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Date:
May 9, 2013

Don’t believe the HYPE: Dedicated Hosting is 3x cheaper than AWS

AWS – The 10,000-pound gorilla

We know that Amazon Web Services (AWS) — Amazon’s Cloud — has its sights set on the enterprise market and is looking to make a splash.  They have a lot of our competitors on the run.  Amazon is a big name, and cloud adoption is good, but I am here to tell you that AWS is not for everyone. Here is why: An overwhelming 90% majority of enterprise workloads are better suited for a dedicated server.  In fact, dedicated server infrastructure wins on price and performance, with costs typically three times less than running similar workloads on AWS.

To give you an example, let’s take a look at one of our most popular mid-level dedicated server solutions:

Codero Dedicated Server vs. Amazon EC2

*1TB Persistent EBS Storage required assumes you want to keep configs, data through maintenance, etc

Yes, you read the chart right. This is showing a 3.3x differential in monthly price. Why then would you pay a hefty premium for EC2 from AWS?  AWS is focused on flexibility, scale, and other elastic features that make cloud computing great.  Despite its continued cost drops, AWS was not built with “constant” workload cost effectiveness in mind.  Think of it like a hotel — if you want to live somewhere 365 days a year, a hotel is not the most economical or practical option.  A house or an apartment is the better alternative. In this way, computing and housing are very similar. 90% of IT workloads available right now are largely predictable and constant.

AWS (and its cloud competitors CloudStack and OpenStack) is and has always been about horizontal scalability – which is the right solution in only these very specific scenarios:

  •  Need for quick scalability – Think of a company that anticipates a boom in audience, or perhaps does not expect it. Recently, the BitCoin currency exchange marketplace MtGox became a victim of its own success when its servers were unable to keep up with surging demands. MtGox runs its infrastructure and apparently has significant high-performance needs along with others. This creates a specific situation, however, where a rapid, perhaps even automated scale-out could have helped to avert an outage.
  • Flexible workloads – Let’s say you are starting your own Netflix. When planning your infrastructure you have to look at your network, disk and CPU utilization throughout – not only the day, but also the week and even seasonal schedules.  It’s not much of a stretch to assume that viewership will increase across the board – over spring break, in the evenings, on the weekends, etc. You need the flexibility to turn systems up or down in relation to your workload.  That’s exactly why Netflix lives on AWS. It’s also why Zynga, which has a similar spikiness footprint, retains capacity with AWS in a hybrid deployment.
  • Applications built for scale-out infrastructure – At the heart of a successful enterprise scale-out operation is a distributed software application.  Whether out of the box or built in-house, these applications have to be flexible in recognizing additional computing resources with as little reconfiguration as possible.
  • Cost not factoring into the decision – If all of these requirements are met and operational costs are not an issue at this particular stage, then it may indeed make sense to look beyond dedicated to a cloud-only solution.  But when is budget not a concern?  You will indeed find that this is the case the minority of the time in the big picture.

 

A gorilla can’t outrun a cheetah

Customization is king, and the AWS cloud is too big to customize. Customers may have uncertainties and custom requirements around storage requirements, security, privacy, SLAs, automated scaling needs, resource deficiencies in backup and disaster recovery capabilities.  The overwhelming majority of computing workload requirements are still customized.

“Not everything will move to the cloud as there are many business processes, data sets and workflows that require specific hardware or proprietary solutions that can’t take advantage of cloud economics.” – James Staten, Forrester Research, Playbook on Cloud Computing 

 

Most workloads are consistent.

Most workloads are relatively consistent and predictable.  In cases of high-performance requirements, they are not meant to be competing for I/O in some infrastructure somewhere.  Real-world data processing does not always scale linearly so paying for that capability when it’s not even a requirement is simply unnecessary.  In the majority of cases traffic demands are predictable, so the cost of rapid scalability doesn’t add up either.

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With this in mind, there are many use-case scenarios where the hybrid approach is more compelling, encompassing the advantages of both worlds – where dedicated servers handle the constant, high-performance and predictable load while cloud servers are available for bursts.  For many, this may be an important capability to build into solutions at some point.  For others, dedicated servers are perfectly suited for most high-performance, security-minded, reliability concerns.
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When part of a complete strategy, dedicated servers are still the kings of the Savannah

Dedicated servers are important enterprise workhorses.  For years dedicated servers have delivered reliable and cost-effective computing to many organizations.  The word ‘dedicated’ makes it very clear; dedicated systems are specifically built and tuned for a single customer application and the users who rely on them.

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Cloud solutions whether OpenStack, CloudStack, Amazon’s AWS, or even Codero’s own Cloud are for everyone to consider, but not for every application out there. I have personally pioneered building three major cloud platforms that all compete with AWS.  So, I should know a thing or two about what applications work in the cloud. Cloud platforms are worth considering as part of the IT mix, but they are not necessarily an ideal solution in every case as the hype suggests especially when used as a sole technological platform.
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Despite the cloud hype, the case for dedicated infrastructure is very strong. Pure cloud solutions are definitely not the most cost-effective either. With on-premises, in-house solutions there are issues with space, costs, additional infrastructure, personnel, support, etc.  A dedicated hosting solution addresses many of those concerns. We believe the world wants to leverage the best of both worlds and needs a good hybrid cloud that bridges the advantages of dedicated and cloud, with the ability to spin up or ramp down capacity as required.
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See beyond the hype, get to know the services you are looking at, the advantages and disadvantages of each, and be sure the costs align with your goals.  Keep watching Codero as we continue developing on the cutting edge, separate our products from the industry noise, and excel in delivering solutions that actually work for business.
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As always, let me know your thoughts, and if you have any questions by commenting below or chatting with us now.

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  • http://www.sparkstation.net Chris Bao

    Nice to learn that dedicated hosting is so cheap. Those who have to maintain their website for a long time can choose dedicated hosting. Dedicated infrastructure will provide strong background for your business.

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  • The King

    This article is right on. The funniest excuse for cloud hosting superiority is the ability to “scale” at any time because a web site might grow too quickly. At the cost of cloud hosting youd be at over $1000 a month to scale to three servers. For that kind of price you can get 10 servers off ebay for $200 a piece and leave them configured and sitting in a rack offline and pre-configured and turn them on as needed and have an entire server farm ready to go on demand, and youd still be paying half the price of cloud with about 80X the performance.

    • Reserved

      What happens when you switch the above configuration to reserved instances. Your argument then becomes a whole lot less convincing.

      • chandlervaughn

        Thanks for the response. You are correct, but you have to compare apples to apples in the respect that if you start talking about a 1-year or 3-year reserved instance, you also have to talk about a 1-year, or 3-year prepaid server with Codero.

        While this is a separate comparison in as of itself, and likely a great follow on topic for the series of blog posts, you can be certain that the order of magnitude of the numbers and deltas still hold. We will try to tee this up for a follow on post for a deeper analysis.

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  • Stuart

    Why not have the best of both? Dedicated servers that you can scale and pay by the minute? As far as I know “Incero Instant” is the only such service I know of but I am sure/hope more will come.

    • chandlervaughn

      Absolutely! Believe me, Stuart, this is not lost as a vision. The reality is that as an industry, we went from dedicated servers, to virtualization, to automating virtualization, to automating virtualization and all the services around it (aka Cloud), and we’re finally starting to come full circle back to automating dedicated servers. I think you’ll be pleasantly surprised by many of the new products we have planned for the coming year.

      Thanks for reaching out!