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Computer rental is a ‘bad deal’ • The Register

Listening to the vendors, the analysts, hell, even the government – the direction of the journey is obvious. All of your server-side computing resources are offloaded to the cloud, whether you like it or not.

David Heinemeier Hansson, CTO of project management platform Basecamp, bucks this inevitable trend.

“Renting computers is bad business for medium-sized companies like ours with stable growth (most of the time). The savings promised with reduced complexity never materialized.

For Basecamp, the cloud made sense for simple, low-traffic applications where complexity was removed by starting with fully managed services. The model also offered advantages for wild turns or towering peaks. “When that happens, there’s nothing like the cloud, as we learned at launch [email service] HEY, and suddenly 300,000 users signed up to try our service in three weeks instead of our forecast of 30,000 in six months,” he said.

However, once users established stable and predictable demand patterns for their applications, the benefits of the cloud disappeared, he said. By continuing to operate in the cloud, Basecamp sometimes paid an “almost absurd premium” for processing power it would in all likelihood never need.

“It’s like paying a quarter of the value of your house for earthquake insurance if you don’t live near a fault line,” Hansson said, adding, “Yeah, sure, if somehow a quake two states down the earth like that opens wide that it breaks your foundation, you may be glad to have it but it doesn’t feel proportionate does it?”

He further criticized how cloud companies were making “obscene margins” on the computers they rented. Given Gartner’s recent analysis that cloud providers won’t slash prices to help recession-hit businesses, that’s unlikely to change any time soon.

To get a sense of how Basecamp’s boat is holding up against the tide, Canalys’ figures released in August showed that in the three months ended June $62.3 billion was spent on Infrastructure-as-a-Service ( IaaS) were spent, up 33 percent year-over-year. Year.

Meanwhile, market leaders AWS, Microsoft and Google reinforced their dominance, growing 42 percent per year above the market as a whole. Together they accounted for 63 percent of the market revenue.

Long-lived observers will recall that Basecamp is no stranger to backing down on things, including taking a sensible approach to human resource management and public relations.

In May 2021, CEO Jason Fried issued a public apology after a major bust over new policies that prevented employees from discussing “social politics” at work.

“David [Heinemeier Hansson] and I fully own the consequences, and we’re sorry. We have a lot to learn and think about, and we will,” he said at the time. ® Computer rental is a ‘bad deal’ • The Register


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