According to multiple sources, Internet transit in the US now costs less than 1$ for a 1 Mbps line for large deals, which translates to 1$ for 324GB, which translates to 0.003$ / GB.
Amazon charges 15-30 times that.
(it appears that traffic can be much more expensive in places other than the US and presumably Europe)
It may cost that much to buy that capacity, but it costs a lot more than that to run the large scale organizations (CAPEX/OPEX) that build and buy these services. You're not just paying for a pipe, you're paying for the corporation.
Exactly, I don't know why so many people seem to miss this. The charges may not reflect the cost of that particular service, but if one looks to the service as a whole, it's not that badly priced. Costs cover the infrastructure, which we reasonably expect to contain multiple redundancies, as well as a profit margin for the business.
> You're not just paying for a pipe, you're paying for the corporation.
You are paying their profit margin, yeah.
It is wildly overpriced, no matter how you look at it. Operating costs even when done on a much smaller and more inefficient scale than for AWS do not make the total cost for incremental bandwidth usage THAT much larger.
Don't bother, AWS defenders will continue to defend it and replace employees with a larger AWS bill and further lockin until they shoot themselves in the foot.
A large AWS bill (which actually gets cheaper over time!) is much easier/cheaper to get rid of than employees. AWS also won't get recruited by a competitor and come into your office wanting a ton more money.
AWS is the employee that sits there and learns the industry and every inch of the system you have for 5 years, and then one day you wake up and they're not at work. You read the news that morning and they just got 50 million to do their version of your company, and way better than yours.
Or they start getting older, don't keep the skills sharp enough, and die off. Now you've got to painfully convince them to help you train a new employee to keep the show running, or pay 10 fold your savings hiring the smartest in the world to fix it. But the systems too big, and by the time it's on the "latest and most popular cloud architecture with proprietary systems", you're irrelevant.
But you're right, they make the companies current CEO/CTO look good by cutting costs in the beginning, so who cares right?
Centurylink has a pretty formidable IaaS offering, it's very well priced and they charge very little (comparatively) for bandwidth. The only problem is their storage solution is extremely expensive but using S3 or soon Backblaze B2 as a storage layer is good enough for me.
A few years ago, an enterprise network I helped run with about 40k users at several hundred locations cost something like $30-35 per user/month to operate. We had strong incentives to price below what an MSP would charge and beat them on 2 occasions.
About 40-50% of that cost was circuits and transit. The vast majority was tied up in labor and equipment costs. If I making money on the whole stack with the market control that AWS has, I would want at least 60% margins on the business -- it's not like locked in customers have easy options.
1 Mbps * 2 days = 21.6 gigabytes so sure you could transfer a lot of really stale data, but if latency is important the prices are dramatically higher. You also often end up paying for both the upload and download side if your need to regularly do large transfers.
Careful. My previous startup was a storage company that competed with Amazon and Google when they were charging 0.10/gb and I calculated it should be around 0.02/gb. A few months after launch, they both realized it too and dropped their prices. Leads dried up overnight.
The high prices seem to persist until one day they don't.
I sort-of agree with you, but in this case I believe it will persist for years to come, as they have faced competitors charging far less for bandwidth for years already and pretty much ignored it.
The price of something is determined by how much people are willing to pay for it, not the marginal cost. We don't pay people based on the marginal cost to keep them alive.
According to multiple sources, Internet transit in the US now costs less than 1$ for a 1 Mbps line for large deals, which translates to 1$ for 324GB, which translates to 0.003$ / GB.
Amazon charges 15-30 times that.
(it appears that traffic can be much more expensive in places other than the US and presumably Europe)