
Hosting, Commodities, and "The Cloud" - davidw
http://journal.dedasys.com/2009/01/14/hosting-commodities-and-the-cloud
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lsc
Economies of scale?

The thing is, hosting takes commodity parts (where most of the 'economies of
scale' are available almost at the retail level) and uses those parts to
provide service. The barriers to entry are small: one really good SysAdmin and
enough money to rent a full rack with power and servers.

see, I think that if you buy less than a full rack, sure, you get eaten alive.
But if you can fill a full rack and 1 30A 208V circuit, the savings as you buy
more space diminish. Again, hosting is a commodity, and most of the economies
of scale are available almost at the retail level. (in this case, from what
I've seen the full rack with 1 208V 30A circuit is about the minimum you need
to buy to get a reasonable price, but buying 10 racks like that doesn't get
you much of a discount.)

SysAdmin time... well, really you need at least 2 SysAdmins, for reasonable
coverage, but one can be less experienced (but still very, very careful!) Now,
two sysadmins can handle more than one rack, so you do gain benefits if you
scale out the capacity to what your two guys can handle.

Look at amazon EC2, they are still charging $70/month for 1.7GB ram. That was
a pretty good price, in 2006. Think about how many of those you can fit on a
$4000 dual quad-core system with 32GB ram. that's a lot of money.

From what I have seen consulting for large companies, they don't get a
discount on hardware or people, either. Sure, they might give dell millions of
dollars, but I pay $1.5K per 32G box less just 'cause I buy motherboards with
16 ram slots and use 2gb modules, while the dells use motherboards with 8 ram
slots, requiring expensive 4GB modules.

And SysAdmins, well, from what I have seen good people are much cheaper for
small companies (at least in part because small companies can hire people and
then easily fire them if they aren't that great.)

~~~
wmf
What is your opinion of Rackable, iDataplex, and the secret Dell cloud
servers? Supposedly these are really cheap but can only be ordered in large
volume (like 10 racks).

~~~
lsc
I don't know, I haven't used them. It's possible that they really are cheap,
but I kindof doubt it. From what I have seen at large companies, purchasing
decisions are first filtered based on what companies are willing and able to
jump through the 'preferred vendor' hoops, and then largely decided on whoever
gives the best kickbacks (or whoever has the best 'relationship' with the
otherwise powerless middle manager making the decision) rather than on price
or other objective concerns. Maybe I am wrong, and there really is information
being exchanged that I am not seeing. I'm just saying how it looks from the
point of view of a consultant brought in to advise on the technical
suitability of the servers.

I worked at a company that bought large volumes of servers from rackable a
while back, (as a SysAdmin, not a consultant) and I don't know about the
price, but the support was pretty good,

