¶ Cloud Adoption and Economies of Scale
Welcome to the Cables to Clouds podcast . Cloud adoption is on the rise and many network infrastructure professionals are being asked to adopt a hybrid approach as individuals who have already started this journey . We would like to empower those professionals with the tools and the knowledge to bridge the gap .
Hello and welcome back to the Cables to Clouds podcast . My name is Alex Perkins , I am at Bumps in the Wire on Twitter and I will be your host for today's episode . Joining me , as always , are my two handsome co-hosts , chris Miles at BGP Main and Tim McConaughey at Juan Gólez . Tim , what have you been up to lately ?
Let's see what have I been up to . So last week I spent the week in Montreal , canada , which was pretty cool . I took the week off and just I went up there . I hadn't been to Montreal before and I picked the best time to go , which is to say when there's wildfires raging in Quebec . And I even picked the best day to go , which last Monday .
They pretty much shut down the whole East Coast for , you know , the Northeast Coast , for flying , and all that because of weather . So I got stuck in the Guardia , over the bank . Yeah , well , yeah , yeah . So I had to actually go into the city to find a hotel to stay at . So , yeah , it was totally overnight . They canceled the flight .
I went the next day but , yeah , it was pretty garbage . But you know what ? Montreal , it was really cool , I really enjoyed it . So back now just getting ready to plan in the last little bit for our trip to Japan , and that's it Nice nice Sorry .
You had to spend the night at the airport . Which one would you have picked ? Jfk or Guardia ?
Oh , man , that's I do have got . No , I don't know . I'd probably just take my chances on the streets . I'd be like , hey , you know , give me one of them trash bags so I can sidle up next to you and snuggle . But yeah , I know I could , I don't know man .
I've had , I've spent two nights at Reagan throughout my life and it is terrible man , Not fun at all .
I did a night at a DFW , also not fun .
They have some benches that were actually kind of comfortable but , I wouldn't recommend sleeping on them .
Yeah , that's the problem with sleeping at any pick a pick an airport man . They're all going to be like that . Even unless you can sleep in the lounge or something , sleep in your American Airlines lounge or one of those Delta lounges or something .
Or the , the USO . I got lucky in Seattle one time . I was stuck when I went to Alaska to like to live there for my last duty assignment . I got stuck in Seattle and luckily they had a USO where I could go sleep on a bunk bed for the night . Nice , that was cool . Yeah . How about you , chris ? What have you been up to ?
Yeah , not a ton . I did have a nice productive week , a lot of terraform , terraform , heavy week , which is which is always fun , because you know you spend a lot of time , just you know , pounding away at that and not talking to people , which is sometimes a nice break coming up this weekend though .
Yeah , I'm actually headed , me , and my girlfriend and a few of our friends are heading down to this place called Mount Kasiasko , which is like one of the only snowy places in in this side of the country where you can go skiing and snowboarding and things like that .
So you know , next time you see me .
I might be coming back with an injury . We'll see . I'm very prone to eating shit .
Are you a ski or snowboard ?
I've only snowboarded ever in my life Snowboard . Yeah , I mean , I've been . I've been skateboarding since I was like 13 . And I remember like whenever I first went snowboarding , I was like , oh , like a piece of cake , it's just the same thing , it's just on snow . And I was . I couldn't have been more wrong . It is . It is night and day different .
All about like where you like control the board , like when you're skateboarding , like you control with the front of the board and like your front foot right and snowboarding it's all , it's all on the back foot right and the way you stop is . That was my worst thing I could get going down these mountains . I was like cooking dude , just like flying .
But then when I came to him to stop , it was just like fuck , dude . That's when I was like tumbling and snow is you think it's soft ? But it's not , it's pretty , it's pretty packed in , not at speed , not at speed , yeah right .
Yeah , and snowman , there's so much like style with snowboarding , you know like buttering everything .
Oh , yeah , yeah right .
There's just so much cool stuff you can do with , like just how you flow with the board and stuff .
I won't be doing that . I'll be more concerned with not embarrassing myself trying to get off the lift .
You got to do the french fry and the pizza .
Oh , yeah , that's . I've never tried skiing and if it wasn't , you know , too much money to rent both sets of equipment , I would try both , but probably won't do that this time . Nice , got you , alex , what's the name ?
Yeah , I guess . Yeah , for me , I haven't been up to too much . Kids are in swimming lessons . We finally got in swimming lessons this summer and it's been every day , so they have been absolutely exhausted . By the end of the week they're all burnt and you know we put sunscreen and everything on them , but man , it is no joke .
The weather has been pretty crazy out here it's supposed to rain every day , but then it doesn't rain and it's just 90 degrees , like which is hot out here , it's just cooking .
It's just absolutely beaten down the sun over here too , man , it's just cooking this place .
I like how you're like yeah , 90 degrees , it's hot out here . It's like that's hot in general , bro , that's , I think , that's , I think that's no , I'm just saying I've lived in a lot of places .
90 is usually . Some people will hear 90 and they'll be like , oh , that's it .
Well , come on Raleigh , it was 99 . It was 99.100 this week , so yeah , definitely .
You got to Nevada where it's a . You know it's a dry heat , you know it's not . It's not the same , it's dry heat .
I don't know why they're always on about that , the high desert .
Always on about the fucking dry heat .
Yeah , I mean , it makes a difference but I lived years in Idaho . It is . I lived in years in Idaho in the high desert and it really truly does make a difference .
You . Okay , we'll talk separate . I didn't know you lived in Idaho . I spent , like my whole teenage years in Idaho .
That's funny . I have to sync up offhand here offline All right .
Yeah , sorry , we'll get to the actual topic of today's episode . So today we want to talk about a term that we hear thrown around , like everywhere . I hear it from all over the place , from lots of analysts and industry pundits . You know everybody's always talking about economies of scale .
So I guess today we're going to basically figure out what is it and what does it actually mean , and how does it impact you and the places you work . As it relates to , like journeys to the cloud , right ? Either all in the cloud or hybrid cloud or staying on prim . So that's going to be what we cover today . So let's start with .
What does economies of scale actually mean ? Either you want to take a crack at what your definition is , right , we don't need like a textbook definition , just what you think of it .
So I mean it's not , it's not that hard right . Economy of scale is this idea that you know , if it's kind of like the Costco , it's the Costco method right , where you know you're going to buy in bulk and because you're buying in bulk , because you're committing , laying that you know more money down , that you're going to get a better price break .
You know that's the same . Like I said , I think of it as like the Costco model , but you know that's the same with hardware . It's the same with software . You know you bulk enterprise license agreement like is basically the idea of an economy of scale of purchasing software right as it pertains to the cloud .
I think the economy of scale is and you hear this a lot , both in the for and against camp . You know the for camp very heavily , like all the CSPs in like the 101 , whatever it's like the AWS has the CCP , which is like the certified cloud prediction or like everybody's 101 cert .
One of the first things they tell you about the value prop of the cloud is the idea of an economy of scale . You know the idea that the CSPs are buying millions and millions and millions of dollars worth of silicon and we're going to turn around and give you that , the give that back to you in savings right .
So to me that's the idea of the economy of scale , okay .
Yeah , no , I love that . The Costco example is great . Chris , do you got anything to add to that , or ?
No , I mean pretty much right on the money .
Obviously , it also kind of correlates with this concept that the CSPs have gotten so big and they're providing these services to so many customers that they're gaining so much from providing this that they can offer it to you at a lower price point , right , because they have , you know , I mean they're potentially making money over , you know , hand over fist on these
products , right that they can pass those cost savings down to you .
So it would seem yeah .
That's . I think that's . What we'll probably get into today is whether or not that is actually happened at all , but yeah .
Yeah , and so basically I say that because you know we were talking about this the other day .
But when the cloud really first started kicking off and there was lots of conferences and you know everybody's watching all the keynotes there was always something about oh look , how much we've cut prices in the last year , right , like you used to see this all the time .
And now , when's the last time you can say that you actually saw that brought up on a slide at the keynote right ? Instead it's like look at these 500 new features we added . So I guess the next question is why haven't ? Why aren't they still driving down costs , right , like is there a cause here that's making it so that the costs are not being lowered ?
Are they being higher ? Like why aren't we seeing that anymore ?
Yeah , I don't know . It's a . I mean , we like . I think the obvious trope that you could point out here is that they're just greedy , right , they're not going to . You know , they've convinced you , they've convinced you that eventually you're going to make the , you're going to get these savings and things like that . But they can you know what ?
What they don't have to bring the prices down if they're continuing to get , you know , a growing customer base every single day , right ? So it's like I don't know if that's that's necessarily the reason . I think that's the no-transcript , you know , if they think that AWS or Microsoft is evil Corp and things like that , so they're just never going to .
You know , do what's best for the consumer in that scenario . But I don't know . I kind of wonder , because you know , I want I start to wonder if this economy of scale thing is kind of was this pie in the sky idea that it may never get to due to the competitiveness of cloud .
I mean , obviously we only have a few major CSPs in the conversation right now , right ? So if I mean , if we're talking about economies of scale , if we're talking about who has the biggest scale , we're probably going to be talking about , you know , aws and Azure .
Right , they're really the main , the main players right here , right , and they're probably the ones that would be able to offer these discounts at this point , assuming that they've gotten over the hill .
But if they're in this kind of like constant you know competition with each other I wonder if this economy of scale , like , does that only correlate to a level of scale that it's impossible to reach because of the competitiveness ?
I don't know , I'm just , I'm just kind of speculating here if it's a reality , but I don't know how you feel , tim , yeah , so I definitely would agree .
¶ Cloud Service Provider Competition Challenges
The , the , the , it's kind of a loaded , so I wanted a real quick address when you said that I hadn't considered . You know , the idea generally is that competition or economy of scale or both right , should just be driving down prices period . And you see that not really necessarily happening . And we'll get into . I think we all have ideas about why that is .
We'll get into that a little bit later . Well , I won't jump , jump ahead too much , but the idea that , like competition is driving prices in a way that you know maybe economy of scales can't do yet , that's a really interesting idea .
So , as I was going to mention , you said , like you know , probably a database in Azure probably have the most scale , and I think that's probably true , although I'd love to . I'm gonna have to do some research after this . Maybe we can make it to see if there's anything published .
That's the other thing is the CSPs keep all this very close to the chest , right ? So it's hard to say for sure that , like you know , aws and G , but very likely I think you're right . But then so you look at a place like GCP and it's like obviously they're bankrolled . I mean , it's Google , right ? So they've got a giant bankroll , so they cannot .
You know , they can offer incentives that have nothing to do with economy of scale . They can just offer like , hey , we want to , and they do right , they all do this right . When they're looking for new people to jump clouds or to bring in big business , they'll offer almost like the I was thinking of it as like the municipal tax break model .
You know who are like you come , bring your business here , we'll give you the tax break . You know what I mean . And that's not based on economy of scale at all , right , because I and so so anyway .
So to get back to the original , I think the actual economy of scale and I'm using kind of Eric quotes here I think I would agree that the actual economy of scale savings hasn't happened , but we've seen competition anyway , because we have to like that , in theory , the you know the whole free market thing of you know you have competition and competition is good ,
it drives down prices , etc . Etc . That's that's good , right , but in terms of the source , I think I think you're right . I think it has more to do with the competition and less to do with them saying oh well , you know , we saved $10 million by buying in bulk .
You know , let's go ahead and pass that on to the consumer , because , because the growth model that these guys have seen , the CSPs have seen over the , you know , hand over fist over fist , 200 , 300% year over year for for years right , it's had to end somewhere , but at the same time , you know what I mean .
Anyway , no , that's . I mean you made a lot of great points . I love the municipality tax , you know , relation , because that's that's exactly true , right , I mean who ?
Of course they're going to be like oh , look at this great customer we have , right , like , if you look on their customer stories , I'm sure AWS is going to talk about , like Netflix , right , just because they're all in on AWS . So that's , that's a really good point .
And I think I won't I won't skip around too much , because I think we kind of all agree on on the same thing that we're not there yet , that the economies of scale just haven't really happened yet like they were promised . And the competition thing is also a good thing to point out , right , that usually would drive better prices in in everywhere .
Right , because everyone's going to be clamoring to get into the cloud . But I think I am going to transition to the next point about these .
Csps also have to build out that infrastructure to host all these companies that want to come in , right , and I think I think we kind of all agree that that's really where the crux of this problem is is they can't even keep up , like it's impossible for them to . Yeah , like they can't .
They just cannot build out the infrastructure fast enough to onboard all of these new people that want to jump to the cloud . Do you guys have anything to to add about that or thoughts on that ?
Yeah , I think there's a great Packet Pushers episode about this on their Day2Cloud show with I think it was with who was on Charles Fitzgerald Day2Cloud Episode 190 , where they talked about how the cloud spending , or the CAPEX , relates to the growth and the success of the CSPs and one of the major notes there is their spending CAPEX relates to .
I mean , you're in the game . You mean the more you're spending on this , the more that you're in the competitiveness of this nature , right . And I mean the numbers speak for themselves in that AWS and Azure are spending very , very large amounts to do this , whereas the others are not quite in the same realm .
Like , obviously , I think Google has a few other things to deal with at the moment with this paradigm shift for AI and things like that . So obviously they've got to remain competitive in that and I don't know if that's going to affect how they contribute to the growth of GCP and things like that .
But yeah , I mean spending is how you know you're in the game . They're developing silicon , they're putting money into that , they purchase the undersea cables and things like that that run all this infrastructure , right . So yeah , I'm probably getting away from your original question , but I mean it's no question that spend is happening right .
They're putting the efforts in . Yeah , it's just . I wonder if it's just not . We haven't just gotten over this hill yet where they're putting all this money in , where they can't kind of cut prices and things like that , to give it back to us .
Yeah , and that packet pushers episode is really good and , Tim , you were mentioning you didn't know if there was any reports out there or stuff . That might be the only place that I've heard any kind of numbers like this . I don't know if you guys have heard them anywhere else , but I think that's really it and it does go over it Pretty well .
Pretty well , because it's pretty IO-ish . Yeah , for sure .
Yeah , that's good . So , yeah , just to give my two cents in there . So I'll just give my two cents in there . Yeah , so I think you're right , alex , and I think we've talked about this multiple times that the reason , the biggest reason we haven't seen those economy skills is exactly what Chris said . Well , two things right .
One is that , hey , they're buying hardware , they're doing the CapEx investment to buy hardware and they're doing it as fast as they can . So even before COVID , we had silicon shortages . Covid just exacerbated and extended the lifespan of all the silicon shortages .
I remember , when I was at Cisco , lead times of years on switches , which brings something up that maybe people haven't really thought about it , which is we talk about CSP competition for customers . What about the CSP competition for silicon , for the supply chain ? That feeds the beast ? You got AWS developing their own silicon .
That's cool , but they still have to source it , like all that . They don't have a . As far as I know , jeff Bezos hasn't bought any silicon mines in Africa or anything yet . So I mean that stuff has to be sourced . As far as we know . So that's at the end of the day .
The CSPs are also not just competing for customers , they're competing for silicon and they're competing with people who've been here forever Juniper , cisco , you know , pick a tech , pick anything that uses tech , and there's competition for that silicon . That's just another reason .
I think we haven't seen that cost savings of the economy of scale , because the CSPs , I think and we don't know right , because that's not like they publish any of this , but maybe I have to check out the packet pushers episode as well Do they cover like the kind of prices that they're paying for this silicon Like that ? They're you know , are they ?
are they compete ? You know , I don't think that's in , I don't think that's covered in any of the I mean .
I doubt they they would disclose that , but I guarantee you that they're . They're not paying market . They're probably paying above market , oh yeah .
Yeah .
You know that's .
I got to take a quick side tangent here on the custom silicon stuff . I mean , does it even make sense to you guys that they are doing that ? Like , what is the benefit of them having their own right ?
Because if they're also competing with their own suppliers , with like all the people that they're bringing in hardware and stuff for , doesn't that just cause more of an issue ? Is there like a continuation of it ?
Well , so , like you know , Cisco for the longest time did use Broadcom as the vendor silicon provider for their switches , and then they , they moved in-house to develop ASICs because , if you think about it and and I'm not sure this is the answer , right , but this is my , this is my , I think this is the answer .
You know , ASICs at the end of the day , are just programmed chips , right You're ? You're programming them to do a specific function . So AWS is . Aws has probably reached the point with their cloud underlay fabric , whatever you call it , where it might make sense for them to actually develop their own ASICs for , for their own specific use cases .
Well , yeah , and also right for their own specific use cases , because I mean , they know what they need out of their gear , right ?
Right .
They might not be getting from the vendors Right ? Yeah , Chris , you got any thoughts on that ?
Yeah , I mean like this kind of concept was also there whenever , like when , like DPTK was like the hot thing , right Cause you can you can customize the way these things operate to to do exactly what you want , right ? So who better , better to fit that , fit that description than than the CSPs , right ?
But yeah , I think , like you said , alex , it's kind of like if the competition is there internally right now for that , like , is this kind of a chicken and egg problem , like like you're just kind of robbing people to pay Paul type thing , you know what I mean . So it's , it's , it's got to be tough .
Yeah , I mean it's . It's crazy too . I mean , you see two , two points .
So so you see , like , the stock prices of , like Arista , right , arista is huge in the CSPs and I'm not I'm not claiming to be an economist or anything , but I'm sure a lot of that is tied to just how much gear and support stuff they're having to provide to all the CSPs , right , yeah , it's no secret that Arista is huge in all of them .
That's true , yeah , so yeah , I don't know the other . I lost my train of thought on the other one , but I'll come back to it when I remember . All right , let's see . So what about ? So we mentioned like larger enterprises earlier , right , so they get a lot of benefit from this right Because they're going to be buying the most .
So I do you think they get preferential right from the CSPs because they're going to be providing so much upfront ?
I mean that's how the enterprise commit works , right , like the enterprise , the EDP or whatever they call it . I can't remember the word . They use the you know where you pay . Basically , you say you commit to spending a certain amount of and they'll give you a discount , right , kind of like the reserved instances thing .
Yeah , yeah , that's a good point . I'm just , I'm guess I'm wondering too right , because that basically earmarks capacity , right ?
It does so in instances there's nothing but earmarks capacity right .
Yeah , oh and okay . I just remembered my second point , so this ties into this . So you mentioned COVID , right , also , it disrupted supply chain , but it also , at the same time , brought more people wanting to go to the cloud , so it's like we had just double whammy all over the place .
It's true . I wonder if that's why we saw the 200 , 300% growth just insane amounts of growth for the CSPs All at once . Basically , it was double whammy type stuff . Everybody was moving out of their data centers right . Everybody was going to hybrid or remote .
Everybody was thinking it was going to be remote from there right , and so everybody was putting all their stuff into the cloud at that point .
¶ Economies of Scale and Multi-Vendor Automation
I don't remember a lot of capacity problems , though , and maybe I'm glossing over it , maybe you just don't forget about it , but actually at that time , maybe they had sufficient capacity and then they just they couldn't predict how much and how quickly . How much of a spike , maybe .
Yeah , I think what's the general rule of thumb is like they're spending and they're putting in infrastructure planning for what capacity is going to . The requirements for capacity are going to be like six months ahead of time . So maybe at the moment they had the capacity . But I mean we saw recently capacity issues with Azure and things like that .
I feel like that was a huge thing . So I don't know if that was just everything coming to a head or what , but , like you said , no one could have predicted this , so I'm actually surprised we didn't see more of it .
But yeah , yeah , which is another reason we haven't seen that economy of scale money back , right . So the demand outstrips the supply by such a probably such a large amount , right that they can't lower the prices they can't lower them .
I think also like it kind of relates to the fact that economy of scale is kind of a nice to have thing when you refer to migration to the cloud , right .
It's not a need to have , it's always been .
It's never been a concrete why people are going to go to the cloud , the why is increased agility and availability and things like that Right ?
So you kind of , and when you ?
I think when you do that investment , you're saying , okay , well , like this is what we're going to pay for this now , not what we're going to potentially get discounted two to three years from now .
You know what I mean , Like I mean , I don't make those decisions necessarily at the company I work for any company I've ever worked for so maybe two people do operate like that , but that just seems like that's never going to be in the forefront of your mind , right ?
So it can kind of it's probably just fallen by the wayside , right , Cause there's obviously been other very , very high profile requirements in front of that .
Yeah , yeah , no , for sure , I mean that's , everyone's always trying to talk about how much they're trying to cut down on cost , right , and yeah , I don't . I don't think a lot of us get to make those decisions , unfortunately , so yeah .
Well , and people went to the cloud initially not to save money but to have the development environment , have the agility to produce stuff right the whole shadow it thing that we always talk about that . You know , developers were the primary users of the cloud because they needed that development environment . That was hard to provision on prem .
So I agree completely that that the idea of economy of scale was something that was that came later , right Cause I mean it wasn't . I mean the original Amazon product was just access compute . There was no idea of an economy . Scale was just like hey , whatever we're not using , we can , you can lease to you for price .
Yeah , I think that , right , that was the original idea . Right , it was Bezos , I think . I don't know , I don't remember the full story , but it was something like Bezos came in and was like we got all this extra compute , how can we lease it out , or something to other departments ? Okay , I got a little bit of another , another side side tangent here .
So , with all of these and this isn't really directly related to economies of scale , but more how the CSPs kind of operate , so because you know , as we've established , they have like multi vendor devices in there , right , so they have , they might have Juniper , they might have Apsar , they might have Cisco , they might have whatever white box , Dell , right , whatever
you have .
Whatever is on sale .
Yeah , exactly Whatever is on sale , whatever can get there the fastest , they don't care , just send it all . I mean , what ? What do you guys think about ? Right ? I hear a lot about Sonic , you know , being used as , like , the , the operating system . So I'm curious , like , if you guys have any thoughts about the CSPs .
They have to have some kind of like multi vendor approach for automating all of these devices , right ? I don't know if you guys have any thoughts on this and like how that might trickle down , I guess , to enterprises , if that makes sense .
So when you say trickle down enterprise , do you mean the idea of just taking being able , being able to automate a multi vendor environment ?
right , that's basically what we're thinking about , yeah , yeah , being able to just , you know , do networking on any device , and it doesn't really matter what the hardware is .
I mean that's the pipe dream or that's the pie . And I say pipe dream is not right , it's like the that's the pie in the sky idea . Right Is that to take the cloud model of being able to essentially automate the delivery of infrastructure for development and do that in an on-prem way , like that was the , that was the ACI dream , right ? Like that was the .
That was the app driven . That's the Apsra dream , that's the whatever . Pick your SDN . So I think enterprises want it . But I think the challenge is that enterprises are not in the business of developing solutions of that scale and complexity , like unless you're in that business right , unless that's your business , right ?
Yeah , I mean , obviously there's the challenge .
And there's costs associated with that .
Right we're for operating a multi-vendor environment like that and I honestly , due to lack of exposure and obviously moving to the cloud I don't know if there's been a lot of like kind of forward movement in this space , but I remember , like , specifically with automation in the networking infrastructure world , I felt like there was always this complaint that , like you
know , the vendors aren't putting in . You know , kind of like these , like kind of consistent API's across the board that can make this easier to do .
So if , like , if you do want to kind of just use that operating model of you know , buy whatever's on sale and get it in there , yeah , like I don't know if the vendors have made that exactly the easiest thing to do . So you know there's got to be drawbacks to that .
Yeah , to the same thing that the buying in bulk thing , you know like , yeah , if CSP is like , hey , juniper said , if we buy this many , then we get it , you know , at near cost . You know what I mean . So it's like it happens in both scenarios .
Yeah , I mean , dude , we worked on you and I worked on Viptela . Chris , for how long and do that ? It seems like every , every version the API changed for a while .
Right it was impossible to write anything . Yeah , when I read a customer that was coming in , like yeah , we're thinking about , you know , building our own custom things to use the API . Like good luck , man .
Like thankfully I wasn't the one helping with that .
But yeah , it was . I know it was a constant pain point for people .
And not just Viptela . That has been a standard for so long . Right Like pick a version of any Cisco , ios or whatever .
Pick a , pick a managing API versions is a difficult thing , no matter what vertical you're in . Yeah , it's insane .
So I like the idea . I think the operational model on prem would actually be pretty cool . But I think most businesses and honestly , for being honest , most network vendors are not up to the to the challenge or haven't been .
I'm thrown down the gauntlet to all the network vendors out there to make that happen and in a way that customers can actually afford and adopt . That's the gauntlet .
Yeah , 100% . I mean that's like you said . That is the you said . Pipe dream wasn't the right word , but I'm gonna . I'm gonna say that is the pipe dream .
Yeah , it's like I used to have this friend oh no , I still have this friend actually . He used to have a co-worker and remember he told me this story one time that the guys to come in like he worked in like a like a help desk , like sys admin type spot .
And he said the guy was super tall guy , he'd always walk in every single day with two , two liters of soda that he would drink in that one day , which is crazy . And he said , like , you would always come in with like diet Mountain Dew .
And he said one day the dude came in with like two it was like the oddest form of like diet Pepsi that you could buy . And he's like he's like , hey man , you got a new one today . And he's like he's , he figured out that day that he doesn't check any of it , he just sees what's the cheapest thing and buys it .
And he's like he's like I don't care what it is , I just got to get it in me . And until we can get that way with I don't think , I don't think you're going to see that that benefit kind of come to fruition .
Well , and no network vendors going to write the multi vendor version of that right Right .
Yeah .
That's the , at the end of the day , right For enterprises to consume . No , no , no . When one network vendor is going to write the NSO , you know to call it out right the NSO that's really going to do all of that for everybody .
But I mean , that's why these over the top , you know software vendors that do this are so marketable , right , oh ?
yeah , and I mean you know you got to think about the people that are doing it at the CSPs . I mean I'm sure eventually some of them are going to get tired of working so much at the CSPs and they're going to move out into these smaller places or start companies that are going to try to commercialize that kind of stuff .
So I don't think that's happened yet . At least I don't know of anyone that has left a CSP and come up with a solution like that . I guess , like Tim , you mentioned Apsra earlier , maybe because I know a lot of the guys that founded Apsra did go on to work for CSPs . So it's kind of the opposite . But who knows , I guess we'll see .
Maybe there's a heavy IP stuff in place where you're supposed to forget once you leave .
Well , that's a good point too . That's definitely possible . Yeah , all
¶ Challenges for Small Companies in Cloud
right . So what about what can smaller companies do then ? Right ? So we talked about large companies , a lot that can kind of come in and of course they buy in bulk and they get these crazy discounts . But how's that going to work for these smaller companies that don't even know their capacity that they need ?
How do they get advantage of cheaper , or do they just have to wait until there's so much infrastructure out there that the CSPs are begging people to come on and use their stuff ?
Just get acquired by a bigger company .
That's all they can do .
No , I'm just going .
There's no , yeah , I mean , this is one where I hate to be the bearer of bad news , but I don't know how a small company ?
Okay , not how , because the answer is , if that day ever comes that the CSPs have outstripped demand and have supply , on that magical day we will see those savings from the economy of scale and theory right , and then those customers who don't have the 500-pound grill is just swinging around that they'll finally benefit by proxy .
Essentially , it's just not I don't know what to say but AWS , azure , g-speed . If you're a small business , I mean we'll have you to take your money , but they're not going to give you a TAM right , they're not going to sign resources to take care of you . Right , You're just not . It doesn't make business sense , right ?
It's like the Bill Gates thing where if he stops to pick up a $100 bill off the street , he's lost money because in the time he took him to take pick up the $100 , right , it just is the way it is .
Yeah , and I think obviously I think the biggest benefit that small businesses can probably benefit from this is using not necessarily the kind of cheaper options for infrastructure , because obviously if you need to buy thousands and thousands of hours of instance costs and things like that , then they're probably not going to see a direct benefit there .
But these services that are already offered and are either offered at a very cheap price point or are getting cheaper , that it's kind of more like they would need to change the way things operate .
If you can like , if I'm mega-corp and I pay so much money for Lambda right , and I'm running Lambda functions , you know obviously they're already cheap in the first place . But if I'm a smaller company , I'm going to be running a significantly less number of Lambda functions and I can leverage that .
But I also need to change the way I operate and we kind of got into this on one of the previous episodes , but it's more like do they have the time and the funds to put into redeveloping applications and migrating off of infrastructure and things like that ?
I don't think there's necessarily anything they can do to make the CSPs be like notice me , senpai kind of thing . I think they just kind of have to change and adopt to leverage where the cost savings are already there .
Well , yeah , and finding the people as well . If you're a small company , how are you going to hire those people , those people currently ? At least it's a rare skill set , right ?
So people that are you want to bring on to optimize your architecture , refactor apps or containerize you know , whatever all the trendy words those people are going to command a higher salary .
That's a supply and demand thing too , just like the infrastructure itself , right Getting being able to . The demand for those people is higher than the supply , so it would be harder for a small business compete even in that arena . So yeah , that's true .
Yeah , yeah , not only rare , not cheap either . So that's yeah , Absolutely .
It'll happen over time , I think . Eventually , yeah , skill sets will kind of level out , but it's going to be . It's going to be a while .
All these people going through their you know six week boot camp , wanting their six figures Just it's all sixes , that was the previous episode , yeah .
I should , uh , yeah , we should . We should start a bootcamp . Six , six , six weeks , the six figures . No , we're not gonna do that .
No , yeah , all right . Well , we'll go around real quick and get any any final thoughts and then I think we'll wrap it up . I think you know we've talked about this pretty in-depth and I think we kind of all come to a lot of the same conclusions . So , got any last things to add ? Tim will just start with you . Yeah , um .
So I mean the whole economy of scale thing , it , but on its own it's one of the things with lot . Logically , it makes sense , right , the idea , the Costco model right , it makes sense . And I again like just to reiterate I think that the reason we haven't seen it yet is because demand and Infrastructure , again , is as far outstripping those as apply do .
I think we'll ever get to the point where demand is Lower and the supply is higher , and we see it , I think it . I think it has to happen eventually , even if the reason it happens is because God knows what comes along and disrupts it . You know , and then people are doing something different , right , the next thing after ?
Or the AI overlords , like , launch the robot revolution and it doesn't matter anymore . Then then you probably get great prices , but you know , so it's very hard to take it to do , to take advantage of an economy of skill .
In that respect , however , you'll notice that the CSPs are still going to have that and all of their documentation and all of their Certifications . All I can say is you know it . Again , it's one of those things where it makes sense on paper . It should make sense in real life . It just hasn't happened . So do it ?
Is it a problem if that they say it , that they say , hey , here's the economy scale , we can pass the savings on to you ? I don't know . I mean , what do you guys think is that ? It's not , it's not lying as the ideas that like . In theory , yeah , it should work , but I think it's still gonna be a while before we actually see that happen .
Yeah , totally agree .
I think I think , obviously when cloud was new and I mean we're still at a point where it's still kind of new to it to a lot of organizations and Professionals out here so I think you know it was easy to talk about when it was new .
Like all of this is , this is in the Like you said , it's in the foundational Certification tracks that you , that you go through for the , the CSPs as well , that like , hey , this is a , this is a major benefit .
I think , as individuals that are contributing to this market and we're , you know , not working for the CSPs , I feel like we just need to stop talking about it like it's a benefit Until it can come to fruition , because if it's , if it never comes to fruition , it was never a benefit to begin with , right ?
So it's like I would almost just say like if you're , if you're writing a business proposition For your company and you're trying to convince them to move something to the cloud , don't , do not list this as an item , do not even kind of give , give any kind of credit to this .
don't want to shoot you down , yeah exactly until I mean , let's , let's make them put their money where their mouth is . Start reporting these numbers again , start putting these in the slide decks when you know , hey , we reduce these prices because of you know this , this amount of scale , etc .
Right , I feel like we just need to kind of , like I said , make them put their money where their mouth is you know , yeah , no , I like it .
And To Tim's question right there , it's not that they're they're not lying about it , it's just that it's easy to tell people as they they're still plenty of people starting to come into the cloud , right ? So , that's something they're gonna want to hear . I'm sure a lot of it is like marketing .
Right , you're trying to get the ear of these finance people that are making the decisions , without the people that know better .
I'm sure there's . I'm sure there's plenty . I'm sure there's plenty of former billionaires where , like they were , like hey , if you keep giving me money , eventually I'll give it back to everyone . I'll give it back to the community , I'll . Trickled down that yeah , that's exactly it . So Don't believe that now .
And you know , until it starts happening , I won't believe it . I .
Love it . Yeah , that was great . All right , any last thoughts , or we're good .
Uh , not just one one closing thing not related to the show , but I do want to point out we now have , against Alex's best will , to keep us off of it , we now have a tiktok account that we're Starting to use .
I don't know , I don't know what's gonna come of it , but you know that's .
Uh , we're definitely gonna be putting clips from the show and you know , who knows , maybe some other things on there , so definitely find us . We'll put that in show notes as well . Um , tiktok is like cable to class of .
Chris's birds , yeah oh , that's a good idea that could be the content .
I didn't even think about that . Damn dude , see people like birds yeah people like birds and I like the birds too , so it's win-win . So , yeah , follow us on tiktok . Um , we'll have Alex do some dances or something at some point , you know he's gonna floss .
Not gonna happen . It's gonna happen , dude .
You'll get , we'll get Addison Ray on there dancing with you , or something you guys probably don't even know . That is , I barely know who , it is All right , should I ?
yeah , no , just leave it leave it out .
Just keep it a mystery you don't need to know .
Awesome , all right . Well , thank you all very much for tuning into the cables to clouds podcast today . If you like this episode , you know , please share it around to anyone you think might be interested .
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