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Cloud computing costs how much?

A major vendor's private cloud system could cost up to a million dollars. What is it about cloud computing that's so expensive?

Weekly cloud computing update

Say WHAT? Private cloud systems like vBlock from EMC/Cisco/VMware and IBM CloudBurst can cost anywhere from $250,000 to a cool million, depending on how much software is included. Sounds like highway robbery. It has to be cheaper to build a commodity cloud like Amazon Web Services, sourcing components directly, right?

Couldn’t you just buy servers from Quanta Computer in Taiwan, or one of the many other original design manufacturers that sell in bulk to Google, Facebook, Amazon, Dell, HP etc.; load up on open source Xen hypervisor technology and open source monitoring and management software from Nagios, OpenTSDB or Zabbix; and Bob’s your uncle, you’ve got a cheap private cloud?

Well, yes and no. As always, open source software needs a lot of customization to really make it work at scale. So even though the acquisition costs are much less, it would probably be painful to support. Just look at how fast Amazon is hiring engineers to support its cloud services; the company’s job page has over 200 openings just in North America alone.

Then there’s Moore’s Law, which continues to drive down the cost of hardware. Industry experts say that big names like HP, Dell and IBM are selling hardware at ridiculously low prices -- less than $3,000 for a current-generation dual-socket box with 16 GB of RAM, a battery-backed array controller, 146 GB SAS disks and out-of-band management.

So why the exorbitant mark-up on the "cloud in a box" appliances? (And I haven’t even mentioned Oracle’s much-hyped Exalogic, which lists for just over a million). Integration work, maybe? That takes some time, but how well integrated are vBlock and CloudBurst, anyway? Do they work with everything else in your IT shop? 

Could it be that the vendors are just throwing a number out there and seeing if anyone is crazy enough to pay? Is it the notion of seeing what the market will bear and adjusting accordingly? In other words, the price has nothing to do with actual system costs. Cloud buyers, beware.

Jo Maitland is the Senior Executive Editor at Contact her at

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