Most of the value of AWS in my experience isn’t really the infrastructure services as much as the higher level managed service offerings in databases, rudimentary machine learning frameworks, and a decently documented (better than 90%+ of enterprise software) set of APIs for things in general. RDS has its faults but hiring DBAs or deputizing existing engineers to setup backups and upgrades on DBs is not very high business value in itself compared to rolling out new features. Heck, even an API call to simulate failovers is hugely invaluable for enabling developers to not suck at using databases in production.
AWS offers the convenience of managed hardware and services on, for which it is charging its premium. As companies grow, they can think about investing in rented servers and managing the software on top of it themselves.
Beyond a scale, owning and managing the servers may also make sense for many.
I don't see it mentioned, but it's entirely possible that Rackspace actually consulted on the migration. They do offer AWS services, realizing that they can't compete and hoping to capture some dollars.
Can someone put up a link for comparing the costs of azure, aws, and google cloud? it seems like there are some big efforts underway to migrate away from AWS.
You are correct, if you have no need to add additional servers or scale the platform, have predictable bandwidth and storage requirements, and your sysadmins don't mind patching all the base OS instead of just rolling new VMs.
However AWS allows you to accomodate uneven growth and load. You can create new machines in minutes (or half an hour for Windows). The virtual nature allows you to quickly ditch a broken host for a good one. You can also save money on development infrastructure by switching it off, or run background jobs on spot machines. Then there's the other services available such as S3 and Lambda.
Of course there are other clouds worth considering, but the advantage of cloud infrastructure is the ability to call it up without months of lead time.
I think your points are sound but it’s worth pointing out that you can roll new host OS’s and VMs without patching on-prem too. You just have to have the discipline to run your internal data center the way cloud providers do. You can even take advantage of one of the few benefits of on-prem and roll a fresh host OS without downtime for the VMs running on it by using live migrations.
> You just have to have the discipline to run your internal data center the way cloud providers do.
AWS employee here, so I am obviously cloud provider biased, but in my viewpoint having that discipline only comes from having very good, expensive engineers. It's hard to get people who really know how to run a datacenter well, especially when most of the good ones would probably prefer to work for a larger cloud provider since than is more interesting and impactful than running a smaller datacenter for a single company.
The forgotten / underestimated cost is the salaries of these people to set things up well in the first place, be on call to fix things when they break, and perform those upgrades in the same way that cloud providers do.
A single engineer salary can get you a LOT of cloud compute power on AWS. If a cloud provider allows you to build the same thing with two fewer engineers then that's probably an extra $400k or so for the infrastructure budget after you factor in these engineer's salaries, taxes, benefits, etc. And $400k can get you an incredible amount of AWS cloud compute.
> The forgotten / underestimated cost is the salaries of these people to set things up well in the first place, be on call to fix things when they break, and perform those upgrades in the same way that cloud providers do.
The thing is, you need this equivalently for any cloud provider as well. People who know how to operate and run a cloud account effectively are not a dime a dozen, and given the migration going on now are actually in higher demand than some qualified datacenter operators.
IMO the best examæel is spinning up a DB with nightly snapshots. This is trivial in AWS. Doing it in your datacenter takes planning, decispline, skills and time.
Same goes for backups to S3 vs. setting up a SAN on the datacenter.
Managing AWS infrastructure isn't trivial, it's easy to forget what that instance does, if everything was provisioned with point and click. Cloudformation or terraform makes it doable. But technical debt is also something you can defer payment on :)
Yeah the DB example is particularly relevant. Amazon Aurora now has continuous point in time backups so in the event of something going wrong you can roll the database back to an arbitrary second: https://aws.amazon.com/blogs/aws/amazon-aurora-backtrack-tur...
Additionally Aurora has robust zero downtime self recovery from a variety of error conditions including disk failures, and you can test that out by running a SQL query that simulates disk failures for example: https://docs.aws.amazon.com/AmazonRDS/latest/UserGuide/Auror...
This level of operational excellence is incredibly hard to build yourself either on premise or even in the cloud if you are only using VM's. Time and time again you see companies that thought they had backups but then discover the backups don't work right. It's not because these companies are stupid, its because it is hard to do right, and building and testing this requires a lot of engineer time. When you do take the time to hire the right people who can do it right you end up finding it is way more expensive to do it yourself than using a cloud managed service. AWS is able to offer the service much cheaper because the cost of development and maintenance, etc is spread across a huge number of customers.
One thing I've noticed with cloud vendors is you are inevitably a small fish in a big pond. Few companies have the AWS investment to make Amazon take notice.
Essentially, if something gets screwed up you have no recourse beyond a refund and moving your infrastructure.
If you have encountered a specific issue where you feel that Amazon ignored you because you weren't a big account please email me using the address on my HN profile. In my experience both on the customer side and now the employee side we are very fair to customers of all sizes when it comes to issues that are our fault. We do have a shared responsibility model though, so if a customer makes a mistake like terminating an instance that had important data on an ephemeral EBS volume, or similar there isn't much support can do.
My comment is more of a generalized observation. Your response seems to confirm it. Who makes the call on "shared" responsibility? I also guessing there is some sort of arbitration clause.
(found it: https://aws.amazon.com/agreement/)
I'm not saying any of this is necessarily wrong, just not what people often expect when they dump, to them, a significant amount of money into something. Many midsize and larger companies like to "big dog" their vendors. They are not accustomed to the cog in a machine feel that most of us tolerate daily.
Most managed hosting providers have some form of Openstack or an API to provision baremetal servers or something similar.
It is easy to sit back and say AWS is really easy; but it just means you haven't looked elsewhere.
Additionally most public clouds have law enforcement or government entities monitoring or tracking things (to an unknown scale). You are always better off in a regular datacenter.
If you don't know why maybe you should hire someone to tell you why.
> Free answers are good. But if you want great answers you have to pay.
It's real money being saved. I've been involved in such efforts at four companies now, and in every case the savings have been very significant.
The claim you should be suspicious of is the one that says you can save money migrating to bare metal. That may be possible in some cases, but not in any typical large company.
If you can save money by moving to AWS at its publicly listed prices, your company has absolutely mismanaged its IT infrastructure.
You can do 10x cheaper than AWS easily, if you are willing tomake tradeoffs that AWS just can't make globally for all their customers.
EDIT: If you’re paying silicon valley wages, and target a global audience with your site/product, and can get from AWS something cheaper than the publicly listed prices, then AWS very likely will be a good deal for you. But many companies have different needs than these, and may be able to save money by dropping things they don’t need.
If you just use EC2, though, you’ll find many other providers of virtual or dedicated servers for rent for much cheaper, with similar performance and reliability.
If you’re fully integrated in the AWS ecosystem, it is much more convenient, but also of course more expensive.
That said, unless you’re in silicon valley, your hiring costs will be so much lower than amazon’s that even your own admin team might end up cheaper than using Amazon’s.
Your avg hire comp may be quite a bit lower outside of the major tech cities, but your still gonna pay a lot for the really good people. You may need less of those people and at a later point with AWS though, depending.
> You can do 10x cheaper than AWS easily, if you are willing tomake tradeoffs that AWS just can't make globally for all their customers.
Are you really replicating AWS or just EC2? How do you replicate S3? Glacier? What about Aurora (DB replication that actually works!). If all I need is raw compute, I can go back to building machines and beat AWS prices but I will have no where near the same level of functionality, flexibility, and now it is up to me to maintain them.
Really? What if you have an occasionaly peaky load with BIG peaks? You have to keep enough hardware on hand to satisfy that even if it only happens, say, 10% of the time.
That’s a lot of wasted infrastructure and time managing it.
The largest factor is bandwidth. In the EU you can get bandwidth a factor 100x cheaper in most situations than with AWS.
The second factor is levels of abstraction. It's cheaper to run your own virtualization software on rented dedicated hardware than to use EC2, and it's cheaper to run your own kubernetes cluster than to use EKS or GKE.
The places where having external companies do it sabes the most is (a) in running the actual hardware and networks and (b) providing a platform for your software (e.g. Google app engine).
Taking a bunch of rented dedicated servers and configuring kubernetes is cheaper than renting the computational power through GKE or EKS.
But basically yeah, these are the same standard solutions to saving money with hosting that have been pretty much known for decades.
EDIT: Be aware, this only applies for the publicly listed prices — if your company can get a deal like Snapchat did with Google, or Netflix with Amazon, then the math may work out entirely different. But I don't know what they pay so I can't comment on that.
Scaling really isn't that big of a deal. 99.99% of companies do not "scale" very fast at all. Most large deployments are grown organically over months or years.
Flexibility is a much bigger factor in using the cloud.
Show me the DC which will provide bandwidth and collocation cheaper than AWS on a rack basis.
Also keep in mind that ever since crypto DCs have a very strict limit on power consumption so there are many more hidden fees now.
> ever since crypto DCs have a very strict limit on power consumption
Has it changed much? I haven't done real hardware in a while, but I remember the rack power to be a very limited resource years ago. (I.e. you could easily pack more hardware in the rack than you'd be allowed to power)
What changed is that they are now agrresively charge you these days.
In London area (city and outskirts like Oxford) its £1500-2000 per 10kw and they count the PSU rating regardless of what you actually use.
And that is on paper only as many DCs limit a rack to 20A which gives 4.8kw only so if you need more you need to lease another rack which costs more money.
And leasing adjacent racks also isn’t really cheap they usually give you maybe 2-3 ones if you need more than that well then you are now leasing floor space which means if you need say one rack with 15kw rated bare metal you may end up having to lease enough room to hold 10 racks if not more.
You can get benefits in terms of speed of deployment, etc, by going to AWS, and then gradually start moving stuff back off of AWS to cheaper services or your own datacenter as it makes sense for money savings. Both moves can be a win.
All this to "close the gap to profitability", which, after the migration, they still will not have done, they'll still be in the red, after more than a decade.
It makes at least some bizarre level of sense that a social company like Twitter, with no clear customer other than "maybe advertisers" to not turn a profit for some time, but for an accounting software company, whose product is paid, to burn cash for over a decade, it just doesn't seem right. It seems like a scam to bilk investors.
Let's raise a glass to the inevitable bankruptcy, in which the founders and VCs don't suffer because the IPO already happened. Here's to you, Rod Drury, Peter Thiel, and Chris Liddell (now working for the Trump administration). Great job, guys. If you end up in jail, I'll send postcards.
Not sure how New Zealand does things, but in the EU, it's relatively common to have zombie companies stagger on for decades on government life support.
There's a _ton_ of funding going from the states to various agencies for various pro-software, next-silicon-valley initiatives. Most of this money is handled by career bureaucrats with little personal experience in running a business.
It's easy to waste someone else's money by giving CPR to a large domestic IT firm, when the alternative is being held responsible for the lost jobs when the company goes under.
I wonder if this is in fact even worse, keeping people "occupied" in money-losing companies, where if the company went under they might (especially in tech) find something productive (in the literal sense of producing something of value) to do.
That seems more likely especially in a case like this, where the employees are skilled, and where the company isn't doing anything unique (novel, charitable, beneficial to society in a nonprofit way, etc) that would merit rating it by some other metric than profit.
It just seems tremendously wasteful to be losing tons of money in a market where there's already a lot of competition and you're not doing anything new. This isn't an electric car, and AI, a space company, where the outlay might be a lot and the time to develop the tech is great, this is a long-established market full of already-solved-profitably problems.
I would guess most of Xero's employees are outside of NZ, but since NZ's primary export is dairy, the government might be foolish enough to try propping it up with some nebulous hope that "keeping the tech industry afloat" will somehow be beneficial, rather than letting the few technologists in their employ go to work for another, more useful company, or to go and start a startup of their own (perhaps with government funding, in lieu of it going to Xero, in that hypothetical situation.)
I use Xero and the interface and functionality is great, but what makes you think someone writing JavaScript for Xero has the skill to work on AI or spacecraft?
I worked on js and php once, and now I work on AI. The tech market in NZ is very limited so I imagine anyone working for Xero in NZ has better-than-average odds of being there just because its a job, rather than because thats all they know how to do (or all they want to know how to do).
Maybe without Xero, they'd be out looking for and learning new things, starting new companies, etc. That's what I would do if I worked for Xero (which was conceivable, at one point) and they closed down.
> Let's raise a glass to the inevitable bankruptcy, in which the founders and VCs don't suffer because the IPO already happened. Here's to you, Rod Drury, Peter Thiel, and Chris Liddell (now working for the Trump administration). Great job, guys. If you end up in jail, I'll send postcards.
What an incredibly strange statement. It's so far away from the reality of the situation that it comes across as just looking for an excuse to lash out.
Their revenue climbed 38% to NZ$407 million, with a positive EBITDA, and grew their subscriber base by 1/3. That business isn't even remotely in danger of going bankrupt. If running a NZ$28 million loss results in that kind of tremendous business expansion, they should do it perpetually.
"Business expansion" rather than "business growth". I agree. They're expanding.
They're not profitable, they expanded, the expansion incurs more loss, what they're doing is digging a deeper hole. If you lose money per customer overall, and you get more customers, now you're losing even more money.
"Positive EBITDA", if you can't pay your taxes/etc and break even... guess what, you're going bankrupt eventually.
All this and they think they can compete with Intuit. This won't be the first time a New Zealand company succeeded in the "ignored by competition because its too small and has its own system of laws and isn't part of a cooperative economic zone (vs, you know, just expanding to another large city in US/EU)" and then thought it could compete overseas, only to have its ass handed to it.
I don't know what their numbers are exactly, but the math often comes down to something like cost of customer acquisition being $10, and customer lifetime value being $80 over 10 years. As long as there are customers to be acquired, and money to spend acquiring them, you should get as many as you can as fast as possible. This is clearly long term profitable, but the first many years you do this, you will be in the red. The flip side is that you could stop doing this and become profitable overnight (at the cost of foregoing potential future profits).
It's still a bet, it's impossible to say if the lifetime value holds up in the face of competition, screw ups or changes in the business environment - but that's why it's an investment.
I don't really agree. I can grow a business infinitely with ease, just have a model that says "you give me $1 and in return I'll give you $1.10", as long as you're handing out free money, growth is easy :)
Now this isn't quite as simple as that but growth without profit and without the prospect of profit isn't something any investor should be keen on.
Without profit the company will have to either take out loans (which require repayment with interest) or issue more capital (which dilutes current investors).
This can be fine in the initial growth stages of a business (you have a plan to start making a profit in the future), however for a 10+ year old business who's already floated their stock, it's not great to indefinitely prioritise turnover over profit.
They have a solid business plan. They're expanding to gain more of the market and spending loads to do it. But at the end of the day they have a good product and can make money out it once they get the adoption rates they're going for.
Kind of like the early days of the XBox. Sometimes you just have to burn money and years to get your foot in the door.
