Why you're addicted to cloud computing

you might find this hard to believe but amazon.com's retail business isn't very profitable selling consumers cheap Chinese junk is a highly competitive low margin business however Amazon Inc becomes profitable after you factor in Amazon web services an insane Cash Cow that recently hit operating margins of 30% renting out servers AKA cloud computing is one of the best business models of the 21st century and nearly every Indie hacker startup and Enterprise is highly addicted to it what they don't tell you is that getting you addicted is essential for the business model to work today you learn exactly how Cloud providers lock you in what you can do about it and some new developments that may change things in the future it is February 12th 2024 and you're watching the code report Amazon web services was the original innovator of the cloud when it launched S3 and ec2 back in 2006 AWS still dominates the market share today with Microsoft's Azure in second and Google Cloud platform in third now even if you use a boutique platform like verell or netfi you're still actually just using a big cloud provider because they generally resell AWS services at a higher price in exchange for a fancy UI and better developer experience what's crazy though is that these companies have the means to stand up their own servers but they're just as locked into AWS as we are and you'll find out why in just a minute now the first step to getting someone addicted to something is to start them when they're young this is what Facebook does with social media and it's why smokers almost always start before they're 18 on the cloud they get the addiction started with the free tier any new account that signs up gets a few hundred bucks for free but if you're a start up and have the right VC behind you you can easily get $100,000 in free AWS credits it's an awesome deal for a but Amazon is playing the long game if your startup doesn't fail they're going to make a 100 times that amount off you in the future in addition Cloud pricing models are extremely complex by Design the more opaque the pricing model the harder it is to determine the actual cost implications of switching providers and for Enterprise they offer long-term discounts in additional support which can be worth billions of dollars when you have customers like the Pentagon getting you in the door is pretty obvious but once you're in they also need ways to make it hard for you to leave and one way they do that is by charging outrageous egress fees egress is when data leaves the network as opposed to to Ingress when data comes into the cloud which is generally free that means if you use a cloud storage bucket and upload say a few pedabytes worth of data then decide you want to go to a different Cloud you're going to have a massive Bill to move that data from one Cloud to the other people generally switch clouds to save money but when you factor in that data transfer bill it's usually not worth it like when 37 signals migrated away from the cloud they were looking at A3 to $400,000 S3 bill just to move the data there is some good news though just a few days ago Google Cloud removed transfer fees when migrating away from Google Cloud that's great news for developers because it breaks down the barriers of vendor lockin however some people saw this as a sign that Google Cloud will be killed soon in which case I would lose this highly unfortunate bed I made last year that's why I think this is actually a sign of product strength and will hopefully motivate other clouds to do the same and by the way there's a 0% chance Google Cloud shuts down anytime soon as it just hit profitability in 2023 according to Gemini this move might be related to the eu's data act which is looking to crack down on cloud egress fees take a look at this breakdown on get deploying platforms like cloudflare totally free while bare metal providers like lenoe and hetner are very reasonable but as we get up to AWS and Azure we see the free allowance decrease and the egress fees increase but then it gets even worse when we look at platforms like forell and NFI they're basically pricing their bandwidth at five times what AWS charges them pretty clever but why don't they just buy their own servers to reduce these costs even further well as you can see their infrastructure is highly dependent on AWS and their egress fees would be astronomical and another thing is that many database companies like say mongodb give you the option to choose a cloud when you create an account well if you're a customer with a massive data set it's going to be extremely expensive to use this service if it's not on the same cloud and essentially that forces every Big Data SAS company into the cloud and that's why Jeff Bezos has a $500 million yacht with a figure head of his girlfriend on the bow and you don't but data transfer fees are just one small way to get locked in another big issue is proprietary technology all the big clouds have their own custom databases which are closed source and not easy to migrate to other platforms even if you use an open source database like postgress or MySQL you'll likely use a fully managed service like RDS in which case you're reliant on the cloud to scale the infrastructure and handle things like security updates and the surrounding ecosystem is tightly integrated all the products work great when they're on the same Cloud but most things aren't standardized to work properly outside that cloud and sometimes that can even include open source tools when you build your infrastructure around custom apis and proprietary Tech it becomes harder and harder to just transfer things elsewhere but nobody wants to be a slave to the cloud so what do we do about it well we have three main options option one is to not use the cloud at all instead you buy your own server and get some static IP addresses and try to manage everything by yourself it'll be way more expensive UPF front way more labor intensive to maintain it won't be as fault tolerant or secure but could pay off in the long run this option doesn't make a lot of sense for Indie hackers but makes a lot of sense for medium-sized businesses like base camp which claims it'll save $7 million over the next 5 years by moving off of the cloud option two is to use the cloud responsibly and by that I mean use open source technologies that are portable which will then allow you to use a multicloud strategy where you pick and choose the best services from each of the major clouds or a hybrid strategy where you use your own hardware for some things and the cloud for others then finally option three is to embrace the addiction pick a cloud and take the easy way out with all their proprietary Tech the cloud is not supposed to be cheaper what you're paying for is convenience bare metal minus pain equals AWS AWS minus pain equals verell the real question is how much pain are you willing to tolerate this has been the code report thanks for watching and I will see you in the next one

Channel: Fireship

Views: 865,666

Keywords: webdev, app development, lesson, tutorial

Id: 4Wa5DivljOM

Length: 5min 24sec (324 seconds)

Published: Mon Feb 12 2024