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Since cloud solutions (Google AppEngine, Amazon, etc.) do more for you, at the end of the day do they cost significantly more than doing it "yourself" with co-location hosting, etc.

Not just starting out, but when the website is mature and getting many page views a day.

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Cloud is price-competitive at scale, but not at the low end. –  Rex M Apr 25 '10 at 17:46
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@Rex Not true - App Engine, for example, is free to start. Many other platforms, including S3, scale well - that's one of the major advantages of 'cloud'. –  Nick Johnson Apr 25 '10 at 20:58
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@Nick there are exceptions to every generalization. That doesn't make it untrue. –  Rex M Apr 25 '10 at 22:04
    
Rex, do you have any evidence that your generalization is true? –  Adam Crossland Apr 25 '10 at 23:04
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2 Answers 2

up vote 3 down vote accepted

Cloud computing, is always more expensive than doing it yourself. The attraction of cloud computing from a finance perspective is that instead of having to show N thousands of dollars of debt from a capital expense, all you show is a monthly bill (of course over the same 3 year period you could have purchased a datacenter bu that's never stopped a CFO from choosing less expensive now over less expensive in total). One of the myths of cloud computing is that you somehow gain infinite scalability. Before we called it cloud computing we called it "just throw more hardware at it". The secret of cloud computing is that your scalability is determined by your application, what technologies it's using and its architecture. Yes, you can probably get more performance or concurrent users out of throwing more hardware at it this time, but sooner or later more memory or faster CPUs isn’t going to do anything useful. I can guarantee you that “the cloud” isn’t going to advise you on how to restructure your storage so it will horizontally scale to a petabyte of data.

Since cloud solutions (Google AppEngine, Amazon, etc.) do more for you

Really, what is the "more" they are doing for you other than providing the hardware required to run your OS of choice? They aren't doing backups, they aren't providing OS licenses.Keep in mind, that with many of the "free" services like goog app engine, there is no SLA involved, so they can't even guarantee that the platform will be up.

So here's what the cloud does offer:

  1. quick startup time
  2. inexpensive entry costs
  3. convienient 1 stop shopping (eg no looking for datacenters, comparing hardware etc)

That certainly might be worthwhile to you but it's going to add to the expense sheet.

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+1 Very good answer ! –  Antoine Benkemoun Apr 26 '10 at 12:48
    
-1. You obviously never heard of leasing (no debt, monthly payments). Plus it is not ALWAYS more expensive. I know a company that starts 10.000 VM's every day. For an hour. To do the accounting in a short itme. They could not do it for the same cost - but that is because the hardare would be dormant like 22 hours per day. –  TomTom Sep 5 '12 at 5:15
    
10,000 CPUs for an hour would run about 36,000 a month. I can buy a whole lot of servers for 432,000 per year. –  Jim B Sep 24 '12 at 18:36
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They cost significantly more than do yourself - their advantage is not price per unit when used full month, it is price per unit for a short time PLUS significant scalaiblity. No many month contract. THis means if you have a site growing fast, you can easily get new nodes online without long term commitment.

Any significant large static load is better served through other means, purely from a financial point of view. Colocation at the end being most competitive - if you OWN the hardware, there is no overhead for leasing, handling etc.

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