmo]

S3 is designed for 99.999999999% durability. Hetzner's Volume storage is just replication between 3 different physical servers.

In terms of durability that's a universe apart.

[djha-skin]

It's not a novel problem but it _is_ a relatively novel (bad) economic environment. We've been in "let the good times roll" mode longer than ten years. In comparison to 2009-2011, it was different. Many ops professionals are younger than that and have gone their entire careers without doing anything on premise.

I remember trying to convince some very talented but newly minted ops professionals -- my colleagues -- to go on prem for cost. This was last year. They were scared. They didn't know how that would work or what safety guarantees there would be. They had a point, because the org I was at then didn't have any on prem presence, since they were such a young organization that they started in the cloud during "the good times". They always hired younger engineers for cost, so nearly no one in the org even knew how to do on prem infra. Switching then would have been a mistake for that org, even though cloud costs (even with large commit agreements) were north of six figures a month.

[tomrod]

What do you mean "for cost" in your comment? For cost savings / frugal purposes? Or using something like a sweetheart deal with a PEO?

[jstummbillig]

I find it intuitively absolutely bizarre that Cloud does not outright win at any scale. In my mind everything about it seems more optimizable with more scale. Obviously I am missing something, but all Cloud pricing looks so significantly more expensive than I feel it should in a healthy and mature market.

[dangus]

It’s more than mere “convenience.” You’re also paying to avoid hiring a bunch of employees to physically visit data centers around the globe.

And if you’re not doing that you are hiring a bare metal servers provider that is still taking a portion of the money you’d be paying AWS.

Even if you don’t need to physically visit data centers thanks to your server management tools, the difference in the level of control you have between cloud and bare metal servers is large. You’re paying to enable workflows that have better automation and virtual networking capabilities.

I recently stood up an entire infrastructure in multiple global locations at once and the only reason I was able to do it in days instead of weeks or months was because of the APIs that Amazon provides that I can leverage with infrastructure automation tooling.

Once you are buying AWS reservations and avoiding their most expensive specialized managed products the price difference isn’t really worth trying to recover for many types of businesses. It’s probably worth it for Hey since they are providing a basic email service to consumers who aren’t paying a whole lot. But they still need something that’s “set it and forget it” which is why they are buying a storage solution that already comes with an S3 compatible API. So then I have to ask why they don’t save even more money and just buy Supermicro servers and install their own software? We all know why: because Amazon’s APIs are where the value is.

There is a lot of profit margin in software and usually your business is best spending their effort working on their core product rather than keeping the lights on, even for large companies. Plus, large companies get the largest discounts from cloud providers which makes data centers even less appealing.

“Convenience” isn’t just convenience, it’s also the flexibility to tear it all down and instantly stop spend. If I launch a product and it fails I just turn it off and it’s gone. Not so if I have my own data center and now I’ve got excess capacity.

[luckylion]

I agree, but I don't think you're in the majority. I don't think most cloud-customers are utilizing all of those additional things that a big cloud provider offers.

How many are actually multi-region? How many actually do massive up/down-scaling on short notice? How many actually use many of those dozens to hundreds of services? How many actually use those complex permissions?

My experience tells me there are some, but there are more who treat AWS/GPC/Azure like a VPS-hoster that's 5-10x more expensive than other hosters. They are not multi-region, they don't do scaling, they go down entirely whenever the AZ has some issues etc. The most they do is maybe use RDS instead of installing mysql/pgsql themselves.

[j45]

This might be a little incomplete.

It's trivial, to get equipment at a datacenter, where the equipment is visited for you on your behalf if you wish.

You can place your own equipment in a datacenter to manage yourself (dedicated servers).

You can have varying amounts of the hardware up to the software layer managed for you as a managed server, where others on site will do certain tasks.

Both of these can still be cheaper than cloud (which provides a convenience and a large markup to make often open source tools easy to administer from a web browser), and then paying someone to manage the cloud.

Global location at once can still be done with the reality of hybrid-cloud or cloud-agnostic setup requirements (not to be tied to one cloud only for fallback and independence).

[hodgesrm]

> The Math stops working when you grow to a certain point.

That point is different for every business. For most of them it depends on how big cloud is in your COGS (cost of goods sold) which affects gross margins, which in turn is one of the most meaningful measures of company financial health. Depending on the nature of your business and the amount of revenue you collect in sales, many companies will never reach the point where there's measurable payback from repatriating. Others may reach that point, but it's a lower priority than other things like opening up new markets.

Many commenters seem to hold very doctrinaire opinions on this topic, when it's mostly basic P&L math.

[t0mas88]

Around that certain point you can also talk to AWS or GCP and get very significant discounts. I'm surprised 37signals and AWS didn't find a number that worked for both.

I've seen a few of these deals with other vendors up close, the difference with public pricing is huge if you spend millions per year.

[dilyevsky]

I worked/consulted for several companies who had multimillion per year cloud commits, sometimes with different clouds, and those discounts are not competitive with onprem like at all

[j45]

If it takes talking to them to get discounts, might as well look at all the options and get the real discount of not being on the cloud.

[bigfatkitten]

DHH has said previously that they already have a very good deal when compared with list price. But AWS still couldn't come close to on prem costs.