Public Cloud or Colocation: What Is Better For You?

There is no doubt that when you look forward to implementing your new applications in your businesses, a thought of where should you host it on the internet crosses your mind. After all, there’s no point of having an application that is inaccessible to your end users, and it definitely does not help your organization grow by any means unless and until you sign up for a popular public cloud service like AWS or buy a dedicated server. There certainly are cases where one side will make more sense than the other and vice versa; but all in all, figuring out which move is going to be more beneficial for your business is all that matters.

Colocation and Cloud services are definitely two of the most popular web services in the industry. However, with the advent of Amazon Web Services back in 2006, and it gaining popularity among the masses, many people consider moving to cloud services as a necessary measure. Every now and then, we lose clients to Amazon Web Services and gain customers who cancel their AWS solution package to opt for our services.

The main reason for people to leave us to sign up for Amazon Web Services is nothing but the media hype that is drifting people towards opting for public cloud services. However, on the other hand, the ones who are coming to us are the ones who have only one complaint with AWS: “Performance is just not worth the money”. That is what separates colocation datacenters from Amazon Web Services. Performance offered by AWS is just not worth the money you’re paying. By all means, don’t take our word into consideration; instead, spy on our little research that explains why the move from colocation datacenters to AWS does not provide you with the best value possible.

The amount of bandwidth has gradually increased industry wide over the last few years: there’s nothing wrong with this statement. Higher bandwidth amounts to more money. Where 10 years ago people would go gaga over 1000GB monthly data transfer limit, now customers want at least 5TB to curb their requirements. The development from 1000GB to 3000GB to 5TB has been intriguing. 10TB monthly data transfer with 1Gbps port is what most clients want. The hosting industry has kept these needs under check and developed themselves with time to ensure they satisfy their clients by giving them what they need. The main reason for this is that we understand the worldwide web usage is increasing every upcoming day. We live in a world of high definition where people want high definition entertainment channels. They want more streaming of data. They rely on the internet to entertain them with high quality pictures, HD videos and many other things that keep the data rate flowing.

Witnessing a time period when 1000GB bandwidth was more than enough to satisfy our client’s requirements to a time when this is the bare minimum, the way of how things have changed is something no one can ever deny. Alongside the increase of bandwidth usage, there has been a relative decrease in prices as well. Plans are getting cheaper and cheaper whereas usage keeps increasing. The strike of competition between top level network providers has given rise to a new era where you can use as much data you want without worrying about fees.

This has motivated us hosting providers to get in commitments with network providers. Basically, the price decreases in proportion with how much throughput a data center like us commits to every month. It has now come down to a point that you could get a 1Gbps commit for as low as $20-$30 for every Mbps to $5 for the same amount of bandwidth consumed. A relative decrease in price, isn’t it? With the increment in the demand department, the supply department has made sure that client’s demand never stops evolving.

All this leads to an enhanced experience for users where they can consume data without giving second thoughts about how much it will cost them, as plans nowadays are highly affordable and offer real value for money.

After learning the evolution of mankind in a decade, it is now time for us to close the economic history books and study the present where we estimate how AWS is not the best affordable solution for you. We used AWS’ own AWS Simple Monthly Calculator. We initially started with our magic number 1000GB from the old times taking 1000GB out and 100GB in data transfer, and to your surprise, this package would cost you around $88 per month. Catering to the present demands of clients where we assume the average consumption to be 30000GB out and 3000GB in, the whole thing would cost you around $2859 per month. Multiplying the ancient 1000GB number with 100, it would lead us to 100000GB out and 10000GB in which would cost you around $8599 per month. This is the breakdown of our little calculation:

  • 1000GB outbound, 100GB inbound: $88/month
  • 3000GB outbound, 300GB inbound: $268/month
  • 10000GB outbound, 1000GB inbound: $898/month
  • 30000GB outbound, 3000GB inbound: $2859/month
  • 100000GB outbound, 10000GB inbound: $8599/month
  • 300000GB outbound, 30000GB inbound: $12410/month

This clearly states how costly AWS actually is. However, don’t take our word for granted. Instead, take note of what our dedicated server typically offers. We at QuadraNet include Intel Xeon E3-1230v2 processor with 8GB DDR3 ECC, 500GB SATA and 10TB transfer in our basic package, costing merely $119 per month. Comparing it with AWS, you’re paying them $800+ for a service that we offer you for $119 and potentially promise you a far better performance rate. In addition to this, we can customize the dedicated server(s) to meet your every need (CPU, RAM, HDD, RAID, bandwidth is fully customizable).

After showing you exactly why AWS is probably not the best hosting solution for you, let us jump straight to Amazon’s CloudFront CDN solution which will still cost you $800+ for consuming 10TB of CDN bandwidth (not including the additional cost that you’ll be charged with every GB while linking your source server to their CDN or the money that you’ll pay for every HTTPS and HTTP requests).

Leaving the costs aside, let us move to a study or better state an example of how Dropbox saved around $75 millions by just moving from public cloud to colocation data centers. Just last month, Datacenter Knowledge posted an article about Dropbox moving their entire infrastructure to colocation data centers by letting go of AWS. There came a point where Dropbox was growing faster than AWS and garnered around 500 million users whereas AWS kept increasing their prices for cloud storage company. However, now over 90% of the operations happen on their own infrastructure, and the end result has been truly fascinating in terms of financial numbers.

Dropbox recently filed an IPO where they stated this on page 66 of their Dropbox’s S-1 SEC form under a section named Infrastructure Optimization:

“In recent years, we have taken several steps to improve the efficiency of the infrastructure that supports our platform [… which] includes an initiative that focused on migrating the vast majority of user data stored on the infrastructure of third-party service providers to our own lower cost, custom-built infrastructure in colocation facilities that we directly lease and operate. […] We expect to continue to realize benefits from expanding our internal infrastructure due to our operating scale and lower unit costs.”

This shows how their steps of improving their infrastructure efficiency to a data center at lower costs has benefitted them to expanding their own internal infrastructure, all thanks to the lower unit costs and their brilliance. Further diving into the subject, let us talk about numbers. Dropbox experienced a net decrease of $39.5 million, including a $92.5 million decrease in expense after the move offset by a $53 million increase in facilities, depreciation, and support expense.

Delving further into the subject, Dropbox saved an additional $35.1 million in operating costs in 2017 which combined with 2016 numbers, leading to them saving $74.6 million on their operating costs in 2 years. We do not know what you think about it but for us it is a big number, and clearly displays why a move from AWS to colocation data centers is totally worth it.

As it is clearly seen the case with Dropbox, there were many other companies that saved lots of money after making the move. Despite all these cases, public cloud services like AWS, Google, and Azure keep getting costly for customers. In 2013, SEO giant Moz experienced the same issue with AWS where they stated this as to how creating their own data required lots of computing power, and spending money on AWS was killing their margins:

“We create a lot of our own data at Moz, and it takes a lot of computing power. Over the years, we’ve spent much small fortunes at Amazon Web Services. It was killing our margins and adding to product instability. Adding insult to injury, we’ve found the service… lacking. […] On a cash basis, we spent $6.2 million at Amazon Web Services, and a mere $2.8 million on our own data centers. The business impact is profound. We’re spending less and have improved reliability and efficiency.”

Businesses are restricted to watch over how much bandwidth they are consuming in the cloud alongside the CPU computing and memory they utilize for their cause. However, on the other side, bare metal server infrastructure has eliminated this by applying set-it and forget-it parameters along with fixed CPU computing and implementing necessary memory settings to serve clients’ application needs – all of it done without opting for a costly public cloud service. As we have previously stated on how our pricing model can help you earn millions without spending billions, it is quite easy to let go of the hype of moving to cloud and instead opt for our colocation services, as we will provide you with better performance at lower rates compared to any other public cloud service.

Moreover, with the switch to public cloud services, you will require a team that will constantly estimate your bandwidth consumption and usage requirements each month which leads to you spending another cap of your profits on a resource that would not even be required if you opt for colocation services instead of public cloud services.

Long things short, it is quite clear that AWS has its upsides and downsides, but the numbers and cost calculations speak for itself — it is definitely not the ideal solution for heavy bandwidth consumers or even for an average consumer. It’ll end up costing you more money for the resources, and won’t provide you with dedicated, consistant and guaranteed performance whereas a dedicated server or colocation environment would.

On the contrary, we at QuadraNet offer you far more reliable plans at reasonable pricing. We’ve been in the infrastructure and datacenter space since 2001, and we know what it takes to deliver a high quality infrastructure solution to our customers. And guess what? You receive far more value and resources for the money. Even though the media may put out the perception that public cloud services are ideal for start-ups, they do not offer a one-time solution to cope with your requirements and budget. When a start-up finally completes its evolution and transforms into a big production that needs more flexibility, efficiency, computing, and most importantly, scalability, then there’s really no option other than signing up for colocation services or dedicated servers (Infrastructure as a Service) to ease your task.

Use the form below to get in touch with a colocation specialist, we can put together a customized package based on your needs, and assist with the migration process.