I'm starting to wonder though whether companies even have the in-house competence to compare the options and price this risk correctly.

>Now a good company would concentrate risk on their differentiating factor or the specific part they have competitive advantage in.

Yes, but one differentiating factor is always price and you don't want to lose all your margins to some infrastructure provider.

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simianwords 7 hours ago | parent | next [-]

Software companies have higher margins so these decisions are lower stakes. Unless on premises helps the bottom line of the main product that the company provides, these decisions don't really matter in my opinion.

Think of a ~5000 employee startup. Two scenarios:

1. if they win the market, they capture something like ~60% margin

2. if that doesn't happen, they just lose, VC fund runs out and then they leave

In this dynamic, costs associated with infrastructure don't change the bottomline of profitability. The risk involved with rolling out their on infrastructure can hurt their main product's existence itself.

	▲	fauigerzigerk 6 hours ago \| parent [-]
		I'm not disputing that there are situations where it makes sense to pay a high risk premium. What I'm disputing is that price doesn't matter. I get the impression that companies are losing the capability to make rational pricing decisions. >Unless on premises helps the bottom line of the main product that the company provides, these decisions don't really matter in my opinion. Well, exactly. But the degree to which the price of a specific input affects your bottom line depends on your product. During the dot com era, some VC funded startups (such as Google) made a decision to avoid using Windows servers, Oracle databases and the whole super expensive scale-up architecture that was the risk-free, professional option at the time. If they hadn't taken this risk, they might not have survived. [Edit] But I think it's not just about cloud vs on-premises. A more important question may be how you're using the cloud. You don't have to lock yourself into a million proprietary APIs and throw petabytes of your data into an egress jail.

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sam_lowry_ 7 hours ago | parent | prev [-]

Precious real-world engineering skills also play a role.

But most importantly, the attractive power that companies doing on-premise infrastructure have towards the best talent.