Rent vs. Buy? The Cloud Conundrum

Grazed from SmartDataCollective. Author: Paul Barsch.

Over the long-run, is cloud computing a waste of money? Some startups and other “asset lite” businesses seem to think so. However, cloud computing for specific use cases, makes a lot of sense—even over the long haul. A Wired Magazine article emphasizes how some Silicon Valley startups are migrating from public clouds to on-premises deployments. Yes, read that again. Cash poor startups are saying “no” to the public cloud.

On the whole this trend seems counter intuitive. That’s because it’s easy to see how capital disadvantaged startups would be enchanted with public cloud computing: little to no startup costs, no IT equipment to buy, no data centers to build, and no software licensing costs. Thus for startups, public cloud computing makes sense for all sorts of applications and it’s easy to see why entrepreneurs would start—and then stick with public clouds for the foreseeable future…

However, after an initial “kick the tires” experience, various venture capital sponsored firms are migrating away from public clouds. The Wired article cites how some start-ups are leaving the public cloud for their own “fleet of good old fashioned computers they could actually put their hands on.” That’s because, over the long run, it’s generally more expensive to rent vs. buy computer resources. The article mentions how one tech start up “did the math” and came up with internal annual costs of $120K for the servers they needed, vs. $320K in public cloud costs…

Read more from the source @ http://smartdatacollective.com/paulbarsch/141361/rent-vs-buy-cloud-conundrum