Comment by maximente
4 years ago
boy howdy, with all the flak i hear about this and the awesome talent in tech, you'd figure an entrepreneur or 1000 would take a stab at this, make it better, charge less. apparently there's gazillions to be made by even charging 50 percent of what AWS does.
so, when should we expect this gloriously efficient competitive market to kick in to action?
my guess is that the AWS ecosystem, despite "price gouging", is simply the best and will be because this is really hard, non-glorious engineering, where solid reliability actually matters. anyone who wants to can go ahead and co-lo, so, whatever. people who want cloud will pay, and those who can't or won't, will not.
There's tons of businesses that are happy to charge less for bandwidth; so it's clear Amazon (and some of the other high tier cloud services) are overcharging on this maybe by a factor of 10, although since transit bits are not all equal, someone with more detail could make a case that the overcharging is less.
It's easyish to compete on bandwidth costs, but Amazon has a lot of other features many people want; it's harder to replicate all of those, especially the part about having a long history of operating such services and not making a lot of changes to make things more expensive or otherwise more difficult. Having to pay a much higher than market price for an easily replaced good in order to get a good that's less easily replaced is textbook anti-competive bundling.
If your bandwidth usage is high enough, maybe it makes sense to send it all through AWS direct connect, and pay for transit yourself; although even then, the AWS direct pricing seems a bit high.
This is like going to a fancy restaurant and being upset that they charge so much for a steak when you can get beef at the supermarket for much less.
No, it's complaining that the water at the fancy restaurant is priced expensively, but people still go there because the many options for food.
And it's easy to replicate the water part (after all VPS providers are dime a dozen), the hard part is the food.
If you ask the fancy restaurant to cater a steak dinner for 1000 people they will charge you a lot closer to supermarket beef.
The point is that if you charge absurd prices for what has basically no marginal cost your pricing model is broken and 1) you are excluding customers that are particularly sensitive to this price or 2) you are liable to undercharge other customers that primarily use other services for which you are not charging what it costs you to provide.
For AWS, given the generally inflated prices, it's probably a lot more of 1) than 2).
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Your point that "AWS has a bunch of other benefits to where people just accept the bandwidth costs so they can leverage those other benefits" doesn't actually counter the original claim that "the bandwidth costs are outrageously overpriced".
You're replying to a comment that includes a tweet from the CEO of Cloudflare, which is quite literally providing that competition with free bandwidth and an increasing suite of computing products.
There are plenty of other platforms as well, like Digitalocean, that have much lower bandwidth pricing.
What competitive market?
Nobody else can give you bandwidth out of Amazon data centers. Amazon's advantage is having a ton of services that work together, and they take advantage of it to price gouge on bandwidth.
If you're buying a standalone CDN service you can get massively better rates.