> Servers are cheaper than you think, if you don't use the cloud
I'm confused why the cloud is viewed as expensive. For managed hosting on a big name provider perhaps, but there are dozens of virtualization providers who are capable of providing power and bandwidth for unbelievably small amounts of money.
Sure you don't get the uptime, reliability, and support of a big name host, but it's usually good enough. From what I've gathered, twitter's growth has not been severely hampered by the fail whale, especially in the beginning.
Once you've reached critical mass, you can move on to a larger host. I think it makes sense to rent rather than own, especially if you're just starting out.
I priced out some servers and cloud providers. It appears that the "cloud" servers are about 30% more expensive. Though the gap widens when you start building bigger machines (32G RAM, latest processors, etc.) EDIT: I'm looking at 2-16G machines.
On the other hand, in my case the extra capacity would sit idle for a while. (I replace servers every 3 years.) Going with a cloud platform, I would have likely upgraded a few times and taken on less risk.
The cool thing about cloud hosting is that you can always switch to owning your own hardware if it will save you money. It's much harder to go the other way.
Also, once you try to shore up risks and add things like drive snapshots, the costs get much closer. (ie: start using all of the features offered by Amazon AWS.)
I'm one of those virtualization providers... but even at my scale, which is pretty small, I price my services such that worst-case, I pay off my hardware in four months. that seems expensive to me.
Of course, if you need small servers (and I only rent small VPSs) I'm saving you money. even if you get the server for free, (which isn't that difficult) finding someone to host a server with 512MiB of ram for $12/month is going to be really hard.
Compare hiring a NW admin and system admin at ~$8k/mo. each. An MSP can provide you with a lot of servers / powerful servers before you even come close to spending $16k/mo. Choose your MSP carefully though. At a minimum consider the SAS70 report from several before choosing. That will 'cull the herd' of the MSPs who make claims and promises but don't back them up with verification from an independent auditor.
You don't need a full time SysAdmin (much less two) until you have a /lot/ of hardware. Until then, you can get reasonably good contract SysAdmins for $100/hr to do your hardware stuff if you can't handle it. (your average independent hardware guy will contract out closer to $40-$70/hr, if you get him or her direct.)
Really, from what I've seen, most of the "cloud" providers only replace your hardware guy; you still need a SysAdmin (or a developer who can handle SysAdmin type stuff, which is probably what you want unless you are an infrastructure provider.)
It's like anything else; If you know the market and know what you are doing, you can save a lot of money by doing or supervising parts of it yourself. If you don't know what you are doing... well, sometimes it's best to find the person with the best reputation you can find and pay full price. I know I'm that way with accounting and legal services; I overpay because I don't know enough about the field to do or supervise any of the work myself.
But, I think that if you spend significant amounts of money on server infrastructure, it's probably worth your time to learn enough to get a better deal on things like contract labor.
I'm confused why the cloud is viewed as expensive. For managed hosting on a big name provider perhaps, but there are dozens of virtualization providers who are capable of providing power and bandwidth for unbelievably small amounts of money.
Sure you don't get the uptime, reliability, and support of a big name host, but it's usually good enough. From what I've gathered, twitter's growth has not been severely hampered by the fail whale, especially in the beginning.
Once you've reached critical mass, you can move on to a larger host. I think it makes sense to rent rather than own, especially if you're just starting out.