I took a lot of crap when I decided to vertically integrate our business four years ago and I invested around $40,000 with Dell to buy our own server cluster. Right then THE CLOUD was the hot new thing, and still is and I was not getting on board. I leased a rack at a respectable Seattle based hosting facility and my wife added the ability to unbox and rack Dell 2950 servers to her long list of talents. The hosting facility team would have done it for us, but we like to get our hands dirty.

That was the most work we did to set up our own server cluster. Four years later we have a 99.9% uptime record and we run a profitable company with an ad network, real-time analytics product and a free virally distributed service off our cluster of 20 machines. When we mail our customers we send over half a million emails in less than 24 hours off our own email server. We serve between 400 and 800 application requests per second all day long.

During the last four years I’ve watched friends and acquaintances get burned by the cloud either due to down time or cost. We pay $3400 per month to host our 20 dedicated machines in a single rack. We have a gigabit connection to the Net and our average bandwidth throughput is around 125 megabits per second constantly.

I’m tired of the Wired Magazine crowd giving me crap for not “being in the cloud” or “getting with the cloud” or whatever. So I’m throwing this down: During the last 4 years I’ve had 99.9% uptime and I’ve spent a total of $190,000 during those 4 years on hosting, which includes the capital investment in the servers. We’ve had a constant throughput of 80 to 120 megabits per second (increasing over time) and roughly 40% avg CPU usage on 20 dual CPU machines (with dedicated Intel E5410 CPU’s each with 4 cores).  As I mentioned we do 400 to 800 app requests per second and we also have an average of 25,000 concurrent connections on our front-end server. I’ll bet anyone who reads this a beer that you won’t find a cloud provider who can do this for you for less than 3X what I’ve paid. [That works out to $3,958 per month.]

If you think having your own dedicated servers in a colocation facility ties you geographically to one place, it doesn’t. I work wherever I want. For 3 out of the last 4 years I was in Seattle. The last year I’ve been in Colorado. I spent 3 weeks in France this month and while I was there I diagnosed a failing drive in one of our servers, ordered the replacement from Dell which will arrive today and be racked by the support team at our hosting facility. We’ve done hardware replacements or upgrades like this many times, including ordering new servers, upgrading memory, upgrading Ubuntu versions and it’s no big deal. A local support person with an anti-static strap and a basic knowledge of linux shell commands can resolve 99% of issues that come up.

I encourage everyone reading this to challenge the marketing hype around THE CLOUD. Go to Dell’s site, get a feel for price/performance, call your local colo provider and get prices on a full rack with a gigabit connection. You will almost certainly be surprised at the bang you’ll get for your buck and how easy it is to manage your own physical machines.

Understand that THE CLOUD exists as a buzzword to help software companies sell more software as a service. It’s sad when software startups who should be using the buzzword to sell more service get taken in by the marketing and outsource their core infrastructure.