It certainly seems unlikely. Maybe it's the current operational cost, not subtracted the new operational cost. Maybe it's due to already adopting cloud and thus having paying double. Maybe it's due to the use of mainframes, rather than conventional servers.
Either way, it's definitely not the cost difference between on-premise and cloud. Cloud providers are not charities, and their buildings and staff are not cheaper than yours.
FedEx essentially does make their own trucks - they buy from white box suppliers who have very narrow margins. Ships are similar. Planes probably have slightly higher margins, but they still will buy used.
Getting computers from the cloud companies is very different: most cloud products (aside from server rentals) are not in competitive markets.
False equivalence. FedEx isn't building the servers here, either. But they do have their own maintenance for their fleet. Thus the better analogy would be if FedEx outsourced fleet management & maintenance to Hertz or similar.
With trucks etc. there are still independent companies that can fix those and transitioning to a new provider is straightforward. With IT in cloud there is a strong vendor lock-in.
> Either way, it's definitely not the cost difference between on-premise and cloud. Cloud providers are not charities, and their buildings and staff are not cheaper than yours.
Exactly, which is why it’s quite a bit cheaper to not have a building and staff right? The premium you pay for the cloud provider having them must be less than having them yourself, or nobody would ever move to a cloud provider.
No, if the premium was less than the cost of operating a datacenter, no cloud provider would be able to stay in business, much less interested in entering the market.
In order for the cloud business to make sense, turn a profit and sponsor the kind of development into new products done by these companies, we can assume that the cloud services sold by these providers must have a very healthy margin compared to the cost of operating a datacenter full of resources.
The primary thing a cloud business can do to drive cost back down past what you could do with your own datacenter is to have better utilization of their resources by dealing with an average across a much wider range of workloads, or by selling spot instances that get killed if capacity is needed, but based on how things are priced it appears that this mainly just pads their margins.
For the customer, it only really ends up cheaper than on-premise is if: A) you need very few resources and do not already have anywhere to put a server or lack a good uplink; B) your use-case is extremely well-optimized for cloud (e.g. extremely bursty serverless where you average load is a tiny fraction of a single machine); or C) you are Netflix and can make a deal with AWS.
Either way, it's definitely not the cost difference between on-premise and cloud. Cloud providers are not charities, and their buildings and staff are not cheaper than yours.