Cell Phones, Cable TV, and Cloud TCO

Whenever I get a minute to watch some TV, I see ads for amazing new phones or video service providers asking me to ditch my cable company.  These deals sound great, and I love all the innovation and watching the marketplace work, but when I think about the total cost of chasing down that great introductory offer, I rarely take it beyond the “thinking about it” stage.

This is a classic Total Cost of Ownership (TCO) analysis for me.  The phone or TV service provider offers a low acquisition cost, but the cost-benefit math doesn’t pencil out when all my adjacent costs are considered, such as any early termination penalty, time and hassle, new equipment, waiting for the installer, not to mention what happens to the rate with the introductory offer runs out.

TCO is critical when choosing a cloud instance for your applications.  Recently, several cloud providers introduced instances based on non-Intel platforms at prices that, at first look, seem like a great way to save some money.  But let’s look at several considerations that should be part of your “full TCO” decision.

Instance Performance-per-Dollar

The hardware underpinning of your cloud instance makes a huge difference in the performance of your applications and services.  The reduced acquisition cost with a cheaper instance is tempting, but it isn’t a good investment if performance declines by a greater percentage than you save.  If you pay 10% less for the instance, but lose 30% performance, is that really a good investment when your customers and employees depend on your digital services?  Intel® Xeon®-based platforms are the most widely deployed hardware in the cloud due to their higher-performance cores, broad software optimizations and compatibility, and 20 year history of delivering leadership processors into the market.  We encourage our customers to run proof-of-concepts or benchmark tests to see for themselves which instance delivers the best performance for their dollars invested. A recent press article compared Intel’s AWS instances to AMD’s and determined that our instances “offer both higher value and absolute performances across almost all cloud use cases.”

Virtual Machine Portability

A cloud instance is usually a virtual machine (VM) that is, at least in theory, completely abstracted from dependencies on the underlying hardware, and thus portable across platforms.  In practice, VMs are dependent on the hardware for performance-accelerating features and instructions.  A VM running on Platform A cannot generally be transferred to Platform B without a time-consuming conversion process, and certainly can’t be live-migrated across platforms without service interruption.  Your cloud TCO model should account for the cost of converting existing VMs on Intel platform to run on non-Intel instances, plus the cost or limitations if you want to move that workload back to Intel in your private cloud or another public provider.

Instance Availability

Several of the new non-Intel instances are only available in certain countries or regional data centers.  In the cloud, you can (again, theoretically), deliver global services from anywhere, but in reality, transit latency and data locality regulations make local presence in many geographies a must.  To minimize TCO at worldwide scale, the best strategy is to replicate identical VMs in identical instances wherever a local presence is required to meet service level agreements or comply with applicable laws.  The cost of creating and maintaining both Intel and non-Intel VM versions of the same service in non-uniform instances may offset any cost savings associated with instance price.

Software Optimizations and Compatibility

Intel engages the world’s cloud providers and software leaders to enable virtualization environments that expose the Intel hardware’s features directly to applications with minimal abstraction by the hypervisor.  Consequently, application vendors tune their software for features like Intel® AVX-512, Intel® Turbo Boost, and Intel® SGX, even though they know they will operate inside a VM.  Workloads running in Intel-based instances can take advantage of these features to increase performance and security, but those software-optimization gains may be lost if the VM is transferred to a non-Intel instance.  The impact of foregoing software optimization gains should be included in any TCO analysis, as it may affect the performance-per-dollar ratio, and reduce service levels.

Deal, or Not So Much of a Deal?

As with cell phones and cable TV, that initial low-cost offer can sound great, but the full picture for most cloud users is more complex and nuanced than the marketing pitch.  Competition is good because it keeps the vendors sharp and gives customers choices.  As you consider your instance choices from your cloud providers, please consider all the factors that roll up into the full TCO to help you find the right platform and cloud type for your needs. Learn more about Intel’s support for CSPs at intel.com/csp.