There is an adage, not quite yet old, suggesting that compute is free but storage is not. Perhaps a more accurate and, as far as public clouds are concerned, apt adaptation of this saying might be that computing and storage are free, and so are inbound networking within a region, but moving data across regions in a public cloud is brutally expensive, and it is even more costly spanning regions.
So much so that, at a certain scale, it makes sense to build your own datacenter and create your own infrastructure hardware and software stack that mimics the salient characteristics of one of the big public clouds. What that tipping point in scale is really depends on the business and the sophistication of the IT organization that supports it; Intel has suggested it is somewhere around 1,200 to 1,500 nodes. But clearly, just because a public cloud has economies of scale does not mean that it passes all of those benefits on to customers. One need only look as far as the operating profits of Amazon Web Services to see this. No one is suggesting that AWS does not provide value for its services. But in its last quarter, it brought nearly $1 billion to its middle line out of just under $3.5 billion in sales – and that is software-class margins for a business that is very heavily into building datacenter infrastructure.
Some companies, say the folks that run the OpenStack project, are ricocheting back from the public cloud to build their own private cloud analogues, and for economic reasons.
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