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One of those moving away from cloud hosting: Eric Frenkiel, founder and CEO of MemSQL.
As a startup, Frenkiel turned to Amazon Web Services for cloud hosting. However, this solution was short lived as Frenkiel switched over to a more traditional physical server instead.
MemSQL simply outgrew Amazon's cloud. They reached the point where physical servers and computers offered them a significant cost savings over the solution that AWS was providing. Frenkiel said, "I'm not a big believer in the public cloud. It's just not effective in the long run."
This case shows that the cloud isn't the right choice for everyone. It's perfect in the beginning for a startup, or even for a newly created website that doesn't grow quickly, but for others it just doesn't work out. Zynga, online gaming giant, is another example. They moved from Amazon's cloud environment and switched to in-house data centers when it was determined Amazon wasn't enough for the services they needed. And it isn't just big sites like Zynga, but smaller companies as well, that are switching over to traditional hosting environments.
Ride-sharing startup Uber also switched to a dedicated hosting company, Peak Hosting, from Amazon's cloud, as have Mixpanel, analytics company, and online clothes trading company Tradesy.
Kit Colbert, engineer at VMware, said, "I don't know how much this is written about...Within IT departments, public clouds do tend to get more expensive over time, especially when you reach a certain scale."
Frenkiel found that the cost to rent virtual servers from Amazon in MemSQL's early days was lower. Both the fact that prices were lower and an early seed funder, Y Combinator, offered MemSQL $10,000 Amazon credits. "When you're lean and just getting started, it's obviously the way to go," said Frenkiel.
When costs rise, it's then time to reconsider your options, exactly what happened to Frenkiel. The site's database was stretched across hundreds of servers, and the number of virtual machines required for testing increased. This led to the cloud becoming a bad idea.
MemSQL found themselves spending $27,000 on Amazon's virtual servers in April. If they had stayed with AWS cloud hosting, that would add up to $324,000. On the other hand, physical servers only cost $120,000 and would be functional for at least three years. And even if they needed more servers down the road, they'd still be saving money compared to the cost of Amazon's cloud hosting services.
Frenkiel said that if they had continued with Amazon, MemSQL would have spent roughly $900,000 over the next three years. This validates his decision to switch to physical servers at a cost of $200,000. "The hardware will pay for itself in about four months."
"The public cloud is phenomenal if you really need its elasticity," he said. "But if you don't -- if you do a consistent amount of workload -- it's far better to go in-house."
John Engates, CTO of Rackspace, agrees: "Web servers belong in the public cloud. But things like databases -- that need really high performance, in terms of [input and output] and reading and writing to memory -- really belong on bare-metal servers or private setups."
This proves that you need to be flexible with your hosting solution, understanding that if the need arises, you might need to move away from the cloud bandwagon for the sake of your company's financial health.
Do you rely on cloud hosting? Are your needs causing you to reassess your current hosting situation?
I'm e-marketing consultant for Ananova company.
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