> I think Adrian Cockcroft & Jedberg may disagree with this statement.

They might. But either they haven't priced it out, or they have decided it's worth paying several times as much for some reason. Given that the high price of EC2 gets brought up and how I've never seen them actually address the pricing issue, I'm not going to speculate why they've decided to make that tradeoff. I find it quite baffling, though, and I'd be very interested in it if they have done a serious assessment of it somewhere.

> They clearly have a HUGE amount of traffic across their service, and they are very successful in keeping a lean team on staff that has a focused skillset while not needing all the IT ops folks on staff.

Given the very public, very extensive issues that in particular Reddit have had with their hosting, and how they kept taking the entire service down for maintenance seemingly always when I want to use it (since I tend to want to use it when Americans are sleeping, I guess), I'm not so sure this is a glowing endorsement of doing things their way. I certainly couldn't get away with the stability-record Reddit has - the CEO where I currently work would look at me as if I was crazy if I suggested even the amount of scheduled maintenance windows Reddit takes. I don't use Netflix, so I haven't kept track of how they're doing stability wise.

EDIT2: Actually looking at their numbers, and comparing EC2 prices, I'm fairly comfortable in saying that the setup we're running is actually larger than their in terms of total computing resources (but nowhere near them on bandwidth use), which is quite interesting...

> while not needing all the IT ops folks on staff.

You can have someone else do the IT ops for co-located services too. There are literally thousands of companies offering suitable services on an hourly basis, and dozens that offers it globally. Outsourcing ops is easy.

And with managed hosting, the ops you need to do yourself if you don't pay for extra service tiers is pretty much the same as for EC2. Someone else handles the hardware, just as with EC2. Someone else handles the network, just as with EC2. What you need to handle is what is installed on your servers, just as with EC2.

> The HW costs to support their service would be very large as well as the distribution of that HW across the [nation|globe] to support their userbase.

You pay for the HW with EC2 too. You just don't get to own it at the end. A typical colocated setup often involves leasing rather than purchasing, so you're still typically dealing with monthly payments. And if you don't want to own, managed hosting is still vastly cheaper.

As an example, leasing costs for our lates purchases of a quad-server box containing 4x dual hex-core 2.6GHz cpu's with 24GB RAM each, and 24x 256GB OCZ Vertex 4 SSD's, is about $600/month per unit. With their share of our rack space, power, bandwidth etc. the full hosting cost excluding our ops cost for this box is about $750/month (this is accounting for the fact our racks are currently nowhere near full, and so this price is higher than it could be).

Comparing them to EC2 is a bit tricky, since there's no direct equivalent. But to be very generous to EC2 and using a model that these servers substantially outperform, consider that 4 x single M3 Double Extra Large in US East is around $3300/month (which is indeed quite a bit better than last time I look - I'll grant that), and I have about $2550/month left to assign to ops every month for that single box.

In reality, for our loads the more direct equivalent would likely be the High I/O EC2 instances, which are almost 3 times as expensive.

(EDIT: Note also that this is before account for any bandwidth charges or costs for EBS volumes or similar for EC2; on the other hand you can of course cut the hourly cost by paying upfront for reserved instances - effectively you're then paying for "fractional managed hosting"... Last time I looked that still ends up more expensive, though the margin is definitively better)

If we had hardware that required enough extra time to deal with to cost us anywhere near that, we'd throw it in the garbage. We're in London. Here, that's 30%-50% the fully loaded cost of a mid-level ops person...

In reality our dev-ops cost per server (remember the box above is four individual servers) is ~$400/month and dropping as part of that cost is development work to automate more of our maintenance. That is our total. Of that ~$100/month is related to the physical server or network infrastructure and maintenance, and thus costs that are included in the EC2 cost.

The rest are related to maintenance of the VM's running on those servers as well as monitoring of the VM's that we'd still pay if were using EC2.

So comparing against the relatively underpowered EC2 instances above, one of our new boxes costs us ~$1150/month for equivalent service, or ~$2350/month total. So we're getting all the dev-ops and monitoring for our VM's "for free" and then some compared to EC2 despite being small enough that we have a lot of ops overhead.

Judging from our growth, our dev-ops cost per server with twice as many servers as we have today would likely only increase by ~ 10%-20%, and so our per-server cost would drop accordingly. Similarly, our rack and power costs would remain roughly constant as we have spare space in our racks, and so the per server costs would drop even more. I'd expect our rough per box costs for the quad server boxes above to drop to ~$900/month if the number doubled with "EC2 equivalent" ops included.

Keep in mind again, that this is comparing to an instance type I know these servers outperform comfortably, and excludes EC2 bandwidth and EBS or other services.

> In a large infrastructure implementation you're going to need quite a few ops specialties:

I don't know why you believe that EC2 is any simpler to work with than managed hosting in this respect. It isn't. Simpler than a co-located setup where you own your own servers, sure. You don't need much size before it's still cheaper, though.

Many hosting providers even provide API's for their managed hosting, and deploy them all using Xen, with the only difference being that you commit to pay for full months of service and a dedicated physical machine. At the same time you often get the benefit of being able to order custom setups tailored to your workload.

> Finally, there is also the hybrid model, where you have your own base-line infrastructure which scales out to AWS to support larger load (CDN model)

I mentioned exactly that, and it is what I recommend unless there are other reasons not to use EC2, because if you handle peaks via EC2, and your traffic is suitably spiky, you can load your dedicated base servers to 90%+ if you're careful instead of often <50% if you don't have any way of rapidly scaling up, and this drives the cost advantage of dedicated for your base load even higher.