As AmazonGoogle and Microsoft continue to drop pricing on their public cloud, and Oracle announces its sashay into the public cloud arena, you’ve got to wonder how this affects the market, and more importantly, customers. While price cuts are always nice, let’s take a deeper look. Have the economics really changed and how will this affect you?

Hidden Fees

What didn’t change with these price cuts were the data transfer fees, often a “hidden” but substantial cost for public cloud deployments. You have to pay transfer fees every time any of your users opens a file reading it out of the public cloud. Both Google and Amazon start transfer fees at $.12/GB and drop them a bit for larger monthly totals. Transfer fees might not be expensive for tiny files, but for larger files like videos or databases, these transfer fees can skyrocket. In fact, transfer fees can effectively double your S3 costs, especially with active data.

Access to Data

And speed of retrieval can be a problem too. Even a fat Internet pipe is slow compared to common intranet networking like Gigabit Ethernet. And when it is slow you may never know why or when it will happen again—the Internet isn’t something you can easily debug and most ISP SLAs aren’t going to cover an end-to-end connection to S3. Like transfer fees, these connectivity costs can equal or exceed what you’re paying for storage on S3.

Traditional Storage Can’t Compete

These price cuts are great for private cloud solutions like SwiftStack. Our customers say that the cost of S3 is accelerating their desire to move off traditional storage (along with the need for an infrastructure that will work with today’s apps). It’s clear that the economics of traditional storage from vendors like NetApp or EMC just aren’t workable any more.

And it’s not just the cost to acquire their hardware and licenses but to maintain, operate and upgrade them. Maintenance fees bring these vendors margins of 70–80%. And software licenses are tied to hardware—when you have to upgrade the hardware you also have to buy new licenses. This business model seems like something left over from the 1980s (because it is) when you put it next to the pay-for-what-you-use model of the public (and private) cloud.

Private Clouds are Still Cheaper

Deploying private on-premises cloud storage with SwiftStack can still undercut the cloud price-droppers and get you faster access, easier regulatory compliance, and control over your data. Here’s how our customers have compared SwiftStack:

  • Based on a free open-source storage engine with wide industry-support
  • Deploys on inexpensive standard hardware
  • Requires minimal FTEs for deployment and maintenance
  • No hidden transfer fees or connectivity costs/headaches
  • Pay-for-what-you-use licensing

We have customers whose production SwiftStack deployments have a monthly TCO less than half of what putting the data in S3 would cost them.

When you add everything up and look at what you really get, cheap public cloud storage still isn’t that cheap, but it has a great effect on customers moving to private cloud deployments. There, I said it.

About Author

Joe Arnold

Joe Arnold

Joe founded SwiftStack to enable enterprise adoption of multi-cloud data management and cloud storage infrastructure. He currently serves as the Chief Product Officer and President of SwiftStack.