[eldavido]

I think this is a really illustrative example of how business strategy can influence decision-making.

"Paying AWS's profit margin" assumes you can get access to their cost structure. You can't. In order to get AWS's cost structure, you need to (a) be buying servers by the truckload to get volume discounts, (b) have a scaled labor force for physically moving, racking, and installing all of this that's insured, directed, and managed to high rates of utilization (want to pay devs to rack servers?), (c) hire expensive network engineers whose cost is fully amortized across AWS's massive installed base, (d) fully amortize all the software engineering required to control all of this, etc.

So the more realistic option for a typical company is, do I (a) try to do this myself, with the time delay, risk, and cost profile of a nonspecialist provider, or (b) pay Amazon, which will cost about the same as (a), but be better in every other way, EVEN THOUGH amazon's superior cost structure lets them make a decent profit off of that decision?

(b) is clearly the right choice. It costs you nothing more, Amazon gets to make profit, and everyone is better off. Point being, you are forced to go with Amazon because they have structural advantages you don't, which gives them access to a better cost structure that you can't replicate.

[apple4ever]

I disagree. They may have some cost structures you don't, but the profit they are making outweighs that. And staffing isn't really reduce.

At least for us, AWS is twice as expensive as dedicated.

[hueving]

Rediculous false choice. You make a huge assumption that aws charges as much as it would cost you to build your own without bulk discounts, etc. They charge way more than that.

I've worked on 40-rack build outs using supermicro without any special pricing that beat the cost of AWS for an equivalent number of reserved instances.

[eldavido]

OK then.

What are you doing with 40 racks of hardware? Serious question. That's A LOT of computers! I assume you mean 40 42 racks? That's like, 800-1000 computers depending on whether you do 1 vs. 2u machines, or use blades, how dense the switching is, how full the racks are, etc.

I was in charge of tech ops for a billion-device scale analytics company and we ran 100-200 VM instances on EC2. I can't imagine needing hundreds of bare-metal instances. I even lived with the guys running Firebase. Before they got acquired by Google, I think they had, maybe a dozen or two bare-metal instances at Softlayer.

[jedberg]

Did you include your own salary and the salary of the person who did the POs and the person who racked them and networked then and configured the networks?

What about the salary of the person who maintains all of that? The cost of spare parts? The cost of downtime when hardware breaks?

[mmt]

Not the parent, but, I, too, have done the cost analysis, at much smaller scale.

And, yes, all-inclusive, AWS is 1.5x-10x more expensive than commodity hardware, depending on how poorly optimized AWS's hardware choices were for the particular workload and the commercial datacenter market at the time.

> What about the salary of the person

In general, I've found the need for the quantity of "person", bizarrely, exaggerated.

> The cost of spare parts?

Included, and it's low. Is this another aspect that's exaggerated?

> The cost of downtime when hardware breaks?

This is identical to the cost of downtime when AWS's hardware breaks.