[cullenking]

The expense of going with a cloud solution is huge if you have a complicated deployment stack and large hardware requirements. my startup will easily grow into the single 8gig/1tb quad core box we are colocating, and far exceed it when we start seeing some real traffic. From what I expect to need in hardware, I would be sitting at over $3k a month in expense moving to Rackspace Cloud. Ignoring upfront cost of the servers, around $10k, colocating will only run me about $300 a month. I understand you don't have to worry about hardware issues, but I could literally hire a sysadmin to worry about hardware issues for that kind of money. It just doesn't make sense outside of well funded startups or established businesses.

[mmt]

Ignoring upfront cost of the servers

Assuming perfectly spherical cows..

Actually, I agree with you, being the sysadmin you mention. Unfortunately, the up-front cost seems to be a barrier to many a startup founder. To me, this suggests a lack of good leasing options, though it could be that's because it's not worth making a business out of it.

I understand you don't have to worry about hardware issues

I've always found this assertion to be misleading at best. One still suffers the consequences of hardware failure (both inherent and human error), yet one has very little, if any, ability to prevent them. You're at the mercy of the providers.

It just doesn't make sense outside of well funded startups or established businesses.

I'm not sure it makes sense inside them, either. I've found that the break-even point for buying versus cloud is consistently around 10 months. The rule of thumb for when the transition from cloud to colo makes sense for a startup that doesn't yet have any of their own hardware is about $10k/mo, assuming they're growing at a rapid clip.

The only situation where it would make sense is compute-heavy (but light on memory and I/O) loads that peak much higher than the average. I have yet to encounter such a one, since it's tough to meet the parenthetical requirement, thereby bypassing the Deutsch distributed computing fallacies.

[catch23]

It's not actually that costly to own a colocated server. A decent server will cost you around $2000 which will include 8 cores & 24gigs of memory. You can colocate it for around $60 a month, which is about $227 per month for 12 months, but is approximately equivalent to 12 small amazon instances.

Colocation is still useful in startups if you want to create/delete instances all the time in a development type environment where you're testing out the infrastructure that integrates between VMs.

[cullenking]

I agree with your points. I've never been a fan of the cloud concept, and am planning on sticking to colocated hardware for what we do.

[jasonkester]

So if you don't ignore the upfront cost, you break even at the 3 month point using his numbers. His argument is every bit as strong regardless of the shape of your cows.

[mmt]

I do agree with the OC, but I also think his situation leans unusually in favor of the colo option.

That is, 3.7 month break-even is a much stronger argument than 10 months, so I'd be interested in hearing what others have found to be the break-even point with various cloud providers.

[jasonkester]

I use boxes in the cloud for various things, but not yet for hosting. We have a couple big fast machines in a cage, of the sort that would cost a grand a month if they were on EC2, that we run all our sites from.

Once you have a single project that justifies the colo box, the marginal cost of starting a new project with a new website is zero. No need to configure a $20/month slicehost box and cross your fingers that it can handle a Redditting. You just put it on the monster box that can handle anything you throw at it until it demonstrates that it needs a big machine of its own.

[bcx]

Could you elaborate more about why you needed to spend $10K up front? And how you take advantage of your one giant server?

Are you using Xen to virtualize a bunch of servers on it?

I've always figured colocation + System Admin ends up costing more than a cloud solution. Especially when you need to have enough redundancy so that you don't fall over if a single server fails. In the cloud if a single server fails, it's their problem. In physical space it's your problem or your system admin's problem. How much time can you spare?

[cullenking]

My wording wasn't too clear, sorry. I didn't mean I have spent that money, just that my planned hardware buildout will cost somewhere around $10k to start. Our single server was about $2k to put together 1.5 years ago. We use it for everything - mysql, redis, pool of unicorns, nginx proxying to unicorn pool and a handful of background workers (resque). I have already dealt with drive failures, but I loaded up the 8 hotswappable bays with drives, so it wasn't too scary. However, I am scared for other hardware failure, which is why I want some more machines.

I am not using Xen. I can see the benefit for some stuff, but I don't believe it's beneficial for my use case. However, I will make that decision in a more informed manner when I am actually in a position to expand our hardware (money and need).

I don't think the colocation costs more. Seriously, I have had great use out of my current server. I figure with a colocated set of 4 servers, $10k initial expenditure + $300 a month for 2 years is $17200, or I can go with rackspace and pay $3000 a month for 2 years, and be $72,000 in the hole. Oh, and after that two years, I don't even have spare hardware to play with!

[patrickgzill]

Sorry to jump in, but are there cloud solutions that don't require sysadmin time? All the ones I have looked at give you a "bare" VM or set of VMs, which you then need to configure for your application.

[biafra]

There is Google App Engine. For Java/Servlet/JPA or Python.

[rbanffy]

Why spend $10K on servers if you have, all things being equal, 98% chance of failing?

Most startups fail. You should be prepared to fail cheaply. You can always spend $50K on servers once you are successful. Let's say you spend $1K/month on cloud-based servers. That's quite a lot of horsepower. If you fail in 6 months, you are still $4K less broken that you would be had you spent $10K in the first place.

If you succeed, you will able to spend as much as you need in servers to keep your bases covered and still add and remove cloud-based servers to lessen your load on demand.

[lsc]

the problem is that the $1K/month in 'the cloud' buys you servers that would cost $4K to buy. Even I (and as far as I can tell, nobody else using Xen has lower prices) price things out so I cover my hardware in four months.

The advantage to 'cloud' stuff is that if you have servers with less than 32GiB ram, the economics of owning get much, much worse, mostly due to hosting costs. If you have tiny little servers, VPSs really are cheaper over the long term... of course, 'serious business' hosting usually requires larger servers, so we're back to saying that you save a lot of money buying if you are big.