In Cloud For Preservation I described how much of the motivation for using cloud services was their month-by-month pay-for-what-you-use billing, which transforms capital expenditures (CapEx) into operational expenditures (OpEx). Organizations typically find OpEx much easier to justify than CapEx because:
- The numbers they look at are smaller, even if what they add up to over time is greater.
- OpEx is less of a commitment, since it can be decreased if circumstances change.
For more than 6 years I've been pointing out that Amazon's margins on its S3 storage service are extortionate, using first local storage and later Backblaze as example competitors. Another issue I raised in Cloud For Preservation was the effect of the lock-in period. The cost and time involved in getting the data out make the customer vulnerable to price hikes. Since cloud storage pricing is normally on a month-by-month basis these can happen with a month's notice.
Another of the risks month-by-month billing poses was detailed by Backblaze CEO in Backblaze Durability is 99.999999999% — And Why It Doesn’t Matter:
Some customers pay by credit card. We don’t have the math behind it, but we believe there’s a greater than 1 in a million chance that the following events could occur:I commented in What Does Data "Durability" Mean?:
If all those things are true, it’s possible that your data gets deleted simply because the system is operating as designed.
- You change your credit card provider. The credit card on file is invalid when the vendor tries to bill it.
- Your email service provider thinks billing emails are SPAM. You don’t see the emails coming from your vendor saying there is a problem.
- You do not answer phone calls from numbers you do not recognize; Customer Support is trying to call you from a blocked number; they are trying to leave voicemails but the mailbox is full.
Thus Backblaze believes that the probability of losing all your objects due to billing problems is more than 10-6, which makes the difference between 8 and 11 nines of durability of a single object irrelevant.For the last few years, Wasabi's entire pitch has been that it is 5-6 times cheaper than S3. I used Wasabi among the examples in my report on Cloud For Preservation, in part because their lack of egress charges means a remarkably short lock-in period:
Wasabi, a cloud storage startup, has devised a pricing model whereby customers buy capacity up-front in return for lower charges.Because archives come in fixed-size chunks, a fixed-price term contract appears to make sense. You are going to use exactly a chunks worth of data every month, so the use-it-or-lose it economics of RCS don't matter.
Wasabi’s Reserved Capacity Storage (RCS) provides enterprises with price predictability and one-time billing. The deal sees storage costs cut by up to 27 per cent compared with pay-as-you-go when customers commit to fixed price terms of up to five years. Customers pay only for storage that is reserved; there are no fees for data egress, API requests or data retrieval.
Wasabi said its research shows many customers prefer the predictability of a fixed price purchase order. The company thinks RCS will be useful for backups, second copies of data, and archives.
If you have a 100TB archive at Wasabi on their pay-as-you-go plan with premium support it will cost $38,456 over 5 years. If you pay up front for RCS, assuming you get the 27% discount at this level (the discount details aren't clear from this page) it would cost $28,072, a difference of $10,383. So if the organization's internal cost of capital is more than 7.4%, which it is likely to be, RCS is going to be adjudged more expensive than pay-as-you-go Wasabi, even ignoring the decreased flexibility.
The way organizations account for OpEx and CapEx continues to be a barrier to sustainable digital preservation.