Mark Zuckerberg complained that public cloud is too expensive. Is he right?

The channel wades in on the social media maven's recent comments declaring AWS pricing to be too high

Mark Zuckerberg arguably might not be in a position to call out other bosses for how they run their business, but he recently came out swinging against Jeff Bezos for the cost of Amazon Web Services (AWS).

The Facebook boss and his wife set up the Biohub - a medical arm of their Chan Zuckerberg Initiative (CZI) philanthropic foundation - in 2015 to use technology to advance research into health, social and scientific issues. During a livestream this month, he declared that the cost of cloud compute and the AWS bill is a recurring topic on the Biohub board's agenda.

He even called the cost of cloud compute a "bottleneck for progress" for the initiative's medical research.

One person who agrees with Zuckerberg (pictured) is Jonathan Lassman, managing director of Epaton. He stated that cloud computing costs are "ridiculously expensive" compared with its alternatives.

"A cloud-first strategy doesn't necessarily mean putting things in the cloud. We do total cost of ownership reports on a daily basis of cloud versus on-prem and cloud comes out at double the price every single time," he stated.

"IT is a cost, not a profit centre, therefore why pay double to do the same job?"

However, Chris Bunch, general manager of EMEA at AWS partner Cloudreach, thoroughly disagreed that the pricing in place by public cloud vendors was prohibitive for organisations.

He argued that although the figure may appear large on the page, it is ultimately more cost effective than a customer trying to build its own capabilities.

"[The pricing] can look expensive in the sense that it will be a big number if you're doing lots of very intensive work, but the cost of doing it via any other means, I would argue, would also be incredibly expensive," he said.

"If you try to build this stuff yourself, the underlying cost of everything else that you're doing is significant."

Zuckerberg's choice

Epaton's Lassman said that on-premise storage offers a more financially viable alternative to cloud computing with all the same benefits.

"Lot of people are getting hung up on the fact that ‘If I put it in the cloud I don't have to worry about it'," he said.

"If I can provide an infrastructure on-premise, that you don't have to touch and you don't have to manage, you still have to do the other job which is to create the applications to put into that infrastructure.

"If I've given you an invisible infrastructure that you can now just create applications to put on, that's basically giving you the same thing that the cloud is giving you."

Dan Scarfe, founder of Microsoft Azure partner New Signature UK, countered that on-premise solutions can end up being more expensive than the cloud if customers do not implement them correctly.

"As a general rule, if you just pick up everything that you've got on-premise and don't change it in any way, shape, or form and just deploy it into the public cloud, then it can be more expensive," he explained.

"It's difficult to compare an enterprise-grade, public cloud environment with a traditional hosting company or a traditional on-premise environment because yes, it might appear more expensive, but it's a much more resilient enterprise-class environment.

"We always encourage customers as part of that migration to the public cloud to rationalise, optimise, and take advantage of platform services rather than infrastructure services."

Facebook cloud?

Zuckerberg's call-out caused some industry watchers to ponder why he doesn't use Facebook's own resources to set up his own cloud if he is disgruntled with his cloud compute bill.

The cloud market space is dominated by AWS, Microsoft Azure and Google Cloud, with the likes of Alibaba, IBM and Oracle holding their own small shares of the space. So is there room for a new, cheaper alternative to those cloud giants?

Bunch and Scarfe agree that there is no real possibility for a new entrant to take on the hyperscalers, rather that any newcomer to the cloud space should focus on carving out a niche for itself rather than pricing itself cheaper to compete with the cloud behemoths.

"So the price that these vendors charge is proportionate to the size of them. The bigger they are, the more cost effective they can be," Scarfe explained.

"A new entrant coming in wouldn't be able to get anywhere close to the prices that the hyperscalers can offer, never mind coming in more cost effectively.

"Outside the hyperscalers, the space is just going to become increasingly niche; a new entrant might be able to offer a capability that one of the public cloud providers can't - because they're doing everything at such a big scale - but that value proposition is all around defining a niche rather than trying to compete with the big guys on price because they have no chance of doing that."

Future costs

It remains to be seen whether the social media tycoon's comments will cause a flurry of decreasing prices in the cloud space, but Scarfe believes that the next few years will see an onset of new pricing structures.

"The cloud vendors are always releasing different services with different pricing models - for example, function-as-a-service where we're not paying for servers or containers anymore, we're paying for the number of times our code executes," he explained.

"We're going to see more of those kinds of innovative price models, but again you only get to take advantage of those price models when you actually go all in on the cloud and start to take advantage of some of these new design paradigms that the public cloud offers."

As more people use individual services proffered by cloud providers it decreases the unit cost, Cloudreach's Bunch explained.

He expects this trend to continue as well as customers committing to longer contracts in exchange for favourable costing from vendors.

"I think we will see the trends continuing to go down on a unit basis and we will see an appetite for custom deals, such as someone making a large commitment in exchange for favourable pricing," he said.

"In the cloud space, we will see a trend towards simplifying pricing optimisation; there are some good wins to be had for Amazon and Microsoft to make it easier for their customers to save money.

"Google, for instance, has a simple pricing service for their compute tier, which means that the more you use it, the more the price goes down.

"I think you'll see more of that kind of simplicity coming through in the pricing model in the future."