13. AWS Growth & Momentum is Staggering
S3 Published Growth Numbers
700B
655
525B
350B
175B 262
102
0B
3 14 40
Q4’06
Q4’07
Q4’08
Q4’09
Q4’10
Q4’11
Source: Public AWS blog & PR announcements
14. The Starkest Example Possible
(‘Private’ Hosting vs. Public Cloud)
Q/Q % growth rates
40%
30%
20%
10%
0%
Q4’08 Q1’09 Q2’09 Q3’09 -10%
Q4’09 Q1’10 Q2’10 Q3’10 Q4’10
RAX Cloud RAX Hosting
Source: Public RAX earnings statements
15. Commodity Cloud as % RAX Total
Revenue
20%
13%
7%
0%
2007 2008 2009
2010
2011
Source: Public RAX earnings statements
16. The Punchline?
Enterprise Clouds Have Greatest Investment
$30B
$23B
$15B
$8B
$0B
2009 2010 2011 2012 2013
Commodity Cloud Enterprise Cloud
Source: Cloudscaling estimates based on public data (conservative)
17. What’s Different About Commodity?
Attribute Commodity Enterprise
H/W Cost Optimization
Homogeneous &
standardized
Design-for-Failure
Self-service, low friction
Scale Engineering
Open Source
Cloud-oriented Biz Model
18. Initial Capital Expense:
Enterprise vs. Commodity Cloud
$1,892
$2,000
H/W Cost per $1,500
Sellable
‘VMU’ (1GB
$1,000
RAM, 1 vCore)
$500
Commodity $225
Enterprise $0
Source: Cloudscaling confidential financial models for IaaS clouds
19. Labor Operational Expense
Enterprise (300:1) vs. Commodity Cloud
(1500:1)
Servers : IT Headcount
$150M
$113M
$75M
$38M
$0M
Year 1 Year 2 Year 3 Year 4 Year 5
Commodity Enterprise
Source: Cloudscaling estimates based on known IaaS deployments
20. The Evidence Suggests ...
Go Commodity
Serve Greenfield
“Cloud-ready” apps
Embrace the Change