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Why Google can host your apps for free

Posted by Rhys Lewis on 13 November 2009 | 2 Comments

One of the most common questions I've heard about [url=http://code.google.com/appengine/]Google's app engine[/url] is, "why would they host your application for free?" Well think about what else they give away for free to anyone who comes to your website: 1. You open your browser to Google's homepage - if it's the iGoogle page, then it probably hosts as much content, requiring as much CPU and bandwidth as a typical website, every time you open a new window or hit the home button. 2. You enter a search term into Google, and get a response back. Once again, the resources required by this action are the same as a typical page impression on a website. 3. You click on a link to the actual website. When this site appears, it includes some advertisements served up by Google, which may require as many resources to select and deliver as the page itself. And you've triggered the click-through script, which also takes resources. Given that the average visit to a website is only one-to-five clicks, Google will have provided as many resources as the provider of the web content. What is the marginal cost to Google of providing the whole experience? Increased Costs: [ulist][*]CPU time required to serve the page[/ulist] [ulist][*]Storage space to keep a copy of your code and content[/ulist] [ulist][*]Bandwidth to deliver content[/ulist] Decreased Search Costs: [ulist][*]Search engine crawling is more efficient because it is carried out across internal networks[/ulist] [ulist][*]There is no need to retry if the site is down or the network is interrupted[/ulist] [ulist][*]Crawling can be timed to coincide with low demand periods, or triggered by new content being added[/ulist] Increased Value: [ulist][*]Google knows exactly who is looking at your website and how they behave, so they can provide a much better search experience for people who may potentially click on your site.[/ulist] [ulist][*]Google extends its full brand experience to another capability, so Google app engine customers are more likely to use the other profitable services such as the Google search engine and Gmail.[/ulist] So all up, the cost for Google to host your apps is not particularly great and they gain a lot from it. The cases where it would cost them a non-trivial amount are large sites with a lot of traffic, and once a threshold is passed Google begins charging for that kind of usage.

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The reason why hosting companies have not instantly lost market share to Google is that Google's technology (a subset of Java) is only usable by someone who is familiar with deploying that type of application.

Hosting companies that offer shared solutions are also working on very thin margins. It's not hard to find someone who will host a PHP based web application for $5/month with a generous allowance for storage and bandwidth.

The difference is that Google's app engine has the potential to scale far beyond the ability of a $5/month service with out needing to change the application itself.

Posted by Rhys Lewis, 23/12/2009 2:10pm (2 years ago)

so if all this is correct, how do hosting companies make a living?

Posted by Verdon, 25/11/2009 5:05pm (2 years ago)

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