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Monday, June 28, 2010

My Cloud Math - Flawed or Flawless?

Dell PowerEdge R900 - $7500
Red Hat Enterprise Linux Support - $1200/year
Draw @ capacity – 1.5 KW per unit
4U = 9 plus a switch 1 Kw
Draw = 14.5 Kw per cabinet at load *.8 = 11.6Kw
$4500 for VM ware per cabinet

2,175/mo rent per cabinet, 78,300 for 3 year term
67,500 hardware amortized over 3 years
10,800 for SW = 32,400 for 3 years:
3 year total – 177,900
Per mo: ~$5,000 per cabinet for a 3 year term

So on a per cabinet basis, you need to do ~$6,00 month in revenue to make it work at low margins.

Using Amazon EC2, @ $1.20 per hour you can bill $28.80 per day per instance. At 16 VM per core and a six core box is used, $2,764.80 per box per day at max utilization (16*6*28.8). At 9 per rack, that's $24,883 per day if the rack is 100% utilized. If the rack is utilized 8% then $24,883*.08= $1990.66 per day.

That's $730,000 per year per rack if you hit 8% utilization.

How does this check out with what you're seeing?


  1. Interesting. How about performance? Are you assuming that you just need same amount of processing power on the EC2? How does the network and storage scale up?

  2. First of all, you left out personnel, infrastructure, storage, marketing and a lot of other overhead costs. The hardware is just a tiny part of the whole cloud. You need people to maintain your hard and software, you need software to make the cloud available to the public and lots more.......

    oooww and Amazons cheapest instance is $0.058 which equals 1.392/day ~ 40 bucks a month.
    and 16VMs a core is kinda positive i think.

  3. You need to cater for the operational costs of the service both internally and at the cloud provider too. A little harder to calculate though.

  4. Thanks for the feedback. I was trying to get to some level of margin and then figure out if the margin=savings if you do it all internally. Keep the comments coming


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