Tuesday, August 9, 2016

Amazon Web Services Chooses to Build Rather than Buy

Amazon has become a part owner of a new trans-Pacific submarine cable network intended to connect data centers in the United States, New Zealand and Australia.

When the Hawaiki Submarine Cable comes online in 2018, it will provide considerably more bandwidth between the US, Australia, and New Zealand than available today, and is expected to lower Amazon Web Services transmission costs.

Otherwise, on those routes, AWS would be buying capacity from Telstra Endeavour and Southern Cross Cable Network.

Enterprises often have “build versus buy” choices where it comes to communications infrastructure.

Very-small firms might always find that buying communications services makes more sense than building and owning infrastructure. Think of phone systems. Still, at some point, owning a phone system is cost neutral.

For large enterprises, owning phone systems traditionally has been cheaper than leasing services from telecom providers.

Since the 1980s, U.S. enterprises seemingly have vacillated between building their own private networks and leasing capacity from telecom service providers. Of course, cloud services providers have unusually important connectivity requirements, making a “build” strategy more valuable. That is why Google, AWS and Microsoft operate their own data centers, for example.

In the era of cloud services, at least some enterprises are finding that owning and operating their own infrastructure is, in substantial part, a reasonable approach.

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