Home > amazon, business, smugmug, web 2.0 > Amazon S3: Show me the money

Amazon S3: Show me the money

November 10, 2006

UPDATE 4/30/07: This post was written in November 2006, so these numbers are a little out of date. It’s now been 12 months and we’ve saved almost exactly $1M. You can see the most recent numbers, as of April 2007, in my ETech slides.

I still have some more Web 2.0 Summit stuff to write up if I get a few minutes today, but let me talk about Amazon’s S3 for a minute. At the conference, I was chatting with Michael Arrington of TechCrunch fame (who perfectly handled a blogosphere mini-explosion last week, I thought) and we got to talking about S3. He was impressed with how we were using it, but joked that our $500K saved number sounded like “complete bullsh*t”. I laughed along with him and assured him it was true, but on the way home I got to thinking that it IS a really big number to throw out there without details.

So here are the cold hard facts:

  • Our estimate, as you can see in BusinessWeek’s cover story, is that we’re saving $500K per year. We’ve been using S3 for almost 7 months so far (we launched it on or around April 14th), so for my $500K estimate to be in the right ballpark, we should be somewhere near $291K saved to date (well, we don’t grow linearly, so less than that … but let’s do easy math, shall we?).
  • We had roughly 64,000,000 photos when we launched S3. We now have close to 110,000,000 photos. Yes, that’s ~72% growth in 7 months.
  • To sustain our pre-S3 growth, we were buying roughly $40,000 per month in hard disks plus servers to attach them to. We’re not talking about EMC or other over-priced storage solutions. We’re talking about single processor commodity Pentium 4 servers attached to really cheap Apple Xserve RAID arrays. Not quite off-the-shelf IDE disks, but once you factor in the reliability and managability, the TCO comes out to be in a similar ballpark (We’ve done it both ways).
    • If you’re doing the math at home, $40K may seem a little high until you realize how our architecture works: We use RAID-5, with hot spares, and we have two entirely separate storage clusters. That means we have to buy 1.4TB of raw disk to store an actual 500GB.
  • To sustain our current, Nov 2006 growth rate, we’d need to buy more like ~$80K per month. Let’s assume over the 7 months, it ramped from $40K to $80K linearly (it was actually more of a curve, but this makes the math easier). $40K + $46K + $53K + $60K + $66K + $73K + $80K = $418K
  • Our datacenter space, power and cooling costs for those arrays is ~$1.36/month for every $100 of storage. (~$544month @ $40K, ramping to ~$1088/month @ $80K). $544 + $626 + $721 + $816 + $898 + $993 + $1088 = $5,686.
  • It’s cost us some manpower to move everything up to S3. So while I expect to save money on manpower in the long run, currently it’s probably break even – I don’t have to install, manage and maintain new hardware, but I’ve had to copy more than 100TB up to Amazon. (We’re not done copying old data up yet, either)
  • Total amount NOT spent over the last 7 months: $423,686
  • Total amount spent on S3: $84,255.25
  • Total savings: $339,430.75
  • That works out to $48,490 / month, which is $581,881 per year. Remember, though, our rate of growth is high, so over the remaining 5 months, the monthly savings will be even greater.
  • These are real, hard numbers after using S3 for 7 months, not our projections. They closely match (but are actually slightly better) than our projections.

So there you have it.

But wait! It gets even better! Because of the stupid way the tax law operates in this country, I would actually have to pay taxes on the $423K I spent buying drives (yes, exactly like the money I spent was actually profit. Dumb.). So I’d have to pay an additional ~$135K in taxes. Technically, I’d get that back over the next 5 years, so I didn’t want to include it as “savings” but as you can imagine, the cash flow implications are huge. In a very real sense, the actual cash I conserved so far is about $474,000.

But wait! It gets even better! Amazon has been so reliable over the last 7 months (considerably more reliable than our own internal storage, which I consider to be quite reliable), that just last week we made S3 an even more fundamental part of our storage architecture. I’ll save the details for a future post, but the bottom line is that we’re actually going to start selling up to 90% of our hard drives on eBay or something. So costs I had previously assumed were sunk are actually about to be recouped. We should get many hundreds of thousands of dollars back in cash.

I expect our savings from Amazon S3 to be well over $1M in 2007, maybe as high as $2M.

Perhaps most important, though, is the difficult-to-quantify time, effort, and mental thought we’re saving. We get to spend both that money and all of our extra time and effort on providing a better customer experience and delivering better customer service. Storage was a necessary evil that’s now been nearly removed as a concern.

Want more? I have some other posts on the subject:

And I’ll continue to post with more hard details, including our technical architecture and some of our code, as well. And yes, we’re starting to consume other Amazon services like EC2.

Categories: amazon, business, smugmug, web 2.0
  1. D.Sims
    November 10, 2006 at 10:39 am

    Thanks for the write up, and I would love to see more technical details of how you manage your S3 system. I have a few questions…

    I gathered from your previous posts that S3 was just going to be your backup storage, but it now sounds like you are going to put all your eggs in one S3 basket? Whats your backup/alternative when S3 breaks or doesnt meet your needs for whatever reason? Have you thought of the legal ramifications of using S3, like when Amazon stores your data in other countries?

  2. November 10, 2006 at 10:59 am

    Hi D,

    Over the last 7 months, we’ve experimented with Amazon S3 in a variety of roles. Initially, and for much of the time, they’ve been relegated to backup and disaster recovery only.

    That’s definitely changed. With a 7 month track record of being more reliable than our own storage, the tables have turned a bit. S3 is now our super-reliable piece of infrastructure, and our own storage is beginning to serve another purpose.

    I’ll explain all of this in detail in some future blog post when I get some time, but we’re not exactly putting all of our eggs in one basket, although we’re at a point that I think it’d be possible and feasible to do so.


  3. kota
    November 10, 2006 at 12:00 pm

    I think it could be risky to put your eggs in other company, which can be reliable, but how do you know they won’t quit the service? How much time they guarantee it will be running? I suppose you thought about this, but I didn’t see the answer.
    Thanks for these great posts. Very pleased to know about these things from you, Smugmug 🙂

    • Mike Crabe
      January 25, 2009 at 4:25 pm

      I think that Amazon S3 service is going to be a huge success dont you agree with me?

  4. November 10, 2006 at 1:16 pm

    There are no guarantees in this business. My hard drives fail in my datacenter, so I have to work around that. A larger company bought up all the power at one of our datacenters, so we had to move or die. The list goes on and on.

    Jeff Bezos is behind this 100%, I’ve spoken to him personally about it a few times, and I believe they’re not going to “quit the service”. But there are no guarantees. If they do decide this isn’t for them (I really, really doubt it because it makes perfect sense for them to do this, and I think they’ll make money), we’ll come up with something new. 🙂


  5. November 10, 2006 at 2:20 pm

    Thanks for that write up. Nice to see how smugmug is able to use the services of other companies to improve its overall business and bottom line.

    “I’ll save the details for a future post, but the bottom line is that we’re actually going to start selling up to 90% of our hard drives on eBay or something”

    Would you consider offering current smugmug users a “private” auction of some type (if it’s feasible)?

  6. November 10, 2006 at 2:28 pm

    So, if we buy the drives on eBay, do we get all the photos on that drive as well? 😉

  7. clickwir
    November 10, 2006 at 2:35 pm

    Selling off hard drives….. nice idea. I want some. 🙂

  8. November 10, 2006 at 2:49 pm

    I’ll definitely post on my blog when we’re ready to start selling the storage, for those who are interested. SmugMug customers will get first preference. 🙂

  9. John
    November 10, 2006 at 2:50 pm

    Don please let me know how my figures are faulty:
    Let assume it costs $1000 to store 500GB.

    The $1000 is a one time cost. If you go with S3 you will pay 500 x $.15 = $75 per month. In 2 years with S3 your cost will be 24months x $75=$1800.

    $1000 vs $1800 and counting

    So how does S3 save you money over the long run.
    Sure my numbers are off. It may cost $2000+ to store 500GB, going with S3 you will be paying a reoccurring fee instead of a 1 time when you purchase your own equipment. Sorry it just seems like Im missing something big here.
    Thank you

  10. dpk
    November 10, 2006 at 3:05 pm

    Part of Amazon’s S3 license agreement is concerning, section B4 where it says:

    “(ii) Your S3 Content is not obscene, libelous, defamatory or otherwise malicious or harmful to any person or entity;”

    That seems incredibly broad, as obscenity is “in the eye of the beholder”, and there’s a group out there to protest just about any type of content out there (porn, of course, but then there are the anti-video game nuts, and even some that believe photography steals souls (ok maybe they’re all gone by now)). Is that just Amazon’s way of saying: “We can shut off your business at any time, if we get a complaint”?

  11. J. S.
    November 10, 2006 at 3:57 pm

    You’ve been promising more details since your first post in August, lol. Which is how I found your blog to begin with. You’d be doing a lot of people favors by posting that and helping speed up the adoption of S3 I think too.

    We also use S3 for a significant amount file hosting for our customers and have found it to be more reliable than our own. Our savings aren’t as dramatic because the files are used more frequently and we eat up much of the savings in transfer costs. Our bandwidth is about 6.5x cheaper than what Amazon charges and we do a lot of it. Peoples personal photos aren’t view all that frequently so the amount of drive space you consume is large compared to the amount data transferred so you’re savings are more substantial.

    I’m looking forward to you technical article. We’re looking for ways to do things better and cheaper and we’re doing a pretty big scale so there isn’t much real world info on companies our size using S3. I was hoping the article would validate some of the ways we were looking to change our implementation to make S3 a little bigger piece of our solution. I’m sure we could be saving another $100k a year or more.

    We struggle with the same issues, such as whether to use it as a primary or just as a backup as we do now, or to some degree in between. What if Amazon quits? What if they fail for even a few hours, 5,6,10. Etc.

    Our data is a slightly more time sensitive and needs high availablity. On the other hand it costs a lot more money to store the info ourselves. Because our data is accessed more frequently the Apple RaidX servers aren’t an option. We use 15k scsi drives on generic high end computers. It runs about $20k per 1.6T of storage. So the storage savings we see are more significant than SmugMug, but the bandwidth savings for us are far less.

    I would agree though the savings overall between thought power, time, server purchases, reliabilty gains, and so on are pretty big. They would be in the low-mid 6 digits for us as well and already are in the low 6 digits.

  12. Chaser
    November 10, 2006 at 4:49 pm

    Way to go! Im sure your whole purpose of writing this little blog was to help others!!!! Nah, either you or someone gave you the idea to use this supposedly helpful post to whore your business via Digg.com.

    Congrats! It worked…I now have heard of smugmug.com and possibly a quarter of million others too. Marketing at it’s best…….cheap!


  13. November 10, 2006 at 4:50 pm

    90% disk savings? Sounds like you’re planning to stop storing originals at your data center and just fetch them from S3 when you need them. Latency is a lot less of a concern at that size.

  14. November 10, 2006 at 6:19 pm

    I have been looking into EC2 as well and the only drawback that I can see is the lack of persistent storage.

    Have you figured out a way around this limitation or does it even matter to you?

  15. November 10, 2006 at 7:00 pm


    Actually, you’re off base on the cost basis. It doesn’t cost us $1000 for 500GB – it’s closer to $3000 for just the disks and servers.

    At $75 per month, that’s 40 months. But that doesn’t take into account the datacenter space, the cooling and power costs, the human labor to install, monitor and repair the hardware, and replacment costs of drives and other hardware, which do fail.

    Perhaps most importantly, though, you’re forgetting that over time, Amazon’s costs will drop as the price of storage drops. That’s *not* true of disks I buy – those are sunk costs.

    Hope that helps!


  16. November 10, 2006 at 7:01 pm

    Now I am a bit concerned. I am a Smugmug customer and was not aware until now that my data was being stored at Amazon.

    Do you have my permission to do this ?

    How secure is my data ?

    What is Amazon’s promise regarding the protection of my data ?

    Are you still storing my data in three separate data centers as advertised ?

    Can I opt out of Amazon having my data ?



  17. November 10, 2006 at 7:04 pm


    I know you’re just trolling, but I’ll take the bait. 🙂

    SmugMug is a popular, profitable, growing business. Of course I like having a few thousand diggers read my blog – who wouldn’t? But it’s not exactly earth-shaking marketing for us.

    We’re in the cover story of BusinessWeek this week. Walt Mossberg of the Wall Street Journal recommended us two weeks ago. PC Magazine has given us the Editor’s Choice award year after year.

    As much as I love digg personally, it’s not exactly the same caliber. 🙂

    I wrote this post because, as a geek, I love the thought of not having to worry about these things as much – let Amazon do it. If people enjoy the post, great. If not, big deal.

    Welcome to blogging.

  18. November 10, 2006 at 7:06 pm


    S3 provides all the permanent storage you’re likely to need, unless you’re doing really really heavy IO stuff, like a heavy database.

    Our EC2 use-case doesn’t rely on anything except S3 for storage, so we’re set.

  19. November 10, 2006 at 7:09 pm


    We’re storing your data in multiple datacenters, yes. Most are Amazon, some are SmugMug.

    We don’t own any datacenters ourselves, so your data has always been stored “at” some other company, who could theoretically grab it. Of course, that would kill their business, and we have reasonable assurances that our various providers, including Amazon, won’t do that.

    Your data is private and secure at Amazon. No-one but SmugMug has access to it. It’s your data, managed by SmugMug, and Amazon happens to be the brand of disks we’re using, essentially.

    We’re happy to answer specific details or questions – just email our Support Heroes here at SmugMug.

  20. John
    November 10, 2006 at 10:32 pm


    How are you finding EC2?

  21. Jeremy
    November 10, 2006 at 11:18 pm

    I’m curious if there is a service similar to S3 for MySQL or any other database platform. Or does S3 allow MySQL queries?

    I have a MySQL database nearing 100 terabytes, and still growing. I’d love to sell of my hard disks and migrate to a service that can manage it.

  22. TAG
    November 11, 2006 at 1:51 am

    What about long-term costs ?

    Like 3-5 years running on own HDDs vs. Amazon ?

    With HDD’s you have to pay for electricity only – but with Amazon more.

    As well – what will happen if Amazon will decide to increase their prices(after reading your blog 😉 – how much it will cost you to migrate to another datacenter or get your own ?

  23. November 11, 2006 at 3:16 am

    Initially i was going to say well if you’re saving money by using S3 how does S3 manage to store all that data at a reasonable cost – but there is a lot there we don’t know – for example the savings they are making by the massive volume they represent…

    but then it occured to me that if S3 should fail at any stage I guess you could roll your savings back into a storage system which by then would be much more storage for “todays” money.

    I confess I love the idea of S3 and more so the Idea ofS3 combined with Elastic Cloud (way cool name btw =)) .

  24. November 11, 2006 at 7:57 am


    The long-term costs are better with Amazon because their prices fall in line with HDDs, whereas my initial purchase price of HDDs is fixed and sunk.

    With our projections, if Amazon’s costs don’t fall (they will, but as an exercise we projected both), Amazon starts to cost more about 9 years out. If they do fall reasonably well with the market cost of HDDs, Amazon never costs more. Not after decades.

  25. Ed
    November 11, 2006 at 10:45 am

    You talk about the costs of storage but I haven’t seen you address the bandwidth costs. I’d be curious to see your data on the $0.20 per GB of data transferred. This is a more subjective debate, since bandwidth usage is going to vary by company. (some companies will have usage fairly distributed if they have a global audience, while others serving mainly the US will have spikes and lows)

    I’m sure it’s nice to have the high burst availability of someone like Amazon, but I would think that since the costs are linear, it might kill you.



  26. November 11, 2006 at 12:03 pm


    Our bandwidth costs with Amazon are higher than our initial projections because we’ve relied on them more than we thought we would (they’ve been more reliable than our own internal storage).

    Their cost of bandwidth, if you buy bandwidth in large chunks like we do, is high. We don’t pay any of our providers nearly as much as we pay Amazon, but we buy bandwidth in GigE connections, so we get pretty good rates.

    The honest answer, though, is that our bandwidth charges to Amazon have been “lost in the noise”. We’re saving so much on overall storage, that I don’t terribly mind the extra bandwidth expense – it’s certainly not enormous.

    That being said, we run our business as efficiently as we can (we have no investment, no debt, and are profitable … keeps you on your toes), so we’re actually going to be buying / leasing GigE connections to Amazon’s datacenters and peering directly with them to reduce the $0.20/GB cost and to eliminate the costs associated with our bandwidth providers for transfers to/from Amazon.

  27. November 11, 2006 at 12:16 pm

    The $500K didn’t seem like such a big number until I realized this was an 80% reduction in costs … WOW!

  28. November 11, 2006 at 5:25 pm

    I have no expertise in the area, but using Xserver RAID sounds like a premium price when there must bigger, better players when you are talking the quantity and quality of storage that you are.

  29. November 12, 2006 at 1:54 pm


    You’d be surprised. Everyone from Oracle to eBay use Xserve RAID now, and use it heavily.

    Apple went from selling no enterprise storage to being the 11th largest seller on the planet in just a few years.

    Their cost per GB is extremely competitive, orders of magnitude better than any other major player. The only reasonable cheaper alternative I know of is to use commodity disks and servers – but that dramatically increases your labor costs, something I’m averse to.

  30. Malte
    November 13, 2006 at 7:36 am

    Hi onethumb.

    Although I appreciate the transparancy of the business hoodahaada, I’m alot more interested in what you’re going to spend these savings on. You briefly mention customer experience and support, could you elaborate on this?


  31. November 14, 2006 at 10:33 am

    S3 seems to be a good service from amazon. SQS seems to be another good service from their offering

  32. November 14, 2006 at 10:36 am


    We’re already rolled out new features and hired new employees that we wouldn’t have otherwise been able to do, so it’s not like we’re building up all this cash so we can hopefully figure it out. 🙂

    The chunk of Pro features we released a few months ago was a direct result, as was the recent hiring of a number of new Support Heroes to handle customer service.

    Hope that helps!

  33. November 14, 2006 at 10:38 am


    Yeah, SQS is very cool. Unfortunately, for a company our size, the cost per transaction seems to be a little too high, particularly when we already have internal queueing services we can just expose. But for a startup, it’s awesome!

  34. Ted
    December 1, 2006 at 3:44 pm

    What do you mean by this part:

    I would actually have to pay taxes on the $423K I spent buying drives (yes, exactly like the money I spent was actually profit. Dumb.). So I’d have to pay an additional ~$135K in taxes. Technically, I’d get that back over the next 5 years, so I didn’t want to include it as “savings” but as you can imagine, the cash flow implications are huge. In a very real sense, the actual cash I conserved so far is about $474,000.

    Why would you have to pay taxes on your purchases as if they were profits? You should be able to depreciate that expenditure, not pay tax and then get it back.

  35. December 1, 2006 at 3:48 pm

    The tax discussion you mention doesn’t make any sense to me. Computer hardware has a 5 year depreciation schedule, so in fact you could take deductions every year for those servers you purchase, reducing your tax liability. How exactly are you paying taxes on that money?

    You pay taxes on income. If you are saving money by not purchasing hardware the only thing happening is that you’re not able to reduce your taxable income through a depreciation deduction.

  36. December 4, 2006 at 10:56 am

    @Ted & Brad:

    I know, sounds crazy, doesn’t it? But go ask a tax professional and they’ll tell you. The issues is you can only depreciate a certain amount each year, and you’re taxed on the rest.

    Over 5 years, the net result is no taxation, but you pay a huge amount up front in year one and then get it back slowly over the next 4.

  37. Mette
    December 8, 2006 at 3:27 am

    I would be interested to know the storage to access ratio (i.e. how much network traffic do you generate for each TB of storage). Maybe it has already been mentioned somewhere, but I couldn’t find it… Can anyone help out?

  38. December 15, 2006 at 2:03 pm

    Yea, it is great, s3. We are about to roll out a product that integrates with skype that allows for p2p and offline binary streaming. S3 will be a big part of the off line storage. We are very pleased with this. I am amazed that I can build a backbone platform off two existing networks, s3, and skype, to allow users to push and pull dynamic binary content. Lets get one think straight: as information becomes more dis-similar and divergent, services like s3 will continue to grow.

  39. December 15, 2006 at 2:07 pm

    oh yeah, late congrats on the kids, we are expecting our fourth any day now…enjoy the blessings!

  40. January 12, 2007 at 7:46 pm

    Well, let me know if you want to offload some of those RAID arrays… 🙂 So, do you download back from S3 every image that your users look at (assuming you might cache some locally)?

  41. Dan
    January 16, 2007 at 8:00 am


    I’m putting together an ad supported service that will generate images for users and then host them on S3. I’m somewhat concerned that a single user could send a large image out as spam, or generate an ad image and use up huge amounts of bandwidth (that I’ll have to pay for). Do you use any throttling or bandwidth caps on the images you host through S3? I googled for S3 customers and this entry was at the top of the list :).


  42. kieran
    January 21, 2007 at 9:42 am


  43. Matt
    January 25, 2007 at 4:31 am

    Don – thanks for sharing this and it’s great to see you doing so well.

    Question (apologies if you have already answered it, I looked): does SmugMug use S3 for your ‘frontline’ image serving – ie for the thumbnails and photos I see on your webpages?

    We are experimenting with using S3 for serving images, (for a completely unrelated application to SmugMug), and finding it just a little too slow to deliver the snappiness we seek. Your pages, even when viewing from Europe, are very fast.


    – Matt

  44. Florida
    February 23, 2007 at 3:09 am

    good URL!!!!!!!!!!!!

  45. morganusvitus
    April 5, 2007 at 3:32 am

    The site looks great ! Thanks for all your help ( past, present and future !)

  46. April 28, 2007 at 5:06 pm

    I completely believe this is the way of the world – with “server-less” hosting (or, in your case, disk-less storage). In turn, I’ve blogged a bit about the next revolutionary trend which involves Amazon’s EC2 and S3 at http://fountnhead.blogspot.com/2007/04/prediction-server-less-it-services.html

  47. May 1, 2007 at 10:07 am

    Amazon just released a new pricing model — I’m curious to see how this affects SmugMug!

  48. July 8, 2007 at 11:33 pm

    What about the authentication problems with S3? Does smugmug have a special arrangement with Amazon? This has been addressed a couple of times, and all someone has to do is control your Email, reset your password, then wreak havok on all your S3 storage with the reset password. Can this really be?
    One problems with S3 is that each operation requires the secret keys that are assigned by Amazon, and your users need to include these at the client. So, are you going to send the secret keys to every client? Anyone with a debugger could lift the keys in about one minute. The other option is to have the users upload or download to your own server, but the trouble with that is you incur BW cost twice, and worse. That’s where EC2 comes in. You can use EC2 to interface with each client, then the keys all stay put on Amazon. Transfers between EC2 and S3 don’t cost.
    But, what about the Email authentication problem? Is the whole of smugmug really vulnerable to someone gaining control of a single Email account and attacking their S3 storage?

  49. February 4, 2008 at 12:46 am

    Smugmug is one of the companies I admire most. Your product offerings, customer service, innovation and focus on your core product quality is … well, super-excellent and awesome. I’ve hosted http://photos.rajiv.com/ on Smugmug for several years and continue to be very pleased with Smugmug.

    For my primary web site, http://www.rajiv.com, I’ve moved from a regular web host to Amazon EC2 and S3. Reading this blog post was one of the sources of inspiration.

    Thank you!
    — Rajiv Pant
    New York, NY

  50. Not Apples to Apples
    April 4, 2008 at 10:44 am

    Sorry, but this is a bit misleading. You weren’t doing things well to begin with, plopping in server after server with disk arrays attached locally. You can’t compare the cost of doing things the wrong way to the cost of S3 and call that an accurate comparison. I work with those “over-priced storage solutions” and I can implement a highly-scalable cost-effective solution cheaper than Amazon prices, including the equivalent monthly charge for bandwidth, power, etc.. You could probably do it even cheaper still looking at something like Isilon – which Kodak uses for their EasyShare service.

    Amazon S3 can make sense for small or mid-size companies, I don’t disagree with that. In many cases, the people resources don’t exist within the company to support running even a small data center. But your argument was based solely on hardware implementation costs, and your comparison is not a good one.

    At the end of the day, one rule still applies: You get what you pay for. Not only can I implement a solution cheaper than Amazon with those “over-priced storage vendors”, I can implement one that doesn’t go down 4 times in 2 years – http://blogs.smugmug.com/don/2007/01/30/amazon-s3-outages-slowdowns-and-problems/

  51. April 4, 2008 at 10:51 am

    @Not Apples to Apples:

    Prove it. I have a lot of money to invest in storage, and if you can really deliver a solid storage solution with $0.15/GB/month TCO, including a minimum of 3 geographically replicated copies (so $0.15/3GB/mo), and which will continue to drop in price without leaving me stuck with sunk costs, I’m all ears and the contract is yours. Better yet, prove that you could have done this 18 months ago (I expect an Amazon price drop “soonish” since disks continue to get cheaper).

    I’ve looked at nearly every provider there is, including Isilon, and they’re all much much more expensive once you factor in replicated geographically disperse copies, including bandwidth, power, and man hours.

    But I’d be thrilled to be proven wrong – and you’d win a multi-million dollar contract. Make sure your pitch is truly apples to apples, of course.

    So put up or shut up 🙂

  52. Me too
    April 8, 2008 at 9:30 pm

    I think we are all forgetting one very important fact. S3 is not a file system. S3 is storing binary blobs attached to a URL. This might work well for some applications, but not for all. So the comparison is not exactly apples to apples by nature.

    This gives Amazon the opportunity to spread around the disk across many CPU’s (“Google File System” style) most likely utilizing commodity hardware (read much cheaper as far as hardware goes). Now in order to do this economically it requires a lot of man power (maintenance), which is possible only on large scale.

    I personally do believe “@Not Apples to Apples”. You can get a price of storage alone < $0.15/GB on a fairly small scale. Not sure you fit in that category. Can you site the total amount of storage you have?

    Now I doubt this can be done using hardware from the big boys (EMC, etc). I would love to see numbers that say otherwise.

    As you stated your pre-existing setup was close to $6/GB, but that included RAID. Discounting for RAID 5 (losing 20%) this means about $4.80/GB. The price of Isilon is around $1.5/GB, the price of Coraid is about $0.71/GB (they claim $0.64) – http://www.coraid.com

    So this is 3 to 6 times lower.

    BTW: The Isilon solution is very scalable and nice, but the main advantage is you get a big NAS device within one file system, which I don’t think your application cares about.

    All the prices above however are purchase price for hardware. To compare apples to apples with S3 we have to provide RAID and double the number in order to provide a second copy. Then we have to lease the equipment and account for the cost of financing. This still does not account for the price of replication (at a minimum the cost for bandwidth). Let’s do the calculations for a typical 36-month lease:

    If the purchase cost of storage hardware per RAW GB is $1, the true cost will be $1 / 0.8 * 1.10^3 = $1.66375 for 3 years = $0.0462 per month
    This assumes RAID 5 (N+1) with 5 disks per array (the 0.8) and 10% per year interest on the financing

    So the magic constant for converting purchase cost to monthly cost under these conditions is 0.0462

    Now we need to multiply by 2 for redundancy. So for $0.71/GB purchase price we get about $0.0657/GB
    You are left with 8.5 cents per GB to pay for everything else, which should be doable. The everything else here includes rack space, power, warranty and repair cost and labor for support.

    None of this accounts for other infrastructure. 1 Gbps switches are quite expensive. Not to talk about 10 Gbps.

    The way I came up with $0.71/GB for the Coraid box was to spend $4000 for SR1521 Appliance + $4000 for 16 x Seagate Barracuda ES.2 ST3750330NS 750GB at $250 a piece. This leaves you with 1 spare HDD. Total is $8,000 for 11.25 TB.

    Notice the cost of hard drives equals the cost of CPU. Now consider if you used commodity hardware. You can assemble a similar configuration for about $2,000 and now the CPU to storage cost becomes 1:2

    This obviously is not the same as the Coraid box. It requires additional labor to assemble, test, create OS image, etc.

    You could even get BUFFALO 4TB TeraStation Pro II. Not very scalable, but purchase price is $0.50/GB. Granted the RAID loss here would be 25% (only 4 drives).

    Now coming back to the initial issue. You are not in the business of managing storage (and other infrastructure), so IMO you are better off with S3. The only thing that has to be considered carefully here is bandwidth cost. $0.20/GB is very expensive. If you start using S3 as the space where you provide data to end users they could sink you. End users in your case are individuals who typically have unlimited download, so they won’t care if they download the same file 15 times. It would be different than using it for backup.

    You probably already have good statistics on the amount of bandwidth consumed by end users, so take a careful look there.

  53. Tim
    June 4, 2008 at 1:46 pm

    Looks like Nirvanix has package prices on unlimited transcoding services.

  54. July 18, 2008 at 4:00 am

    you can definitively save money on ebay by using a free image host

  55. August 4, 2008 at 7:40 pm

    interesting aricle

  56. August 9, 2008 at 10:38 am

    Money can be saved but Is there any risk in it……….

  57. December 7, 2008 at 2:27 pm

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    January 8, 2009 at 12:16 pm

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  59. January 9, 2009 at 9:51 am

    If you are on Windows try CloudBerry Explorer for Amazon S3. It makes managing files in S3 EASY http://cloudberrylab.com/It supports most of the Amazon S3 and CloudFront features and It is a FREEWARE.

  60. January 22, 2009 at 7:50 pm


  61. Dabarrimi
    February 21, 2009 at 7:02 pm

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  62. February 27, 2009 at 6:00 am

    Sie haben eine schöne Seite!

  63. March 1, 2009 at 8:04 pm

    made professionally. So to holdB

  64. June 8, 2009 at 9:46 am

    S3 is working fine. But now there are many better one came up now

  65. June 18, 2009 at 2:14 pm

    Still trying to configure how to make business with amazon. Thanks for your writing.

  66. July 5, 2009 at 1:44 pm

    I'm looking some tips for earn money from internet, i'm browsing with google and i found this site. Very nice tips i can read some articles. thanks a lot

  67. July 13, 2009 at 1:29 pm

    nice info.thanks for the information…

  68. July 15, 2009 at 9:39 am

    also amazon has an affiliate site selling DVD movies etc.

  69. August 25, 2009 at 12:57 pm

    that's good ide, you are genius man

  70. September 9, 2009 at 1:57 am

    thanks for your info about s3 system, I want to know more for this system, thanks for share

  71. nike
    September 30, 2009 at 3:16 pm
  72. October 29, 2009 at 11:33 am

    I have been looking into EC2 as well and the only drawback that I can see is the lack of persistent storage.

  73. November 20, 2009 at 3:24 am

    You're the amazon expert.
    I want to learn a lot about it from you.

  74. November 26, 2009 at 9:55 am

    There are many hosting companies. Search for the best hosting company on the internet. You will come across a lot of hosting companies. Choose the company which provides the best service on your budget. They offer their service in different packages. Choose a package to suit your needs and sign up for an account.

  75. December 15, 2009 at 4:38 pm

    thanks your article is very importen for me

  76. December 15, 2009 at 4:44 pm

    wow thanks man for nice information

  77. December 18, 2009 at 5:04 pm

    s3 still work until now

  78. December 18, 2009 at 5:27 pm

    We're in the cover story of BusinessWeek this week. Walt Mossberg of the Wall Street Journal recommended us two weeks ago. PC Magazine has given us the Editor's Choice award year after year.

  79. December 20, 2009 at 10:36 am

    Wow…great info
    I never knew about this before until now.
    How the hell in the world did you manage to get your hands on such stuff?

  80. December 31, 2009 at 3:35 am

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