Clouds, and VPS’s before that, work on the age-old principle of buying in bulk and selling by the piece. You run one big server for $1,000/month, then you rent it out to seven people for $200/month, and voila, you’ve cleared a $400/month profit.
DHH, Don’t be fooled by serverless
This is something that has bothered me for some time. The prices of these services when compared to full servers is absurd. Hear that whole sentence. Compared to full servers. The response of many would be either a) “the prices are very low!” or b) “no one needs a full server!” The whole sentence matters. If you need a full server, the price is very high to rent it piecemeal. If you are going to eat a whole cow in a year, buying it pound by pound from the grocery store will cost substantially more than buying a whole cow.
But what happens if a customer needs the performance of a whole box, most of the time? Then they’re paying $1,400/month for $1,000’s worth of computing. Or maybe, because they’re reserving the whole box, they’ll get a deal at $1,250/month by committing to a whole year. That deal is far less obviously good on both sides. It’s basically a credit agreement at a 25% APR. Tread wisely!
But if you execute enough functions to fill the computing power of a whole box, it’s a terrible deal.
And then there is the lock-in. If you build an application in PHP or Ruby, you can basically run that anywhere. These cloud services are designed so you have to architect around them. If the pricing of my server for this site goes too high, I can take it elsewhere. It’s just HTML.
The further down the rabbit hole you go with “cloud-native” services in serverless, the harder it’ll be to climb out when you realize that you should own the donkey rather than rent it. And especially once you realize that paying to rent a whole donkey at the piece price of a hundred slices is an even worse deal than just renting the whole donkey by itself! […] And if you start off with a proprietary serverless setup, you might well find the lock-in impossible to escape by the time the rental math no longer works.
So who are these services best suited for?
The cloud is primarily for companies that have big swings in use – like Amazon’s original AWS case of huge demand around Black Friday and Christmas, which left them with unused capacity for the rest of the year – or for early outfits that don’t do enough business to either warrant owning a whole computer or spend so little on the cloud that it just doesn’t matter.