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Singapore software maker says own hardware in colo costs $400M less than cloud

‘Wouldn’t be profitable, or exist, if our products were 100% on AWS’

Singaporean search engine optimization tools slinger Ahrefs has claimed that keeping its infrastructure on-premises, rather than using Amazon Web Services, will save it $400 million over three years.

A March 9th post by one of the company’s datacenter operations execs, Efim Mirochnik, compared the cost of acquiring its fleet of 850 servers (an image in his post depicts Dell EMC kit) and running them in a co-located datacenter with the cost of running a similar rig in Amazon Web Services.

Mirochnik calculated the cost per server per month is $1,500, including acquisition cost of the server.

In AWS he believes the company would pay $17,557 per equivalent server.

Mirochnik’s calculations included the cost of electricity, internet service providers charges, IP Transit costs, dark fiber charges, and the cost of operating internal network hardware.

But the comparison isn’t quite apples to apples, because Mirochnik admitted “AWS doesn’t provide an EC2 instance with the number of cores we have.” His numbers are therefore based on “an EC2 configuration with half the cores and 1TB RAM. We then compared one Ahrefs server cost to the cost of two such EC2 instances.” He also admitted that some of his networking costs for AWS are rough estimates and his post doesn’t detail whether his AWS costs consider on-demand instances or the cheaper rates that cloud buyers can pay if they commit for multiple years.

So, grab a big pinch of salt for the above conclusions. But even with imprecise calculations, Mirochnik confidently asserted “Ahrefs wouldn’t be profitable, or even exist, if our products were 100% on AWS.”

The post then turns its attention to whether other organizations could enjoy the same savings Ahrefs believes it has achieved, especially those currently using clouds.

“It is complicated to leave a cloud once you are there,” Mirochnik wrote, before suggesting that the move will be painful, but the cost savings could save a company.

He also suggested that the skills to repatriate workloads from the cloud might be more easily obtained than in the past.

“Big companies, FAANG [Facebook, Amazon, Apple, Netflix and Google] in particular, vacuumed the job market for many years. They had been hiring engineers to run their enormous data centers and infrastructure, leaving only a few for smaller companies.”

“But with the mass layoffs in Big Tech in recent months, this may be an opportunity to re-evaluate the approach to the cloud, consider a reverse migration from the cloud, and hire seasoned professionals of the data center world.”

Mirochnik is not alone in suggesting that clouds are expensive: 37 Signals’ CTO David Heinemeier Hansson is chronicling his company’s cloud repatriation efforts and recently detailed how buying its own servers saved $7 million in cloud costs.

Microsoft and AWS also recently admitted that customers are complaining about costs, leading both cloud outfits to work more closely with clients to optimize their use of rented resources. ®

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