How Amazon Keeps Cutting AWS Prices: Cheapskate Culture

An anonymous reader writes "Amazon Web Services has cut its prices on 40-plus consecutive occasions, at times leading the charge, at other times countering similar moves by Microsoft and Google. This article at CRN includes some interesting behind-the-scenes trivia about how Amazon keeps costs down, including some interesting speculation — for example, that perhaps the reason Amazon's Glacier storage is so cheap is that maybe it might be based at least partly on tape, not disk (Amazon would not comment). The article also explains that the company will only pay for its employees to fly Economy, and that includes its senior executives. If they feel the need to upgrade to Business or First Class, they must do so from their own pocket. And instead of buying hardware from an OEM vendor, AWS sources its own components – everything from processors to disk drives to memory and network cards — and uses contract manufacturing to put together its machines."

Comments

Business class is a misnomer

[Anonymous Coward]

Unless you work in finance, oil/gas or certain luxury markets and have money to burn you're flying economy no matter what industry you're in. It's not being cheap, it's being smart. You're stil going to get to the same place at the same time as the other passengers.

Re:Business class is a misnomer

[Anonymous Coward]

Some people do not enjoy travel and upgrading them is one way to encourage them to do it more often.

Re:Business class is a misnomer

[wienerschnizzel]

You're stil going to get to the same place at the same time as the other passengers.

Not in the same shape though.

It might not impact you much if you are going to one conference, but if you fly to multiple destinations within a week, it will build up. Your back/joint pain, stress level, lack of sleep will show. It might mean that you will save 5k on the boarding passes of your exec but then pay millions for the bad decision she makes.

Re:Business class is a misnomer

[Pembers]

You're stil going to get to the same place at the same time as the other passengers.

True, but you have a nicer seat with more room, and everything before and after the flight runs faster and smoother. You have your own check-in desk and security line, so you can arrive at the airport an hour later than the economy-class passengers. You have a bigger baggage allowance, so you might not have to put anything in the hold - and if you do, it'll probably come off the plane first. All that can make the difference between a day trip and an overnight stay, or turn a trip of n days into n-1 days.

Re:Business class is a misnomer

[DuckDodgers]

Or lose her because she quits to work for a company that has less travel.

Economy Class Only

[CohibaVancouver]

The requirement of 'no business class' for air travel isn't unique to Amazon. Every tech company I've worked for had the same policy - From the senior execs on down.

Thankfully, the company I work for now doesn't require red-eye flights. So I can arrive at a destination, sleep overnight in a hotel bed, then wake up the next morning and start working.

Re:Economy Class Only

[binarylarry]

Little planes can also be scary as fuck.

Re:Economy Class Only

[bsane]

They have (had?) regular flights between their west coast locations, you just show up and take a seat. I don't know that they fly charter flights anywhere else on a regular basis. It also wasn't unique to Intel, HP used to do something very similar.

Re:Economy Class Only

[BonThomme]

And I'm sure if you ever actually flew with one our your senior execs, you'd be mystified why you can't find them in the coach section...

Re:Economy Class Only

[Anonymous Coward]

I fly those planes regularly to get between Intel sites. The experience is infinitely better than commercial flights.
1) You go via smaller airports, or a separate terminal. No bilking for parking, stupid busses etc.
2) Walk in, wave your badge, get on plane. 5 minutes.
3) It's economy sizes seats, but they have a power socket.
4) Yes you do sit next to the execs.
5) You drop your bag on the trolley going out. It's on a trolly on the tarmac when you get out the other end
6) No one is going to steal expensive things from your bags.
7) No assigned seating. Get on, find a seat, sit down.
8) It costs Intel a lot less to fill its own plane than to pay commercial rates.

The downside is they are popular and so it's hard to get seats at short notice.

Re:Economy Class Only

[CohibaVancouver]

And I'm sure if you ever actually flew with one our your senior execs, you'd be mystified why you can't find them in the coach section...

A couple of years ago I flew back from Mobile World Congress (Barcelona) in economy class. An Intel exec was seated next to me and an IBM exec was across the aisle.

Fly Economy - tragic!

[Overzeetop]

We're supposed to be surprised that everyone is supposed to fly coach?

And, if you're custom rolling your backend at the scale of AWS, I wouldn't expect anything *but* sourcing yourself. Outsourcing is for organizations that don't have the expertise in house and want a finger to point if things go wrong. Vertical integration is more cost efficient if you have the scale to make it work.

Cheapskate?

[fuzzyfuzzyfungus]

Doesn't 'cheapskate' have a somewhat perjorative connotation, either edging into 'stingy' (if talking about spending on socially normative things) or 'penny wise, pound foolish' (if talking about good sense in short and long term cost/benefit thinking)?

From what the article decribes, Amazon isn't so much 'cheapskate' as operating perfectly sensibly given their scale, cutting unnecessary (but usually bundled) components, and not giving in to poorly justified; but commonly assumed, habits like sending Important Employees to fly business class.

I can understand why they would be scaring their competitors pretty seriously; but I'm not sure that I see the 'cheapskate' bit.

AWS is NOT cheap

[afidel]

AWS is expensive, I can provide the equivalent of an m3.large reserved instance to my users for 1/4th the cost over 3 years, if you ammatorize my infrastructure over 5 years (which is what we've actually been doing) then it's almost 1/7th as much. The only places where AWS makes sense is if you're a quickly growing startup, have a VERY bursty workload, or you're so small that you can't justify 3 hosts for a VMWare Essentials bundle.

Re:AWS is NOT cheap

[rebelwarlock]

I also provide hosting. Give me money instead.

Fixed that for you.

Re:I've heard this somewhere before...

[fuzzyfuzzyfungus]

Amazon, in its majestic equality, requires both code monkeys and senior executives to pay for their own upgrades.

It beats the alternative of providing the upgrades for free to the people who can most easily afford them, in the service of maintaining a good, solid, hierarchy.

Of course it is tape

[cryptizard]

perhaps the reason Amazon's Glacier storage is so cheap is that maybe it might be based at least partly on tape, not disk

That is one of the stupidest things I have ever read. Of course it is using tape, why else would it take up to 24 hours to get your data when you request it? Everyone knows that is the whole point of Glacier, and the reason they can offer it so cheap. Nobody wants to deal with the hassle of having their own offsite tape library, so Amazon will do it for you with a convenience user interface. That is literally exactly what all of AWS is based on, doing something cheaper for you because they have the expertise and the facilities at scale.

Re:Walmart on the web

[wonkey_monkey]

You do not want to know what I'm doing right now.

could be blueray

[schlachter]

It could also be blueray disk based. Not as likely as tape based, but could be cheaper/faster at scale.

Amazon principles

[subanark]

The Amazon business is focused around it's core principles:
http://www.amazon.com/Values-C...

Notice that "Frugality" is listed as one of them.