There is a common myth that for super large scale companies it makes sense to build their own data center instead of using a public cloud.
In many cases I believe this is exactly the opposite. For many companies, time to market, focus and top line are more critical than a theoretical saving 20% on the cost.
The Killing , Wikipedia
Consider Netflix and Zynga. Both companies are large and smart enough to build their own private clouds.
Zynga chose to leave AWS and build their own cloud infrastructure. Netflix chose to stay on AWS, probably with a huge discount.
Their stock price might hint on which company made the right choice.
Netflix Vs Zynga
Netflix focused the company’s energy on moving from a tech company into a movie production studio with shows like “House of Cards” , “Arrested Development”,”The Killing” and “Orange is the new Black”. Zynga was busy in becoming a data center company. Instead of focusing on social games and preparing for the next big change into Mobile.
The more generic point is that the bottleneck in most companies is a person. More specifically, it is management attention. If everyone is busy in building a private cloud and purchasing 1000’s of servers, no one has time to create a new business line.
The thought is that a private cloud becomes attractive with huge scale because the number of devops people to write software has an upper bound.
This might be true, but there are very few people in the world who have already done it, and hiring takes a lot of time.
The other option is to hire inexperienced people, at least on this scale, and they would make mistakes.
Companies like Netflix and Zynga are supposed to have 70-90% gross margin. Reducing cost of hardware from 20% to 15% is nice, but even that is not straight forward. And in any case, it is much less important than losing or creating a new $1B on the revenue side.
The hardest thing to understand in the world is the income tax. Albert Einstein
As a manager, there are three domains which I try to avoid as much as I can.
Taxes, Intellectual Property and Real Estate.
They all seem to have an arbitrary logic, which is highly non intuitive, non useful, complex and out dated.
In many cases it seems they are controlled by people who make their living from making it more complex, rather than making it simple.
And the worst is when you get a combination of these domains in a business decision:
We can’t merge these companies because we will have to pay a tax for “IP”
We cannot move this activity to Israel because our IP is listed in New Zealand
We can’t sell this division ,which we don’t need, because we already wrote it off as a tax loss
If we buy more real-estate we “earn” more money for tax benefits
I understand that “Taxes and Death” are the only two certain things in life. I also understand that Intellectual property can provide big income for patent Trolls. I even realize that selling and buying real estate is a great way to become a rich daddy.
But I prefer to leave these to other people. Thank you very much 🙂
When it comes to moving a live data center that is supporting a nearly $20-billion corporation, things change daily. So even though the team overseeing EMC Corporation’s transfer of data to a new data center 600 miles away spent 12 months in a discovery process to hone our migration strategy, the process is still a bit of a moving target.
With so many moving pieces, the fact is—as the saying goes—you don’t know what you don’t know with this kind of project.
One of the challenges to keep in mind when migrating to a data center like this is that it’s not just for today. The capital investment is huge, and migrating a data center takes months of planning and many more months to implement.
Nonetheless, we have achieved great success in data migration from Westborough, MA, to our new Durham, N.C., data center in 2011. We are primed to…
This extremely funny clip serves as a good demonstration to the state of the art in conferencing. But if humankind can ride 30 meter waves, maybe there is a chance we can improve here as well.
Video conferencing is going to hit mainstream – the technology and bandwidth are available for couple of years , but now the software and hardware are also ubiquitous.
Smart phones and new laptops have an excellent built-in camera and microphone built-in and all the new messengers have built-in Video calling.
I have been evangelizing video usage in EMC Beer Sheva new site, and while it takes some time to get used to , it is hard to go back.
Don’t be surprised if the breakthrough here would come from a new player and not the traditional players.
Unified Messaging – while there is no technology barrier to get it done, I know very few people who actually get all their email, phone, cellular ,calendar, voice mail and SMS information in aggregated fashion,in the same location and accessible through multiple views and devices. This is quite weird since the technology is around for a long time.
Even my $300 Cisco smart VOIP phone is no smarter than the $100 Panasonic wireless phone at home or the $10 unizen phone. No integration with email and messenger, no integration with cellular , no video capabilities. This seems like a product management issue. Again, who ever gets it right and create the “DropBox” of unified messaging would “surprisingly” create a huge company.
High (Normal) Quality Voice Conferencing – at least 50% of the voice conferencing I attend have a horrible sound quality. People drop of, people can’t connect , there is background noise from traffic, annoying echoes, low sound quality and the list goes on. While the market is “commoditized” in theory this is , IMHO, BS. While there are many free conferencing solutions they all suck, pardon my French. To make matters worst , the paid services are just as bad. I would be very happy to pay 10$ a month for a great audio conferencing service that always works, has easy sign on, great sound quality, built-in recording and email\SMS reminders.
Japanese Gardens Albert Kahn Paris May, With Blackberry Bold
I moved from a 50 people company to 50,000 people company, but the important changes are in my computing environment 🙂 Quick observations, after one month:
The fact that phones are still in “Logistics” department and not under “IT” is obsolete. These are “Smart Phones”, after all.
The BlackBerry bold is inferior to the iPhone in almost every aspect. The usability, the performance, the applications, the browser , the contacts and so on. I don’t even like the keyboard too much.
In the words of my five-years old nephew : “Why did they take the phone with the birds away from you?” and in his sad little eyes : “Will you promise to have the birds back again for next time you visit me?”
Macs do get stuck. Mine gets stuck quite often. Probably because of the Cisco’s VPN client, but it mysteriously gets stuck even after a restart and requires a hard boot. I remember form Check Point days that Apple’s API for VPN was quite horrible, but it does not make me feel better.
The Mac is very very heavy compared to my X61 Lenovo. It is quite a burden travelling between Beer Sheba, Tel Aviv, Ramat Gan, Herzelia, San Mateo and Boston. My back really hurts.
Drag and drop with the multi-touch is horrible. I have to use a normal mouse to move my emails into folders. And with my system for handling email, it is critical.
Office 2011 on Mac is not horrible. Microsoft communicator is quite annoying, but the built-in camera works very well and video quality is very nice. Does anyone know how to get it to sign in automatically ?
The Mac screen is awesome. It even makes the Blackberry photos look good.
I guess Google can make $2B just from replacing exchange around the world. I suspect in two years they would.
I’m carrying about 16 different forms of private key: 10 physical keys, 2 parking RFID keys, two employee badges , one SecureID , one cell phone with SIM. Can we have a start-up that unites all of these? This is so 20th century and does not add any security, it just makes me look like janitor 🙂
Quick math shows that Amazon might need to pay $2M to its customers due to its SLA policy.
Amazon Service in North Virgina has been down for more than 20 hours, to some degree.
Assuming Amazon’s EC2 Revenues in 2011 would reach $750M, I’m guessing that current monthly rate is $50M
Let’s assume %40 of the total EC2 servers are in north Virginia region (I’m too lazy to do the exact calculations).
Amazon SLA states that it will pay %10 of the bill for the effected month (April:)) if SLA is less than 99.5%. 20 Hours of downtime mean SLA for this year would be smaller than 99.8.
If the Annual Uptime Percentage for a customer drops below 99.95% for the Service Year, that customer is eligible to receive a Service Credit equal to 10% of their bill (excluding one-time payments made for Reserved Instances) for the Eligible Credit Period. To file a claim, a customer does not have to have wait 365 days from the day they started using the service or 365 days from their last successful claim. A customer can file a claim any time their Annual Uptime Percentage over the trailing 365 days drops below 99.95%.
Therefore Amazon has to pay %10 of the monthly bill to the relevant customer.
$50 M * %40 %10 = $2M. By the way, it seems this is not “real money” but only credit to use EC2, so real cost to Amazon is probably 70% of that (Their margins are probably much nicer than they claim :)).
The other interesting questions is : What was the cost of the downtime for Amazon’s customers? Would I get free badges from Foursquare? That could cost them millions of free points….
Some disclaimers:
Customers have to ask for their money back, not sure all will remember to do it
The SLA states that more than one availability zone needs to be missing in order to count as “downtime”. On 1:48PM PDT the status update mentions that only a single availability zone is unavailable, so maybe the relevant downtime is not 20 hours
I’m not a lawyer ,and did not do a thorough analysis of the agreement in any way. Just trying to see economics meaningful of SLA’s
I still think EC2 is very cool and they seem to be very honest about what’s going on.God knows most internal enterprise apps are not in a better status. It would be interesting to see how the market leader behaves in this case and how much will they actually pay their customers back.
40% might be a bit high , but it does seem most servers are still in the US