[lolinder]

As others have mentioned, there was no revenue drop, there's been a reduction in growth. AWS's 20% growth rate is still very respectable, more than double the 9% growth rate the company had overall.

I would be hesitant to attribute slowed growth to a return to self hosting, it's much more likely that it's caused by companies dialing back their cloud growth after spending a few years going ham digitizing everything during the pandemic.

[DyslexicAtheist]

parent still has a very strong point considering that a drop in growth (not revenue) quickly translates in projects / features being cancelled. That's a good thing to FailFast from a start-up pov but when me as a start-up needs to make a bet about building on top of certain features this adds to my cost/benefit calculation when deciding if I want to jump on new features (device-shadows, digital-twins, or whatever else is the latest innovation the cloud announces).

From that pov I expect my platform to behave like a utility (never change or only change with strict backward compatibility). That level of control simply is against the business model of the cloud.

[lolinder]

But there are so many degrees of ratcheting back cloud costs before we get back to self-hosted.

Sure, companies are probably less interested in wacky new cloud features then they were before, but that means going back to basics like EC2 and RDS, which do function like utilities, not going back to their own data centers.

[kkielhofner]

Ah yes, sorry, slower than expected growth was the data point. In my defense I had a screaming toddler in the car!

That said I think the point generally remains - one could argue slower than expected growth in cloud services is a revenue drop (in a way) vs expectations. The market responded accordingly[0] - "However, Azure growth is decelerating." Note that this is all including the explosion in "2023 AI hotness" which is almost certainly offsetting what would be larger losses due to the shift I'm arguing. As the All In Guys noted "you won't see a pitch deck without the letters AI in it" - and a good chunk of that is still going to cloud providers as (in my opinion) there are long tails to these changes and many existing solutions/applications getting "AI" slapped on them are effectively trapped in $BIGCLOUD.

Self-hosting AI is also significantly more difficult and upfront more expensive when you start looking at dealing with (typically) Nvidia hardware costs and software stack complexity. I can definitely see many of these "pivots" to "something AI, we need to throw AI in this" the more well understood and initially faster and "cheaper" utilization of cloud services will continue until the AI trend stabilizes.

From what I could hear (and process) over the screaming the All In Guys presented the argument I tend to agree with - a resurgence of self-hosted infrastructure.

Companies are also dialing back cloud spend because they're realizing for many applications it's very expensive relatively and can actually be limiting compared to self-hosting[1]. Per usual when the cheap money and economic boom retracts they start actually looking at costs they were once happy to just keep writing checks for.

I'd like to reiterate there's a lot of calculation and strategy when it comes down to selecting infrastructure hosting. Again, I think we're in a period where there's a bit of a sea change/wakeup from the past decade of "of course you always build and host everything in $BIGCLOUD" - without even remotely considering alternatives. It's been the default for a while and it isn't as much anymore - and I'd argue that trend is accelerating. There is no "one size fits all".

[0] - https://www.investors.com/news/technology/msft-stock-microso...

[1] - https://www.linkedin.com/pulse/snapchat-earnings-case-runawa...

[lolinder]

I think you're still jumping to conclusions to think that the ratcheting back is going to take any significant portion of the market all the way back to self-hosted. I suspect that companies are less willing to invest in fancy new platform features that drive more revenue than VPSs and managed DBs, but I have a very hard time believing that EC2 or RDS are flagging.

[kkielhofner]

I should have been more clear on this - in terms of total install base I don't know that it's going to be "significant" in terms of customer count.

However, I do think it will be at least "noticeable" in terms of individual customers with large spend. Total GCP revenue in 2022 was roughly 65 billion and Snap leaving alone is 1.5% of total revenue.

Especially looking at ML cases where cloud GPU pricing is wildly expensive - retail on-demand instance A100 pricing is at least $3/hr which practically speaking with the AWS pricing model is can be twice that all-in. This is for an instance with 32GB of RAM and 8 VCPUs - which for a lot of A100 use cases is useless. Need 32 vCPU and 256 GB of RAM? That's more like $20/hr.

A single A100 machine that's above and beyond more capable can be had from Dell for roughly $50k, which even factoring in hosting based on colo pricing I've seen has an ROI of ~15 months for constant usage. For the equivalent hardware (and still vastly improved performance - 32vCPU and 256GB of RAM) that ROI gets to less than six months.

Yes, the A100 is typically used for training (and cloud definitely still makes sense there) but more and more models require the performance and VRAM of a V100/H100 for inference (24/365 availability). Do it at any kind of scale/redundancy and ROI catches up even faster. An equivalent to this approach is reserved pricing, which over the 1-3yr term of a lease vs. reserved instance self-hosting becomes almost comically more cost and performance effective. With the extra benefit of actually being more flexible.

Financing and leasing is readily available and with various tax incentives (like Section 179 leasing) you can pretty quickly pay for a FTE to manage the infra for you - which is probably a wash anyway because at any kind of "real" scale or complexity you almost certainly already have dedicated human resources just to manage cloud. You don't even ever need for an employee to go to the hosting facility because most will rack and provision your hardware for free. Combined with remote hands and standard warranty support any (in my experience very rare) hardware failures just get handled.

I should note that this model almost eliminates the tendency for cloud spend to balloon to many X anticipated/budgeted spend - the all too common story of "sticker shock" from clouds on bandwidth alone that cloud has ridiculous markups on. Colo pricing and leases are fixed cost (with all you can eat port speed bandwidth included or so cheap at 95th percentile billing it's practically a rounding error).

I have significant experience at CTO level with both approaches (and hybrid, of course). In many situations the benefits of "self-hosting" vs cloud are dramatic.

The extremely effective marketing that has created and perpetuated an industry wide fear of self-hosting and hardware (especially with the "always cloud always" generation) is fading. I think the uptime and reliability promises of cloud are also fading - this thread started off with discussion of yet-another cloud outage. My background is in healthcare and telecom and I'm shocked at the cavalier attitude of just accepting these outages and being down while standing around helpless wondering when your big cloud will acknowledge, communicate, and resolve them. A few machines in a few rack units of space across a couple of facilities generally trounces cloud in reliability and uptime.

I love HN and the overall knowledge and quality of discussion here but when it comes to hardware and self-hosting many have completely drunk the cloud Kool-Aid and have zero experience with self-hosting - so no idea what they're talking about. Not saying you personally, just generally.

[GreedClarifies]

In isolated cases companies can reduce costs by self hosting. Usually this is a combination of very specialized requirements or shockingly technically competent early employees or founders.

However even in these exceptional cases there are hidden costs that will likely arise.

For most companies the very concept of self hosting is comical. This is a one way train.

[kkielhofner]

By it's very nature HN is pretty startup focused (you're talking about founders). When I say "greenfield" I'm mostly talking about a startup (and beyond) that's survived the ~first year of chaos/infant mortality - which should be well before the significant technical debt of the solution and Hotel California nature of cloud take hold.

For an established real business there's almost no question.

Do you have any experience with self-hosting and examples of hidden costs? In my experience with both and hybrid approaches cloud has substantially more dramatic hidden costs. From a cost and pricing perspective cloud has many more foot guns - it's routine at this point for people to report exceeding their monthly budgets and billing notifications literally overnight.