The Costof Cloud
A Civo white paper looking into the complexity of cloud costs
for businesses and alternatives beyond the hyperscalers.
One of the main reasons the cloud has become so successful in the past decade or so is that it's built for developers. Developers don't want to spend their time making the infrastructure work, they want to go higher up the stack and get stuck into what they enjoy - problem-solving through code. The cloud gives them everything they need without the usual headaches.
A developer focus is what has made AWS so successful: in the early days it just cared about building features that were useful to its engineers. But at some point over the past ten years, this developer focus has been overtaken by something else entirely - the drive to deliver shareholder value.
At the first Amazon AWS re:Invent conference - which was 10 years ago this year - cloud computing was a different proposition. In 2012 enterprises certainly weren't sold on the idea of cloud and after years of running their own data centres they needed convincing. Security and perceived lack of control were massive hurdles that needed to be overcome. That first re:Invent conference was where Amazon fully embraced the developer community, and it sowed the seeds for the public cloud that we're all benefiting from today.
But a decade later, Amazon has not lived up to its promises.
The big theme in 2012 was the economy of scale. Amazon could build it cheaper, better, faster - and it would directly benefit you, the customer. However, there's a hazy point where scale starts to become market power. Where a few companies take control and prioritise profit over customers. And we've seen that with the big three hyperscalers.
In his first-ever re:Invent keynote the then SVP of AWS, Andy Jassy (now CEO of Amazon) discussed the benefits of the cloud. Anyone who's been in this industry for any period of time will be well-versed on the reasons: trade CapEx for OpEx, don't pay for idle infrastructure thanks to variable capacity, increase your agility and go global in minutes. But his real focus was this: “lower variable expense than companies can do themselves.”
The theory was that Amazon could use its massive size to leverage its economies of scale to lower infrastructure costs and reduce its prices to a point where nobody could do it for less. It was a massive flywheel that delivered cheaper and cheaper infrastructure as its size and momentum increased.
Fast forward to 2022 and Andy Jassy is the CEO of Amazon. AWS growth continues to break records: it recently reported record profits of nearly $25 billion for the full year 2021, and an operating margin of 29.8% in Q4 2021.
Economies of scale from hyperscalers haven't passed on to the customer, and they are damaging the bottom line for many businesses. When you then add to that their overly complex and opaque pricing practises, it means customers can't even work out how much they're going to be charged from month to month.
It's well known that hyperscalers are overcharging, I hear this all the time. But the same mentality that led to “nobody getting fired for buying IBM” in the 1970s applies to the hyperscalers of today. They are the perceived “safe” brand of cloud computing to the extent that pricing is often overlooked.
Don't buy into the hyperscaler narrative. There is a new breed of cloud providers like Civo who are challenging the status quo and believe things don't have to be that way.
Civo was built by developers for developers, and we listen to our community. In fact, everything we do is driven by the community, and our pricing is upfront and predictable, leading to no nasty surprises at the end of the month.