[pjc50]

> immense positive benefit of moving all capex to opex

Hmm. Is that really a benefit or Enron-ing yourself? I can see how it allows efficient ramp-up of small companies which can't afford a whole sysadmin for ops, but the big downside is that the return on capital goes to the megacompanies, to whom you are paying rent.

I can sort of see why it's happened, because it's very hard to capture the added value of software by selling it. Especially in this area, the value of software is driven to zero. Whereas restructuring as a service and putting up barriers to entry brings back the margins for the developer.

We almost need an update to Coase's Theory of the Firm to account for the disruptive effects of IP-heavy organisation.

[pm90]

It reduces the resources needed to bootstrap your own company. Of course once it reaches a certain size, it makes it more cost effective to host your resources internally. There are also many organizations who do not want to deal with a whole division dedicated to maintaining a reliable, distributed, secure computer network for their employees and would be more willing to pay for the cloud rather than the extra people required to maintain the in-house solution.

[cookiecaper]

This is not really true. Not "once you reach a certain size", but once you move off the lowest-tier starter hardware, cloud quickly becomes much more expensive than owning hardware, and security solutions continue to depend on the individual administrators (most backups do too).

Cloud's biggest benefit is really convenience, because you don't need to go to the datacenter and put in another hard drive yourself when you need more space. That's absolutely not worth the price premium most of the time. Large companies could hire hardware jockeys in-house for a fraction of the cost and smaller companies can't afford such conveniences.

[skybrian]

For "convenience" substitute "having the technical sophistication to manage it properly". How many companies know enough to hire and retain top-notch people to run a datacenter and keep upgrading it?

[cookiecaper]

Renting a rack is not the same as running a data center. The technical sophistication is available. It can be hired on the employment market or contracted as an ad-hoc service. Many colos offer a hands fee to have their staff do things like install disks on your behalf, and there is always the traditional managed server.

Chasing the cloud has cost companies a massive amount of money. I'm familiar with companies that would've saved nearly a million bucks a year by staying on bare metal/in-rack hypervisor. They weren't forced into the cloud by a shortage of people who could perform hardware maintenance, they went because it was the hip thing to do.

[bastawhiz]

That's not also strictly true. I can spin up redundant cloud server instances on three continents for roughly the same price as three instances in a data center physically near me. If I need to put a drive in a physical server on the other side of the world, I'm dead in the water. It's only a matter of convenience if there's a reasonable, cheaper alternative.

[cookiecaper]

While I'm sure there are unique situations that for whatever bizarre reason work out where cloud is cheaper, they're pretty rare. Most of the time, if you have a server "on the other side of the world" you're in a data center where you can ask the datacenter's staff to install another disk for you and pay any associated fee. If you put it in a datacenter that doesn't offer such services and you're 5000 miles away, that was probably a bad call.

Cloud does have some benefits and there are specific applications that are smarter to run in the cloud than on colocated hardware, but they're almost never going to be cheaper to run in the cloud.

You can sometimes save money sort of indirectly. For example, if your MySQL application is struggling and you put it on Aurora and it runs fine there, then you've saved tons of labor costs in exchange for the cost of your Aurora instance, which isn't cheap, but is probably cheaper than consulting time, but even this is a short-lived benefit because at some point the monthly rent crosses the threshold, and it locks you into an application that can only run well on Amazon RDS.

[cookiecaper]

>Is that really a benefit or Enron-ing yourself?

I read it as sarcasm. ;)