San Francisco, California, July 2003
Distributed Computing Economics
Computing economics are changing. Today there is rough price parity between: ( 1) one
database access; ( 2) 10 bytes of network traffic; ( 3) 100,000 instructions; ( 4) 10 bytes of
disk storage; and ( 5) a megabyte of disk bandwidth. This has implications for how one
structures Internet-scale distributed computing: one puts computing as close to the data
as possible in order to avoid expensive network traffic.
THE COST OF COMPUTING
Computing is free.Th e world’s most powerful computer is free (SETI@Home is a 54-tera-
flop machine).1 Google freely provides a trillion searches per year to the world’s largest
online database (two petabytes). Hotmail freely carries a trillion e-mail messages per
year. Amazon.com offers a free book-search tool. Many sites offer free news and other
free content. Movies, sports events, concerts, and entertainment are freely available via
Actually, it’s not free, but most computing is now so inexpensive that advertising
can pay for it. The content is not really free; it is paid for by advertising. Advertisers
routinely pay more than a dollar per thousand impressions. If Google or Hotmail can
collect a dollar per thousand, the resulting $1 billion per year will more than pay for
their development and operating expenses. If they can deliver a search or a mail message
for a few microdollars, the advertising pays them a few millidollars for the incidental
“eyeballs.” So, these services are not free—advertising pays for them.
Computing costs hundreds of billions of dollars per year. IBM, HP, Dell, Unisys, NEC,
and Sun each sell billions of dollars of computers each year. Software companies such as
Microsoft, IBM, Oracle, and Computer Associates sell billions of dollars of software per
year. So, computing is obviously not free.
TCO (total cost of ownership) is more than $1 trillion per year; operations costs far
exceed capital costs. Hardware and software are minor parts of the total cost of ownership. Hardware comprises less than half the total cost; some claim less than 10 percent
of the cost of a computing service. So, the real cost of computing is measured in trillions
of dollars per year.
Megaservices such as Yahoo!, Google, and Hotmail have relatively low operations
staff costs. These megaservices have discovered ways to deliver content for less than the
millidollar that advertising will fund. For example, in 2002 Google had an operations
staff of 25 who managed its two-petabyte (215 bytes) database and 10,000 servers spread
across several sites. Hotmail and Yahoo! cite similar numbers—small staffs manage ~300
TB of storage and more than 10,000 servers.