Does the "Cloud" run on physical servers in datacenters
Does the "Cloud" run on physical servers in datacenters
Posted Jun 11, 2013 21:49 UTC (Tue) by Cyberax (✭ supporter ✭, #52523)In reply to: Does the "Cloud" run on physical servers in datacenters by dlang
Parent article: An introduction to OpenStack
Technically, EC2 is more expensive than a no-name VPS hosting (and you're not going to get a dedicated server for $99 a month) but from my experience it's significantly more reliable. And also has very nice services like S3 (which is great for static files).
And the main advantage - you can get additional nodes extremely easy. And delete them even easier.
Posted Jun 11, 2013 22:35 UTC (Tue)
by dlang (guest, #313)
[Link] (18 responses)
The pricing I am seeing is 0.58/hour. the price you are seeing may be for a different availability zone, they vary. The pricing for reserved nodes depends on the type of reservation. I was using the ballpark figure of saving 50%, in extreme cases you can save up to 65%. Spot pricing allows you to save more, as long as it is acceptable to loose your system at high demand times.
8 core real servers start at <$200/month. I haven't bothered to jump through the hoops, but it used to be that you could get smaller servers starting at $99/month from Server Beach, Rackspace, etc. Taking a quick look at their sites, it looks like they won't give you pricing without involving a salesman, something I'm not going to do just to get numbers for a discussion here :-)
It makes sense that if you guarantee that you are paying for the system for three years, that you will get better pricing. This also shows that you really are paying for more than just the time that you use the server, you are also paying a share of the time they expect the server to be idle
Look, I'm not saying that AWS is horrible and should be avoided. I'm just disputing the "put it in the cloud and save tons of money" mantra. Sometimes it will save you money, sometimes it will cost you money.
First do the math and decide what the best answer for your business is. It may be worth spending more for the flexibility, it may not be.
> And the main advantage - you can get additional nodes extremely easy. And delete them even easier.
as long as the extra nodes are not reserved nodes.
at this point we are back to the higher, standard pricing.
Posted Jun 11, 2013 22:41 UTC (Tue)
by Cyberax (✭ supporter ✭, #52523)
[Link] (17 responses)
> Look, I'm not saying that AWS is horrible and should be avoided. I'm just disputing the "put it in the cloud and save tons of money" mantra. Sometimes it will save you money, sometimes it will cost you money.
It's scary how much of a typical corporate datacenter Amazon can replace. They have storage, computing, archival storage, etc.
> at this point we are back to the higher, standard pricing.
Posted Jun 12, 2013 0:16 UTC (Wed)
by dlang (guest, #313)
[Link] (16 responses)
While Amazon does have some purchasing advantages due to it's size, the margins on hardware are rather small (single digit percentages), so it's not decisive. they all have to pay for the systems, the electricity, and the maintenance of the systems. To this figure, they then tack on their profit margin and the cost of whatever value-add that they provide over giving you the raw servers.
It's in the cost of this value-add that Amazon has an advantage due to their size. they are spending a lot more in developing and maintaining the software infrastructure, but they have a much larger number of servers to split this cost over.
But if you pay for only part of the time of the server, all of them have to pay their overhead for the full time of the server.
Posted Jun 12, 2013 2:18 UTC (Wed)
by giraffedata (guest, #1954)
[Link] (15 responses)
The profit margin doesn't figure in. You pay that even if you do it all yourself.
In a competitive (non-monopolistic) situation, there is no real profit - products are sold at cost. What some accountings report as profit is actually the cost of the capital - what investors had to be paid to provide the money to build the data center. Even if you build your own data center, you have to buy the capital to do it - from a bank, bondholders, stockholders/owners, or whatever, and it will cost the same.
Posted Jun 12, 2013 3:51 UTC (Wed)
by dlang (guest, #313)
[Link] (14 responses)
competition doesn't mean zero profit, it just puts a (soft) cap on the profit margin
But the more layers that there are who need to either make a profit, or pay the 'cost of capital' the higher the price will be.
this is part of the reason why the giant companies got so large, by eliminating the multiple layers of profit, they were able to lower their cost of the final product, either keeping all the profit themselves, or being able to lower the retail cost below what other, less integrated companies could afford.
Posted Jun 12, 2013 5:01 UTC (Wed)
by nybble41 (subscriber, #55106)
[Link] (2 responses)
If there were an economic profit to be had in any particular business, then by definition the market would not be in a state of equilibrium. Capital would be reallocated toward that area until balance was achieved and the expected marginal return no longer exceeded the opportunity cost.
In practice economic profit still tends toward zero, but uncertainty and constantly changing conditions ensure that it fluctuates (with a wide margin of error) rather than settling there. You see a few outliers with a short-term profit or loss, but the low-risk businesses around for the long term are all about equal, and tend toward the market rate of return on capital (the "risk-free" interest rate adjusted for changes in the supply of currency). This rate of accounting return is equivalent to zero economic return.
Posted Jun 12, 2013 5:57 UTC (Wed)
by dlang (guest, #313)
[Link] (1 responses)
spoken like a true Economist (no insult to you intended, to "Economists" there is some insult intended :-)
however, in the real world there are not ideal conditions, and no field of business is in a state of equilibrium.
you are also ignoring the fact that businesses convert labor into money, including the efforts of the owners.
So business owners who start off with little money earn this fictional "cost of capital" on their time and effort, without necessarily having the capital to start with.
There is also the matter of convenience and trust. These are not things that can be measured precisely (and they differ from person to person) but they can significantly change the amount of profit that a company can make.
Posted Jun 12, 2013 15:57 UTC (Wed)
by nybble41 (subscriber, #55106)
[Link]
Actually, I addressed this point. Even under non-ideal conditions, the economic profit tends toward zero. It just never reaches zero and stays there.
> you are also ignoring the fact that businesses convert labor into money, including the efforts of the owners.
No, I'm not. The labor invested into the business is part of the opportunity cost. The same capacity for labor could be put to use in another line of work, or in leisure. Accounting profit does not consider the value of the owners' labor; economic profit does. This is part of the reason accounting profit overstates the business's actual profitability.
> There is also the matter of convenience and trust. ... they can significantly change the amount of profit that a company can make.
Sure, but there is a cost to providing convenience and trust. Some of that cost may be measured and quantified; the rest is not factored in to accounting profit, again exaggerating the overall profitability of the venture. Economic profit considers the total cost.
Posted Jun 12, 2013 5:43 UTC (Wed)
by giraffedata (guest, #1954)
[Link] (10 responses)
This actually gives us the proof of the theorem that in a competitive, free, and efficient market, there is no profit. If each stage in the supply chain withdrew value from it, then the most profitable supply chain would be the shortest. Companies would be striving to "cut out the middleman." But the fact is that the middleman always contributes services worth whatever his "markup" is, and in modern times, we see supply chains growing ever longer. The successful companies are the ones who outsource everything they can and use their own capital to grow horizontally within a thin layer of the stack.
The total amount of capital throughout the supply chain is the same whether you divide it into 10 stages or one, so whatever amounts you call profit add up to the same final cost at the end of the chain.
Posted Jun 12, 2013 12:34 UTC (Wed)
by Cyberax (✭ supporter ✭, #52523)
[Link] (9 responses)
Once the growth stops, then yes - there'll be no profit.
Posted Jun 12, 2013 12:49 UTC (Wed)
by massimiliano (subscriber, #3048)
[Link] (6 responses)
I would have never thought that a simple clarification on a price comparison could spawn such an interesting thread about economy... but of course this is LWN!
Once the growth stops, then yes - there'll be no profit.
So, is it for this reason that when the growth stops we have a crisis, and there are movements stating that our economic system is flawed because a perpetual growth is not possible and-or sustainable?
Cheers,
Posted Jun 12, 2013 13:12 UTC (Wed)
by Cyberax (✭ supporter ✭, #52523)
[Link]
After that? Who knows, maybe we'll live in a post-scarcity society or as uploaded electronic intellects.
Posted Jun 12, 2013 13:36 UTC (Wed)
by khim (subscriber, #9252)
[Link] (4 responses)
Yup. Growth actually stopped a few years back and now we are looking on the world where most businesses actually produce negative profits. I've already tried to discuss that: you can easily find all the times where expansion happened and new markets arrived on a graph. But discussion quickly derailed because people tend to state all the right facts then carefully ignore the implications. Here is an example: Think about it: if wages are going down 10x when gadgets price goes down 10x then market actually shrinks. Ok, it does not work. So we have wages constant and price of gadgets are 10x cheaper. Cool - but now we have all the businesses deep in red. We can issue the debt (government debt or private debt) and compensate this (which is exactly what happens today around the world) - but how long it'll work? The answer: 5, may 10 years if you are lucky. Not a long term solution. Now we find the real answer: if gadgets price goes down and wages are kept up then "internal market" grows only if you move productions of all these gadgets overseas. Where you can easily create new debt. Which explains the paradox:
If you'll think about it then it's obvious that main export product in the first phase of expansion should be green paper with some watermarks - and this is exactly what happened.
Posted Jun 12, 2013 14:25 UTC (Wed)
by Cyberax (✭ supporter ✭, #52523)
[Link] (3 responses)
Anyway, growth has not stopped, but politicians' heads are firmly stuck in their nether places. So the Depression goes on, doing its job (depressing the economy). The current job situation is not a fundamental change, it's just an evidence of mismanagement.
And if you want a test case - look at Japan. They are on the road back to robust growth.
Posted Jun 12, 2013 14:59 UTC (Wed)
by khim (subscriber, #9252)
[Link] (2 responses)
And again you ignore the facts. Yes, US mainly exports not physical currency, but bonds. But that's now - at the final stages of game. In the first stages it actually loaned money, then have gotten actual physical goods back. The first dose is for free :-). It's not as if that's some new or unknown process - that's just how explansion to the new territory happens. Only half-millenia ago conquistadors actually brought mirros and glassbeads while half-century ago just some papers were used. It's not a fundamental change, I agree. That happens every time all the available territories are fully exploited. The only difference: this time there are no new territories coming. Globe is more-or-less completely covered. Really? What kind of growth? In debt? Yes, here they are leaders, but not the number one. Greece won this race few years back and now reap all the benefits: over 25% unemployment rate and all other nice side benefits. Japan is next, but it's quite possible that some small countries will outrun it on the road to ruin (like Cyprus did recently). Of course they are not members of EU thus they will have more choices but not that many.
Posted Jun 12, 2013 15:12 UTC (Wed)
by Cyberax (✭ supporter ✭, #52523)
[Link] (1 responses)
The notion that US exports 'money' is one of those 'simple, neat and wrong' answers. The reality is much more complicated.
US had lived with a near zero trade balance for the most part of the last 50 years. And it had a really good economic growth. And what's more, the peaks of this growth actually fall in the time when US had had minimal import _and_ export (btw, that's a coincidence, not a causal relation).
>Really? What kind of growth? In debt? Yes, here they are leaders, but not the number one.
Posted Jun 12, 2013 17:31 UTC (Wed)
by khim (subscriber, #9252)
[Link]
Well, sure. There are some pretty complex structures involved. But that's the core engine which moves the whole mechanism. No, it's not a coincidence. If your economic machine is built around building debt then most of growth will happen when new territories are just added and new debt attached to these new people is rapidly created. This is when you actually have minimal import and export because there debt machine uses future imports and exports as collateral. Once you start to actually grow import and export future prospects become worse and worse and when it becomes obvious that future imports and exports are overvalued growth stops. This is similar process to the Apple's stock growth and fall: it reached maximum and started going down not when Apple's actual sales reached maximum but when expectation reached maximum. This will be just a pointless gamble. Two factors are known: These two factors mean that this whole thing will fall apart at some point, but that timescale for this process is measured in decades, not mere years. And since this is not a zero-sum game yet (when Greece collapses Japan and US pyramids get new lease on life, e.g.) it's practically impossible to say which countries will collapse when. By all rights Japan should have collapsed before Greece, but because most of it's debt is issued by large internal creditors and because Japan is not a member of EU Greece went under first. Will Italy or Japan collapse first? Nobody knows: again, objectively purely in economic sense Japan's situation is much worse, but Italy's hands are tied by EU. When I complained last time about the lack of detailed theory I was not pretending: over century old Mark's theory is still the most potent theory which describes this process, but it is over century old and thus it obviously misses some modern trends. Which is a pity. We desperately need an adequate theory to make this destructive process less disastrous, but so far most "professional" economists refuse to even acknowledge that process is underway.
Posted Jun 12, 2013 15:55 UTC (Wed)
by giraffedata (guest, #1954)
[Link] (1 responses)
That was included in "efficient." A (theoretical) efficient market reaches equilibrium instantly.
Coming back to analyzing whether it should be cheaper to rent from ServerBeach of own your own, if one believes that inefficiency/growth means we have to add in ServerBeach's profit, one should indicate what particular costs of the inefficiency that profit represents.
All I'm saying is that in making a comparison like this, if you add in one of the supplier's book profits, you'll be double counting. Just add up everyone's costs, not counting transfers from one to another, and compare the totals.
(I say should be cheaper above to distinguish from the alternative method of looking at actual price lists, in which case book profits are again irrelevant).
Posted Jun 12, 2013 16:06 UTC (Wed)
by Cyberax (✭ supporter ✭, #52523)
[Link]
> Coming back to analyzing whether it should be cheaper to rent from ServerBeach of own your own, if one believes that inefficiency/growth means we have to add in ServerBeach's profit, one should indicate what particular costs of the inefficiency that profit represents.
For example, if your core competency is at producing welded tubes then do you really want to spend your time and energy on maintaining your own Exchange installation? Of course, high-level management won't necessarily know all the details of installation, but they still would have to understand proposals, approve budgets, etc.
And it's compounded by the fact that the 'classic' IT infrastructure still is not at the 'commodity' level like, say, HVAC. It still requires a fair amount of attention to details even for fairly simple cases.
Then there's a question of reliability - it's much easies to guarantee it if you have 100000 servers than if you have just 2.
And so on.
Does the "Cloud" run on physical servers in datacenters
Does the "Cloud" run on physical servers in datacenters
It almost always "save your money" now...
Unless you need it for a couple of hours to handle peak loads or to run a large computation.
Does the "Cloud" run on physical servers in datacenters
Does the "Cloud" run on physical servers in datacenters
They then tack on their profit margin
Does the "Cloud" run on physical servers in datacenters
Does the "Cloud" run on physical servers in datacenters
Does the "Cloud" run on physical servers in datacenters
Does the "Cloud" run on physical servers in datacenters
Does the "Cloud" run on physical servers in datacenters
But the more layers that there are who need to either make a profit, or pay the 'cost of capital' the higher the price will be.
Does the "Cloud" run on physical servers in datacenters
You forgot to add "at the equilibrium conditions". Which doesn't happen because we (as a civilization) experience an economic growth. That in turn creates imbalances and this allows the profit to exceed the breakeven point.
Does the "Cloud" run on physical servers in datacenters
_ Massimiliano
Does the "Cloud" run on physical servers in datacenters
Does the "Cloud" run on physical servers in datacenters
So, is it for this reason that when the growth stops we have a crisis, and there are movements stating that our economic system is flawed because a perpetual growth is not possible and-or sustainable?
Slashing the cost of a $500 widget to $50 immediately opens up a lot of internal market.
In fact, US exported hardly anything during the first post-war years (hardly anybody in Europe could buy imported stuff).
Does the "Cloud" run on physical servers in datacenters
That's not a place to discuss it, but this is incorrect. Total 'export' of US currency is just a small fraction of US GDP (I think around 0.2% or about 50-100 billion).
Does the "Cloud" run on physical servers in datacenters
Total 'export' of US currency is just a small fraction of US GDP (I think around 0.2% or about 50-100 billion).
The current job situation is not a fundamental change, it's just an evidence of mismanagement.
And if you want a test case - look at Japan. They are on the road back to robust growth.
Does the "Cloud" run on physical servers in datacenters
Nope. You do.
Want to bet? I propose the following: during the next 2 years Japan GDP will grow at least 2% each year above the level of inflation. There'll be no additional significant unemployment and there'll be no debt crises (even though the debt level will actually grow).
Does the "Cloud" run on physical servers in datacenters
The notion that US exports 'money' is one of those 'simple, neat and wrong' answers. The reality is much more complicated.
And what's more, the peaks of this growth actually fall in the time when US had had minimal import _and_ export (btw, that's a coincidence, not a causal relation).
I propose the following: during the next 2 years Japan GDP will grow at least 2% each year above the level of inflation. There'll be no additional significant unemployment and there'll be no debt crises (even though the debt level will actually grow).
1. Expansion of markets is finished and now we are in the purely speculative pyramid-style phase of the game.
2. This particular pyramid is extremely slowly-moving one (note how you mention "2% each year", not "20% each year" or "200% each year").Does the "Cloud" run on physical servers in datacenters
You forgot to add "at the equilibrium conditions". Which doesn't happen because we (as a civilization) experience an economic growth. That in turn creates imbalances and this allows the profit to exceed the breakeven point.
Does the "Cloud" run on physical servers in datacenters
For individuals it's a more complicated calculation. Any company consists of humans who have finite attention spans.