
Follow the CAPEX: Separating the Clowns from the Clouds - lazydon
http://www.platformonomics.com/2018/05/follow-the-capex-separating-the-clowns-from-the-clouds/
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mrmcd
> But they’re way behind, need to spend tens of billions to have a competitive
> global cloud infrastructure, and have a much more severe customer problem
> than IBM: their customers hate them

Had a good, long laugh at that one. Jesus, is there anyone on this planet that
_doesn 't_ regard Oracle as the corporate equivalent of a slimy, violent mob
boss?

~~~
koolba
Overall a great read. There's a bunch of funny lines. I like this one:

> You may not get fired for buying IBM, as the old saying goes, but it is
> increasingly likely your employer will go out of business if you’re in an
> industry where technology matters.

~~~
vdalal
Talking of great lines...

* "Amazon, Google, and Microsoft each spent more on CAPEX in 2017 than Oracle has in its entire history."

* "That red line you may mistake for the x-axis is Oracle’s CAPEX spending"

* "Maybe they are reconciled to sitting at the children’s table of cloud, but the problem for both IBM and Oracle is cloud is eating their existing businesses. It has eaten the server business and now starting to feast in earnest on software infrastructure, including the database, which is the profitable heart of these companies."

* "Both companies have acquired a number of SaaS applications, which will bolster their sense of self-worth and belonging in the cloud, but there is little to no platform leverage associated with these apps (and platform leverage = profits!!!)."

* "Watson which is in serious contention to be the biggest “overpromise and underdeliver” in tech industry history, now blockchain as they try to save humanity from our looming existential tomato provenance crisis"

* "And their (IBM’s) customer problem is who their customers are at this point: the disrupted. You may not get fired for buying IBM, as the old saying goes, but it is increasingly likely your employer will go out of business if you’re in an industry where technology matters."

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empath75
One of the more pointless arguments I’ve gotten into on reddit was one where a
guy in an investing subreddit was absolutely positive that as soon as oracle
and ibm decided to take cloud seriously, aws would collapse as IT managers
around the world would switch to what they know and love.

As if AWS was a mere experiment, and any day now the big boys would come in
and show how it’s done.

~~~
zapita
Careful not to go too far in the other direction, and under-estimate the power
of an entrenched relationship with enterprise IT customers.

Microsoft has become the de facto number two cloud provider, and Azure is now
AWS's main competitor. That is in great part because IT managers (and behind
them, CIOs and procurement) are familiar with Microsoft products.

~~~
tootie
It's because Microsoft took this shit seriously and built a credible
competitor. They are very wisely leveraging their popular enterprise software
like Office 365 and Active Directory and branding them as Azure services. Then
selling everything under the same enterprise licensing umbrella. Not to
mention all the retail companies that are in direct competition with Amazon
and would gladly send their money elsewhere. I've switched from AWS to Azure
recently and haven't missed a beat.

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tootie
Oracle is basically a law firm for their computers. Write contracts, fail to
deliver, sue for fees.

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projectramo
My question is: what happens to all the small cloud infrastructure startups?

Surely Digital Ocean, Linode, Vultr etc don't have the resources to invest in
these massive facilities.

Yet, they have customers, and provide options.

How are the big three (AWS, GCP, MS) able to sell on such a scale?

~~~
closeparen
The cloud providers provide a lot more than the VPS providers:

\- Arbitrary private network topologies

\- Managed databases

\- Other managed services for the "undifferentiated heavy lifting" of
infrastructure like source control, CI/CD, monitoring, log aggregation,
alerting, load balancing, encryption, directory services, etc.

As such, they're in a different business - providing single servers for
hobbyist and small-business websites - rather than seriously competing with
on-prem for big-co infrastructure needs. They're making some attempts to catch
up but are far behind.

~~~
projectramo
Would love to learn more about the difference.

Since this discussion is "old", I might have to craft an Ask HN

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joelkevinjones
Both IBM and Oracle make their own hardware. How does that factor in given the
typical margins for "server-class" hardware?

~~~
mmt
> the typical margins

Are you implying that they're particularly high? Reference please :)

I wouldn't be surprised if full list price for "brand name" vendors like IBM,
HP, and maybe even Dell (presumably Oracle, too) are inflated, but in every
case I've heard of, for even modest volumes, the discounts tend to equalize
the prices (well, maybe not IBM) and can occasionally be competitive with
SuperMicro.

I'd aregue that the only company that _really_ makes (or at least ultra-
customizes/optimizes) their own, to the point of being outside of any "class"
of hardware, is Google. I suspect they're the only ones whose capex might be
deceptively low because of the cost optimization.

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0898
Why do people say CAPEX when they could just say “money”?

~~~
angry_octet
Because accountants treat it differently to OPEX (operational expenses) when
valuing and for taxation, and hence they are separate figures available from
companies. Obviously both are important, but growth in customer base isn't
forecast by OPEX.

