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But the cost base for a P2 peer will be much higher than S3's cost base, because of Amazon's massive economies of scale, and its extraordinarily low cost of capital. So the business of running a P2 peer will have margins much lower than Amazon's notoriously low margins.
I think that this overlooks a big strength of P2 in that it permits players to enter the storage marketplace that could previously never enter.
Right now, if you have 100 TB of extra space in anticipation of storage you're not yet using, there's not much you can do with it except sell the physical disks and buy new ones later when you need them. It's probably not worth the effort and won't save money.
If a storage marketplace exists, now you can earn money from that 100 TB that would otherwise sit unused.
I think of it as similar to Airbnb and hospitality. If you had a spare room in your home 10 years ago, it would be very difficult for you to rent it out for short-term stays. With Airbnb, now it is pretty easy to do so and profitable for both Airbnb and the hosts themselves.
If you were to analyze it from a perspective of margins, assuming that hosts had the same up-front costs as hotels, then hotels would seem to clearly dominate Airbnb rooms. The cost to add an extra guest room to an existing house is very high. It is much less than Hilton spends per room when it constructs a hotel. But the host already has the room so the comparison of margins isn't capturing the whole picture.
Suppose P2 storage became profitable and started to take business from S3. Amazon's slow AI has an obvious response, it can run P2 peers for itself on the same infrastructure as it runs S3. With its vast economies of scale and extremely low cost of capital, P2-on-S3 would easily capture the bulk of the P2 market. It isn't just that, if successful, the P2 network would become centralized, it is that it would become centralized at Amazon!
I'm skeptical of the idea that S3 could simply turn around and dominate P2.
For one thing, they'd no longer have most of the advantages they currently have as S3. They too would need clients to encrypt everything and deal with the more complicated software.
Importantly, they'd lose the advantage of bundling with AWS. One of S3's big advantages is that you don't pay for bandwidth within AWS, but that couldn't hold if they tried to dominate P2 (or maybe they could if they really tried to get tricky with P2 host detection, but they probably wouldn't).
The dominant providers would also be forced to compete more directly with each other. If S3 tried to be the dominant P2 provider, it loses its lock-in. Storage just becomes a commodity. One reason for developers to stay with S3 now is because there data is already there and the software is already written against S3 APIs, but if it's written against generic P2 APIs, the consumer would just move their data whenever another provider offers better pricing.
Jun 20, 2018, 11:03:47 PM
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