Hybrid Clouds are not the future, better IaaS

pricing is

Andreas Gauger@gaugi

Introduction• Andreas Gauger

• 18 years in the hosting/cloud industry

• Founded and led the 1&1 hosting business from 1995 to 2008

• Started ProfitBricks in 2010 together with Achim Weiß who was CTO at 1&1 and responsible for all development and all datacenters

Two statements…

When I saw the first cloud computing

products I thought they would never be

a success

First cloud computing• Only pretty small instances

• performance fluctuation due to bad neighbor problems

• No that reliable

• Lot’s of things you could not do (no networking, load balancing etc.)

• 2 to 4 times more expensive than dedicated servers

But it was a success…

• Very low starting cost

• No investments

• No long term contract, no unused capacity

• Once the workload was adapted to the cloud it was easily scalable, no (wrong) pre planning of capacity was necessary any more

• No management of hardware, datacenter or connectivity any more

Today cloud is different

• Small to very big instances available

• Performance of modern clouds can be very high

• Reliability can be very good due to more redundancy

• Software defined datacenters offer all the possibilities of „real hardware“ data centers

But…

The cloud is still overpriced

It’s the elephant in the room

• Typical public cloud IaaS offerings have gross margins as high as 80% to 90%

• Cloud pricing is dominated by big players that set the standards nearly all the competitors use as orientation

• Sadly also most companies that offer services on top of IaaS do the same

Why do I tell you?• I should shut up and be happy about the

margins

• But I think the artificially high pricing has started to hinder the adoption of IaaS

• Hybrid clouds emerge, and one of the main reasons for this is - the too high price of IaaS

• Companies with large workloads pull them from IaaS providers out of cost reasons

Old technology is happy

• The too high pricing leaves the door open for old technology

• Hardware vendors tell their customers to use „hybrid clouds“ that are a combination of a „private cloud“ where they can sell the good old servers and storage systems and public cloud

• Dedicated server hosters do the same thing but there the „private cloud“ is rented not bought

Even IaaS providers go back in time

• Some IaaS providers have „indecent proposals“

• The more more we take away from the flexibility the cloud promised, the better pricing you will get

• „Sign a three year fixed contract on an instance. Pay a high setup fee and a fixed monthly fee (no matter if you use the instance) and you get a 66% discount“ (actual offer of Amazon)

And why is this bad?

• Cloud computing is a promise.

• It is a very elegant form of resource allocation and it takes away a lot of burdens from the user

• Hybrid clouds and „lock-in“ pricing schemes take away these advantages and even add an additional layer of complexity to the management (hybrid clouds)

So what should you do?

• Look out for the new and modern IaaS companies out there.

• They didn’t have the burden of older technology and existing revenue streams to protect

• They offer modern, high performant virtual datacenters at much more reasonable pricing than the big players

Another secret• If you want to know your cost of a certain

IaaS provider for you there is ONLY ONE WAY to find out:

• Run your actual workload on that provider. The real one. Then find out what bang you get for your buck.

• If you try to compare IaaS provider pricing on paper you have a high chance to be factors off.

Conclusion

• Don’t go hybrid cloud for cost reasons

• Just find and test cost efficient IaaS providers and live happy ever after