Dropbox’s move off AWS was a windfall for the company, but most traditional corporations shouldn’t bank on similar success.
The file hosting company saved nearly $75 million in infrastructure costs over the past two years following a cloud data migration off a “third-party data center service provider,” according to an S-1 form filed with the U.S. Securities and Exchange Commission. That third party isn’t named, but it’s likely AWS, given Dropbox’s past statements.
Those savings may reinvigorate debate in some circles about whether to house infrastructure on-premises or on the cloud, but Dropbox is likely more of an outlier than a harbinger of what others can expect.
Plenty of case studies highlight the cost benefits to move to the public cloud, but Dropbox’s feat is rare. First, the company was an early AWS success story that made waves in 2016 when it disclosed it had moved 90% of its users’ data to its own custom-built infrastructure. Second, Dropbox’s IPO filing precipitated a financial report with unique insights into those cost differentials, and many customers may balk at such deep disclosures.
Dropbox was never 100% on AWS, nor has it completely abandoned AWS. It originally split its architecture to host metadata in private data centers and to host file content on Simple Storage Service (S3), but Dropbox built systems to better fit its needs, and so far that has translated to big savings following its cloud data migration. That transition didn’t come cheap, however. The company spent more than $53 million for custom architectures in three colocation facilities to accommodate exabytes of storage, according to the S-1 filing.
Dropbox said it stores the remaining 10% of user data on AWS, in part to localize data in the U.S. and Europe, and it uses Amazon’s public cloud to “help deliver our services.” (Dropbox declined to comment for this report.)
Dropbox can serve as an example for SaaS or online services providers that don’t want to outsource a key pillar of a business value proposition to AWS, said Melanie Posey, an analyst with 451 Research. But that model may be feasible only for digital service providers with established businesses and patterns of demand, she said.
After years of debate about on-premises versus the cloud, IT leaders have become less dogmatic, and more pragmatic. Corporations increasingly trust public cloud providers to host their workloads, but most established corporations won’t relinquish the entirety of their private infrastructures any time soon. That’s why the major cloud providers, which make money hand over fist as customer data flood their hyperscale data centers, have either partnered with a private data center stalwart or built their own scaled down versions of their cloud to sit inside customers’ own facilities.
Still, the debate persists in part because of the lack of clarity on bottom line costs, and straight per-server comparisons. The shift from CapEx to OpEx has caused consternation among companies that expected big savings on the cloud, particularly those that failed to account for per-second billing and other ancillary costs. Moreover, the public cloud removes parts or all of the manual work of in-house infrastructure maintenance.
Public cloud advocates argue the true benefit is not in cost, but rather in agility and access to higher-level services. It’s also unclear how true is the axiom that the public cloud becomes cost-prohibitive once workloads reach a certain scale. The best example to rebut that argument is Netflix, which operates more than 150,000 instances on AWS to serve more than 100 million customers. AWS is also known to give preferential pricing to some of its largest customers and has greatly expanded its professional services.
Perhaps the biggest takeaway from Dropbox’s migration windfall is what industry observers have said for years: focus your IT dollars on what makes your business different. Dropbox’s strategy to build one of the largest data stores in the world depended on owning custom architecture, and that bet appears to have paid off big time. But if infrastructure is just a means to an end, maybe don’t drop $50 million on physical assets that are of little consequence to your business outcomes.