This margin is bound to soar now that "the firm said it plans to extend the useful life of its servers from four years to five, and its networking equipment from five years to six in the future". AWS' profit margin is almost 30% ($18.5b in profits on $62.2B in revenue), despite huge investments in future capacity and new services. Meanwhile Amazon in particular is printing profits renting out servers at obscene margins. Then lathered up with a thick coat of NEW-NEW-NEW paint, and The Cloud has beamed so brightly only the luddites would consider running their own servers in its shadow. ![]() Sold with analogies like "well you don't run your own powerplant either, do you?" or "are infrastructure services really your core competency?". It was a wonderful marketing coup, though. Some things are simpler, others more complex, but on the whole, I've yet to hear of organizations at our scale being able to materially shrink their operations team, just because they moved to the cloud. Anyone who thinks running a major service like HEY or Basecamp in the cloud is "simple" has clearly never tried. Now the argument always goes: Sure, but you have to manage these machines! The cloud is so much simpler! The savings will all be there in labor costs! Except no. Do you know how many insanely beefy servers you could purchase on a budget of half a million dollars per year? Yes, when you're processing email for many tens of thousands of customers, there's a lot of data to analyze and store, but this still strikes me as rather absurd. We're paying over half a million dollars per year for database (RDS) and search (ES) services from Amazon. Yeah, sure, if somehow a quake two states over opens the earth so wide it cracks your foundation, you might be happy to have it, but it doesn't feel proportional, does it? It's like paying a quarter of your house's value for earthquake insurance when you don't live anywhere near a fault line. Yet by continuing to operate in the cloud, we're paying an at times almost absurd premium for the possibility that it could. There's nothing like the cloud when that happens, like we learned when launching HEY, and suddenly 300,000 users signed up to try our service in three weeks instead of our forecast of 30,000 in six months.īut neither of those two conditions apply to us today. ![]() Or when you have no idea whether you need ten servers or a hundred. When the baseline is a sliver of your largest needs. When you have wild swings or towering peaks in usage. ![]() The second is when your load is highly irregular. ![]() (Then you'll later be faced with a Good Problem once the bills grow into the stratosphere as usage picks up, but that's a reasonable trade-off.) It remains a fabulous way to get started when you have no customers, and it'll carry you quite far even once you start having some. This is the shining path that Heroku forged, and the one that has since been paved by Render and others. The first end is when your application is so simple and low traffic that you really do save on complexity by starting with fully managed services. The cloud excels at two ends of the spectrum, where only one end was ever relevant for us. The savings promised in reduced complexity never materialized. It's finally time to conclude: Renting computers is (mostly) a bad deal for medium-sized companies like ours with stable growth. We've seen all the cloud has to offer, and tried most of it. We've run on bare virtual machines, we've run on Kubernetes. We've run extensively in both Amazon's cloud and Google's cloud. Basecamp has had one foot in the cloud for well over a decade, and HEY has been running there exclusively since it was launched two years ago.
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