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As Brough Turner pointed out6 soon after the initial report broke, no bandwidth cost analysis for Google is credible without including peering7.While using a peering approach has its own costs, such as connecting to a peering hub, managing complex and often contentious peer relationships, dealing with SLA-less best efforts service, and even occasional payment to powerful peers, the bulk of these costs are fixed – that is, you hire the same team and run the same fiber whether you are pushing 1 Gbps or 100 Gbps.

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We also estimate the hosting costs are lower than projected by benchmarking an estimate of 500W of peak power use per server hosted in out of the way locations.

Regardless of how the infrastructure cost numbers are sliced, if Credit Suisse’s revenue estimates are correct,12 You Tube will take a loss in 2009 – and a significant one by most standards. There are many answers, ranging from the strategic to the inscrutable.

Getting supplier quotes into an apples-to-apples format and balancing supplier strengths and weaknesses into an evaluation of optimal fit. Learn what you need to think about when building shared IT services. Even as analysts were touting capacity shortages, virtualization and cloud allowed scale to move outside of the traditional co-lo, leaving unused capacity and price drops not seen since the aftershocks of the dot com era. And what can providers, buyers, and partners do to get the best out of this time of crisis?

It takes a high organizational maturity level to even contemplate true shared services — which balances the economies of scales of centralized IT with the responsiveness and customization of decentralized purchasing.

At current rates, its servers likely cost no more than $500 apiece,11 and can add a sub-$100 1TB hard drive to produce a net cost of $.60 / GB.

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