
Which is less expensive: Amazon or self-hosted? - sadtaf
http://gigaom.com/2012/02/11/which-is-less-expensive-amazon-or-self-hosted/
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mgkimsal
"Today, instead of simply assuming that you’ll be buying and operating your
own servers, storage and networking"

umm... I've been _leasing_ dedicated servers since 1999 just fine. Why is all
'cloud' discussion always about AWS vs buying dedicated hardware? The vast
middle ground serves most people just fine.

EDIT: Actually, I can understand these discussions in some capacity - with
large enough orgs, money may come from budget X vs budget Y, and there can be
tax implications depending on what option you choose. The majority of people I
see/read/hear having these discussions are not at that level though.

~~~
druiid
I'd say the tax portion is actually a huge consideration for many businesses
that would be comparing between leasing or buying. If you purchase $100k of
hardware or more, that can have a pretty significant tax benefit.

~~~
mgkimsal
Yes, again, true, but... the majority of people I know that have these
discussions, and make these decisions, aren't dealing at anywhere near that
level, and start to justify AWS because of a free micro tier vs having to
shell out $40/month on a VPS.

Again, yes, there _can_ be bigger considerations at play, but I contend it
materially impacts far fewer people than think they would be impacted.

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mpchlets
It seems to me that this post is missing the advantages of Cloud Computing
(AWS) and the Cloud Ecosystem. The Cloud is not less expensive than physical
servers - it is different and a different beast. You have flexibility and a
different toolset, as well the ability to start a new server without
procurement. As well, it completely disregards some of the advantages of
physical servers, including in-box IO (disk) needs. Clouds have not been good
in the past for high-IO apps. As well, you get more control at the expense of
flexibility.

Overall - the determination of Cloud vs Physical should not be based solely on
Price but needs and overall Ecosystem that you want to participate in.

Not to mention, as an independent consultant and developer, the ability to
spin up a new server to play with any time is invaluable.

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jrs235
Long term yes, it's cheaper to own than rent/lease.

Renting/leasing is often more cash flow friendly in the short/near term (due
to not needing large sums of initial investment and [in the U.S.] tax
implications of OpEx vs CapEx expenditures)

If you're trying to preserve capital in a start-up situation renting/leasing
is the way to go until you know what resources you actually need.

~~~
noodle
It's also risk mitigation. You can spin those AWS instances up and down
smoothly depending on your needs.

You can't get rid of a 1+ year lease agreement, or something that you
purchased. Nor is it a good idea to buy/lease more quickly without really
thinking about the long-term financials.

~~~
nasalgoat
Unless you're running spot instances, that logic doesn't work.

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noodle
Could you elaborate on this?

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nasalgoat
Reserved instances are paid for a full year.

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noodle
1) There's a difference between on-demand and spot instances.

2) Well... yes. My entire premise is based upon not making any long-term
leases/purchases, as I stated. Hence, if you bought a 1 year reserved
instance, you're doing long-term leasing, and therefore your situation doesn't
fall into what I was discussing. So, I'm not sure what your point is.

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bbrunner
I'd like to see this same sort of thing done with updates for the lower 2014
pricing and in either the US West Oregon Region or the US East Region instead
of Northern California. NorCal is roughly 10% more costly for many instance
types.

Edit: And a little more attention paid to cost of maintenance and outages,
which does factor into the decision of self-hosted vs AWS quite heavily. This
article sort of does some hand-waving to get away from it, but it is an
important consideration.

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kayoone
At my last startup we were running everything off of AWS but i would not do it
again except for some short running toy projects. We ended up paying a few
hundred $ per month for a web and db server that were just barely usable in
terms of speed.

Compare that to a box i can get for EUR 50 over at Hetzner that alone is
multiple times faster than the 2 small AWS vms . Need another one ? Will be
provisioned in about an hour...don't need an instance anymore ? Cancel it by
the end of the month, no long term contracts. Yes there is a one-time fee for
setting up a new box, but thats about it. And you don't believe how far you
can get with a proper beefy 2, maybe 3 machine setup..For EUR 150 you get
power equivalent to spending >1000 on AWS easily.

Today AWS to me only makes sense for short term computing projects or
something very time limited (eg <4weeks) or if money simply doesn't matter.
Everything else is just marketing bla, i still need todo the same setup work
on AWS.

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electrograv
Another case where self hosting can be much less expensive (by orders of
magnitude, in fact) than cloud providers is compute-bottlenecked tasks, e.g.
machine learning experiments with huge training sets.

A single self-hosted compute server that costs ~$20/month in electricity to
run 24/7 would cost over $1500/month from AWS.

~~~
Xylakant
This may be swayed by the fact that you might have a task that can be run in
parallel on multiple machines and then finish in an hour, so that you can then
move on. Buying or renting enough capacity and then leaving idle for the
remaining time is not an option, but with AWS you can easily spin up 100
instances for an hour and do the computational worth for 4 days of a single
machine, then shut them down at no extra cost.

~~~
vonmoltke
That is the use case that AWS is best for. That is not the use case covered in
the article, though. The use case being discussed is that for a cluster of
always-on machines with a fairly consistent load. If you have a minimum
baseline load on your servers, fulfilling that from AWS, or Azure, or similar
services doesn't make financial sense. Colocated (if you don't mind dealing
with the hardware) or leased (if you do mind) servers for your baseline load
combined with cloud machines for load spikes makes the most sense.

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bijbij
It is the most ridiculous article I have ever read because it doesn't consider
the cost of maintaining and support.

~~~
malij
I agree with you. Sometimes hiring a person for maintaining is more expensive
and sometimes is cheaper. It depends on the scale of product.

~~~
bijbij
It is not just about hiring people there are too many parameters like
providing backups and infrastrcture and so many on

~~~
vonmoltke
And how many of those are significantly different between the two options?
Either way, you still need one or more sysadmins, you still need a backup
setup. Sure, there are extra maintenance costs associated with owning the
hardware, but what portion of maintaining a server infrastructure is tied up
specifically in that, and how does it scale relative to the size of the
cluster?

~~~
nasalgoat
In my experience of managing a team of 10+ admins, less than 5% of their time
was spent dealing with physical hardware and that includes installation and
repair.

Today's equipment is very reliable.

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bfell
I think this article does an OK job of outlining parts of the decision tree
for cloud vs. self-hosted (while ignoring other options like traditional
hosting providers). The other things to consider are staffing and materials
costs if maintaining servers in house, DR/business continuity, time value of
money depending on how the servers are financed, replacement of aging hardware
and operating environments, and differences of how the infrastructure would be
built (clustered, load balanced, geographic load balanced, etc.). The reality
is cloud providers provide a lot of building blocks for you to use to design
infrastructure in a more robust manner but that doesn't mean that other
options should be ignored - it’s another decision that depends on the factors
laid out in the article and a lot of others that are specific to each
organization.

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pavlov
Article is from February 2012. Does this price comparison reflect today's
situation?

~~~
malij
Amazoon has updated AWS pricing list recently, But I think the method which
this article introduces is useful generally for estimating server costs.

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jlgaddis
_> ... a bit more than half of the total cost for each alternative is for
bandwidth/data transfer charges ($35,144 for self-hosted at $8/Mbps and
$36,900 for AWS)._

If you're buying ~5 Gbps and paying $8/Mbps for it, please please please get
in touch with me. I will sell it to you for $6/Mbps and save you 25% off the
top! :-)

~~~
druiid
About $5/Mbps here! It seems like you can get some pretty good deals if you
find a newish data-center. Internap has been building out like crazy recently
and gave us a great deal on bandwidth. I remember the days of potentially
hundreds of dollars per Megabit!

Edit: Expanded my comment.. this isn't fark.com

~~~
vonmoltke
I have a single-server colo at a local datacenter here in Dallas[1] for $49
total (with 10Mbps). Same datacenter will give you 2Gbps to a half or full
rack for $1900/mo.

[1] [http://www.colounlimited.com/](http://www.colounlimited.com/)

~~~
waps
At 5 Gbps order size, if you're paying more than $0.9/Mbps you're getting
screwed.

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api
You also have to take time into account. Self-hosting is going to take a bit
more time to coordinate, administrate, and possibly even fiddle with hardware.

I'd also like to see a comparison with other cloud providers, since Amazon is
rather expensive.

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sehugg
I don't see any mention of storage costs in the article. If you're using S3,
it's really hard to wean off of it, and using it externally doesn't usually
make economic sense because you're paying twice for bandwidth. And if you go
to a S3-compatiable service, you miss out on Amazon's cost-saving features
like Glacier, lifecycle management etc.

Amazon's storage pricing is already pretty competitive:
[http://www.twinstrata.com/cloud-storage-
pricing/](http://www.twinstrata.com/cloud-storage-pricing/)

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jmngomes
I don't think "bang for the buck" comparisons are the main issue here.

The main advantage of going for AWS (especially) or other cloud provider is
flexibility: you shrink and grow your server farms whenever you need to, with
little setup/maintenance costs.

So, cost savings come, mainly, from not paying for idle/underused hardware. At
scale, these can make it cheaper to go cloud rather than self-hosted.

~~~
kayoone
Sounds nice in theory, but how often do you actually need to do that? More
often than not, you are still overpaying on AWS vs a simple leased server.
Look at what you get for a mere 50 bucks/month
[http://www.hetzner.de/en/hosting/produkte_rootserver/ex40](http://www.hetzner.de/en/hosting/produkte_rootserver/ex40)

Add 10 to that and you have dual SSDs, no long term contracts and provisioning
of new machines within the same day, mostly <2 hours.

~~~
jmngomes
> "More often than not, you are still overpaying on AWS vs a simple leased
> server"

Sorry, didn't explain myself properly: that's exactly my point. Unless you
have enough scale to enjoy the benefits of on-demand shrink/grow, you're
better off with offers like the one you posted or even other cloud providers
like DO.

A good thing about AWS is that it ended up forcing down prices for leased
servers.

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bhaisaab
While it may depend on a company's requirements; speaking for the startup I
work for -- we use bare-metal servers that give us more bang for the buck and
they are cheaper than aws and cloud solutions in general that we've compared
(note: we were on Linode in the beginning but are now on SoftLayer)

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Spooky23
What's the cost of staff who speak AWS lingo and know how to engineer
solutions vs. traditional server environments?

In our work with private cloud, traditional enterprise data center folks don't
seem to grok cloud.

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utopkara
There is something wrong about the "Total Costs for Different Data Transit
Cost Assumptions". The hybrid cost should not be less than its parts, it could
follow the lowest cost line at best.

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angrybits
AWS isn't about being cheaper, it's about capital preservation. (Although
reserved instances give you an option to make an investment if you choose.)

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skrowl
That depends.

How much do you feel that outages / lost data cost you?

How much is your time worth while managing your own servers & network?

~~~
mgkimsal
Because Amazon has never had outages? It happens to everyone at some point.

~~~
specialp
It does happen to everyone including those hosting their own. What if your
transit provider in your colo goes down? What if their UPS goes boom? That is
why if you are hosting your own and will lose significant money on downtime
you need to have another colo which adds a lot of cost. If you want to stay in
AWS you can provision machines in other availability zones if things go bad
quite quickly or have them running in other zones. You could also have
redundancy by having assets with other cloud providers too.

~~~
grey-area
You should have offsite backups anyway, no matter what service you're using,
and a quick way to deploy to other providers if whatever host/datacenter
you're using dies. That applies no matter what sort of host you use really,
which I think is what the OP tried to say - not that self-hosting is bullet-
proof, but that AWS is not bullet-proof either.

AWS outages in one zone do sometimes affect other zones too, so it is not
disaster proof:

[http://www.zdnet.com/amazon-web-services-the-hidden-bugs-
tha...](http://www.zdnet.com/amazon-web-services-the-hidden-bugs-that-made-
aws-outage-worse-7000000186/)

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pm90
Google started with used computers crammed into a Stanford dorm room.

Just sayin'...

