When I asked one Googler familiar with the company's cloud infrastructure whether he thought an enterprise could operate anywhere near the efficiency of Google, he responded that the idea was "hysterical." As one example, he pointed out that "we take power direct from transmission lines and build out our own substations." Google, for its part, details how its roll-your-own approach results in tremendous efficiencies. A traditional enterprise data center, by contrast, has a few thousand hosts, yet incurs similar physical plant and power consumption costs - except they're not the same costs.Ĭall it vertical integration or whatever you want, but the mega-cloud vendors are building everything related to their data centers. According to a source familiar with AWS operations, a typical AWS data center includes 50,000 hosts or 1,000 racks. No wonder, given the relative size of those mega-clouds' data centers. Today the top five would include AWS and probably Microsoft. According to a 2012 report in Wired, Google was the fifth largest server maker in the world. Their variable costs decrease due to their ability to purchase in larger quantities their fixed costs are amortized over a higher volume customer base their relative efficiency can increase as scale drives automation and improved processes their ability to attract and retain talent increases in proportion to the difficulty of the technical challenges imposed and so on.Ĭonsider the relative size of these data centers. The most obvious reason that the mega-cloud vendors can charge less for more computing, storage, and other resources is that they pay less per server than enterprises running private data centers, thanks to the huge volumes of hardware they buy. As O'Grady describes it:
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