So, then why even provide the distinction of rent vs own if thats the case?
> you are paying Amazon enough to buy that much physical space, power, bandwidth, IT staff, etc.
And you're also sharing the costs with other people. Clearly FedEx is saving $400M/year while also funding Bezo's trips to space, no?
> But any Fortune 500 transitioning to the cloud is literally just taking their money and burning it, because the alleged cost savings of efficiencies of scale are being completely absorbed by the cloud provider's profit margins.
This is literally not the case without the details so stop speculating. Every F500 should (and probably is) be doing a rent vs own calculation and determining the TCO, and then making the decision from there. It's not unilaterally the case, it has to be assessed.
I wonder how much they'd save if they rebuilt their infrastructure with own DCs. There are huge savings in decommissioning mainframes, switching to free software and automating more. At the scale of Fedex, I don't think they'll spend much more on hardware and ops than AWS.
The cloud just offers an additional middleman that also gets a profit margin.
You get your support in one place instead of Hodge pogge of ... yeah we rent server from X but software that runs on it is from Y and in reality provider Z is support so now C has to agree for physical access to the server and now align stars to get all 4 working together instead of shifting blame around to fix anything.
And you hope the Amazon employee makes decisions that are favorable to your business, even though they do not care about it.
The problem with building out a new state-of-the-art datacenter - or several of them - is the enormous capital expenditure you've just put on your company's books, not to mention the operating expenditure of all the people that will be required to run it. Yes, it's true that as time goes on, you can claim some tax advantages in the form of depreciation, etc. on some components of this new huge outlay, but at the end of the day, when the company misses quarterly or yearly expectations from Wall Street and the stock price takes a 10% hit, the "blame" gets squarely laid at your feet - you are, after all, "the problem". You spent a shitload of money provisioning future resources for the company's (expected) growth.
Meanwhile, in Cloud Cuckoo-Cuckoo Land, your rival has migrated all or nearly all existing infrastructure to the cloud, thus including a significant op-ex, but not nearly as large as the enormous cap-ex you've just incurred. They're hailed as a hero. A goddamned visionary! Look at all that money they're going to save the company! Nevermind the fact that they explicitly instructed the IT department's head to provision only the necessary resources for current operations, after all, the "promise" of the cloud is that you can just spin up whatever you need in a few minutes, anyway. And besides, the cloud deployment of all the company's servers and the necessary expansion won't incur a significant turning of heads until long after our visionary executive has jumped ship to another company for more pay, a corner office, and a better stock compensation package. Best of all, he say that he saved the company $XX millions of dollars over your plan, and it can be said legitimately, even though it is, of course, inaccurate.
If you're huge, it's never cheaper to farm out the administration of your critical infrastructure to qualified experts. But because of the dominance of the Quarterly Report Cycle in modern business, this gets swept off by the wayside as "outdated thinking".
I say this, by the way, as an IT professional building out cloud solutions for companies. For a lot of small-to-medium sized businesses, and startups especially, the cloud makes sense. If someone at Federal Express thinks the cloud makes sense, they're looking out for themselves, not the company.
Big companies need this too. Some team wants to spin up some new service to try out some idea? In cloud-land they push a button. In "rack & stack" land they have to wait for Ops to purchase the hardware and provision it.
Cloud makes it cheap and easy to try out new stuff.
If you are big enough to have your own datacenter, you are paying Amazon enough to buy that much physical space, power, bandwidth, IT staff, etc. plus funding Bezos' trips to space.
There's a justifiable niche where you're too small to justify running your own server/below the need of one full-time IT staff where the cloud makes sense, and startups temporarily benefit from the ability to rapidly scale on cloud platforms. But any Fortune 500 transitioning to the cloud is literally just taking their money and burning it, because the alleged cost savings of efficiencies of scale are being completely absorbed by the cloud provider's profit margins. And they're still going to end up paying their own IT staff to handle the cloud management in addition to (by proxy) paying the cloud provider's IT staff to manage the hardware.