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I'm trying to understand the hype around cloud computing and whether it could be a better alternative to a traditional data center in terms of costs. I can see the benefits of cloud if you are a small business, but what if you were lucky and became a big giant?

A website that hosts videos, images, music, games, etc. would need an incredible amount of storage. If you were aiming at the next big thing on the Internet and if you eventually had to store, say, 200 petabytes of data, would you pay 200 petabytes * 0.15 per GB = 30M a month or would you buy your own storage? I know the latter comes at a price in that you need to pay for electricity, IT staff, hardware replacement, housing, data replication, etc., but I still feel like the former seems more expensive. OR maybe I'm wrong?

Of course storage is not the only variable that costs. You need to pay for bandwidth (probably the most expensive), HTTP methods like GET, PUT, and DELETE, and virtual machines. A website with high traffic and a large user base would consume those in high doses.

So, what is cheaper? Hosting your highly popular website in the cloud or in your own datacenter?

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closed as not constructive by EEAA, John Gardeniers, RobM, ThatGraemeGuy, Chris S May 10 '11 at 13:10

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There is no way to answer this objectively. Trust me, I get the confusion over the "hype around cloud computing", but in some instances it works for a business, and other times it won't. It comes down to a cost-risk analysis on a per situation basis. –  Holocryptic May 10 '11 at 2:29

3 Answers 3

At its best, cloud services allow massive scale-out without having to deal with the forklift upgrades required to do it all yourself. It allows an incremental approach to growing the business, which is easier to swallow in smaller chunks than the big ones needed when doing it physically.

At some point the economics of it are going to force you into building your own infrastructure instead of relying on the big cloud players, but where that line in the sand is varies from business to business. It is entirely possible that some hybrid approach, some fully private, some fully cloudy, is what ends up as your best case.

Each internet application is different in storage, processing, and bandwidth needs. As things grow, fundamental problems emerge that require fixing which can change the metrics entirely. There is no way a 10 person office with high dreams can effectively predict how their new-shiny will behave with 100x the userbase and 40% growth a month. Plan for scalability from the start and fix your assumption-faults when they start biting you on the butt.

The whole point of cloud storage is that you can keep adding and adding and adding without having to forklift in some new storage arrays, because the cloud-provider is leveraging the economies of scale to an extent you can't match (at least at the small and medium sizes). Once your own storage demands start reaching those of a cloud-storage provider itself, then going physical starts looking attractive. Until then, the economics is hard to ignore.

But... some applications don't deal well with cloud storage for whatever reason. Perhaps the storage performance is too variable. Or your peak loads are so peaky that everything slows down during peak and the economics of the SLA required to keep your stuff performant is breaking the bank. Sometimes this kind of thing can be engineered around in code, but not always. In those cases, going physical for at least some portion of the infrastructure starts making sense.

But in the end, it all depends on the application.

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And then you go and answer objectively. Damn you. –  Holocryptic May 10 '11 at 3:12

No doubt that small and medium businesses would highly benifited by cloud computing in terms of both cost and time.

But to answer the question Which one is cheaper ?

We have to look at the core business, if you are not much aware of the data center technologies then the best way is to go with a cloud service provider as they do all for you and you need not to look at installing and maintaining the system, employing specialists to operate and timely upgrade the system and you get enough time to focus on your core business.

But if you have enough knowledge of Data senters and various related services and/or it is your core business it will be effective to maintain your own setup to host websites

Concept here is not only that which one is cheap. But, how much an individual or small organization be benefited is more of concerned. Now that's depends upon their need and they have to decide that its worthy or not. Even if it is little worthy, you wil get all the benefits at the cost of few (May be More...) bucks. For e.g you need not update the setup regularly with new technologies in the market, not need to hire specialists to work on the complex data center setup.

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The primary benefit of cloud services to business* is found where a business is small enough that it's more economical to outsource to a third party than attempt to run an in-house version at a small scale. The problem with evaluating the benefit, however, is that a great deal of the IT cost that can be saved are intangible.

Dollar-for-dollar, even small players can purchase 1Tb of SAN storage space cheaper than it can be had over a 3-year period with a cloud services provider. But once you strip out the time spend administering your chosen storage technology, the risks of losing disks or a staff member screwing up a configuration, power, cooling and ongoing support, the cloud offering may work out more attractive.

Also, it tends to be the case that the the parties responsible for a companies financials favour predictable interval charges to one-off unpredictable charges. This means 'renting' is more attractive than 'buying' even if buying is cheaper overall. A vendor offering you a monthly rate for X amount of disk, bandwidth, RAM, CPU or whatever is more attractive from a financial standpoint than outright purchase of expensive IT equipment (plus all the aforementioned intangible costs associated with this).

The benefit here in moving 'into the cloud' should start to become apparent to small and medium business, if their current situation is the Datacenter-in-a-broom-cupboard approach that we're probably all familiar with. Cloud providers can provide the same or similar service and do so reliably and cheaply due to the economies of scale that small businesses simply can't tap. However as you alluded in your question, companies who's business 'is IT' are often of a scale where these benefits start to be realized internally and in those cases a 'cloud provider' often can't offer as much. However, this needs to be taken on a system-by-system basis, because even a company that specializes in (for example) online data storage will probably benefit from moving their internal IT needs (email, test environments, document management) out 'to the cloud'. Their core business would of course remain in their own racks via dedicated links that they control, but they can easily remove the hassle of maintaining unrelated IT stuff (that every other company under the sun also requires) by farming it out to someone who specializes in delivering that service. This means the IT bods at that company can then spend their days focusing on their core business (in this case, their file hosting service) rather than running around wasting hours troubleshooting their company exchange server.

*Bear in mind that I work for a cloud services partner and spend my days helping clients 'move into the cloud', so my perspective on this is both informed and biased in equal measure.

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