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Is there a point where a private cloud is cheaper than the public cloud?

Brandon Butler | Oct. 15, 2014
Private cloud vendors say they’ve found it, analysts say it’s not that easy.

Posey, the IDC analyst, buys into the idea that it's usually less expensive to use hosted private cloud for steady-state, sustained usage and predictable load applications. "If the infrastructure for the workload needs to run 24/7/365, then there's not much point in paying for it on a pay-as-you-go basis," she says, adding however that public cloud vendors do have incentives for volume discount pricing that could make their solutions more cost competitive. Furthermore, the public cloud has other advantages like being able to have automatic disaster recovery failover without having to buy twice the amount of private cloud infrastructure.

Public cloud vendor Digital Ocean's CMO Mitch Wainer says the report is missing the point about the differences between public and private clouds.

"The speed and agility of the public cloud allows users to quickly provision servers for their applications, and also provides the flexibility to scale up or down based on their needs," he says. "This allows users to pay only for the resources they use, while keeping the focus on innovation and productivity without having to worry about infrastructure."

Analyst Lee Doyle of Doyle Research says it's good for companies that are spending a lot of money on the public cloud to consider if there's a more cost effective way to run their workloads, including potentially bringing them in-house. Around $7,000 on public cloud spend is enough to consider exploring other options, depending on the size of the company.

But the public cloud is not replacing collocation and managed services. Posey cites IDC figures showing that the collocation/managed service market was $38 billion last year with expected growth to $54 billion in 2017. The cloud market as a whole - including SaaS, IaaS and PaaS - was $47 billion last year; only $12 billion of which was for IaaS. The IaaS market is expected to grow to $31 billion by 2017, IDC says. So, while IaaS is expected to have impressive growth, managed hosting and collocation are still expected to grow as well.


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