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Hemant Mohapatra
So is paying $8m/mo to -- almost $100m/yr! Each ride costs $.14 in AWS rent. I keep hearing they could build their own DC & save. My early days at cloud, heard the same from customers: "at scale, owning is cheaper". It wasn't - they all came around. Here's why:
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Hemant Mohapatra Mar 3
Replying to @Equinix
Construction of a mid-sized Enterprise DC (just 5000sqft), at just "tier3" availability (3 9s) will cost around 40m. If you want 5 9s redundancy you will need 1-2 failovers, so 3x that. Incld racks, cooling, power, construction and land. Using a colo will likely save 20%
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Hemant Mohapatra Mar 3
Replying to @MohapatraHemant
But your DC costs will amortize over 10 years, correct? Yes. But there's more. Construction will take 12-24mos. For that time, company loses focus, hires non-core engg, vendors, and planners that understand bldg codes, fire safety, env rules, security, maintenance etc.
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Hemant Mohapatra Mar 3
Replying to @MohapatraHemant
Then for 10 years you have: ongoing support, maintenance & repair, costs of power, heating/cooling, and biometric security of physical assets. Power bills alone run in xxMs that's why Google DCs are so remote and near Geo/hydro/solar power sources.
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Hemant Mohapatra Mar 3
Replying to @MohapatraHemant
Moreover, you need to build for 10yrs out, not today, so you'll likely either keep building more and more, or overbuild capacity by 50-100%. Your initial estimate of 40m (x3) is now 60-80m (x3).
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Hemant Mohapatra Mar 3
Replying to @MohapatraHemant
Next comes some of the most expensive stuff: fiber! Without gigabit connectivity you are toast. Building your own undersea cables will cost 100s of Ms, so you'll be beholden to buying dark fiber from tier1/2 telcos and pay exorbitant rates for intercontinental traffic.
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Hemant Mohapatra Mar 3
Replying to @MohapatraHemant
Next comes the outages: no matter what you do, you'll never have hot-swappable everything managed by ultra fast robotic arms that replace hard drives in seconds. Your hw will fail at rack/server level at 2-3x the avg cloud. Massive costs to missing SLAs to the biz that you bear.
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Hemant Mohapatra Mar 3
Replying to @MohapatraHemant
Finally comes certifications for PCI, for HIPAA, for Gov, bla bla bla. You'll coordinate with the consultants day and out and it'll take anywhere between 3-12 months to get most of your infra certified to run your biz the right way.
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Hemant Mohapatra Mar 3
Replying to @MohapatraHemant
I ran a "TCO" analysis at Google to convince a large customer why GCP was better. The numbers were clear, but customer wasn't convinced. Went to Verizon cloud, which shut down, then HP cloud, which also got shut down. Went on-prem. Then came to us. Zynga story is well known too.
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Hemant Mohapatra Mar 3
Replying to @MohapatraHemant
Few rare examples of this working in parts. Netflix & Dropbox. When companies reach "internet scale" & have to do a lot of customization on the stack, running own infra may make sense IFF you have the GMs to cover 2yrs CAPEX & plan upfront. Both firms still use the cloud a lot.
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Hemant Mohapatra Mar 3
Replying to @MohapatraHemant
E.g. if you are +30% of the internet traffic (nflx) it doesn't make sense to pay rent to telcos any more and feed their margins. You have the volume and stable demand to justify ownership. For the rest, cloud is where they'll live and die.
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Sandeep Srinivasa Mar 3
Your numbers are off. Owning is mostly in context of Colo here . For example in India will build the right power and gigabit infra in l5 datacenters. The cost savings are multi-X. I think ultimately it's a question of the costs not mattering enough to the bottom.
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Hemant Mohapatra Mar 3
No true. I've seen contracts from all major colos and they are just 20-30% lower on TCO without counting a bunch of other costs that are intangible.
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Rajath Kedilaya Mar 3
Replying to @MohapatraHemant
I thought Netflix was still on AWS!
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Hemant Mohapatra Mar 3
Replying to @rajathkedi
They are multicloud. Delivery network def their own. Bunch of archival storage on cloud. Maybe compute too.
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Alice Chikara Mar 3
As per your numbers ; Cost $80 Million and 2 years to build. Still makes sense to build and switch in 2 years, rather pay $100mln Per Annum for the next 10 years.
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Hemant Mohapatra Mar 3
Numbers are for "mid-sized" cloud. Lyft is multiples of that.
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Mike Nicholls Mar 3
Great thread I think Google must be missing their top Cloud Biz Dev guy
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Hemant Mohapatra Mar 4
Just did
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Hemant Mohapatra Mar 4
Replying to @Axu08021805 @lyft and 3 others
It's a public company so you can check their investor reports and make your own judgements.
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