How to select a cloud server

by Daniel Rubio

You know your company or project needs one, but you're now facing a barrage of cloud server options, buzzwords, doublespeak and sales tactics like you've never seen. Are you selecting the right cloud server product and provider ? Will your cloud provider be able to accommodate your future cloud server needs ? Will your provider burn a hole in your pocket, and if so, what are your alternatives ?

Up next, you'll get a fact based analysis of all the different cloud server providers in the market, so you're able to make a better decision based on your project needs. Given the term cloud server has grown dramatically in scope in recent years, a cloud server for the purpose of the following discussion is: an Internet accessible environment with full access to an operating system (e.g. Linux, Windows) with its own reserved processor(s) (CPUs), memory (RAM) and storage space.

The three major options

The first selection you must make when choosing a cloud server is the type of provider you require. In today's cloud market, there are three major options:

At this juncture of the cloud server selection process, it can be extremely premature and short-sighted to focus on price and provider brand. In addition, you should also avoid any preconceptions you may have about providers being for certain types of companies or projects. For example, Netflix is a major 'turn key' Amazon AWS customer[1], but it also manages its own hardware[2]. Similarly, if you're a start-up or medium sized business, the right provider will depend on the problem you're trying to solve, including time-lines and skills your team may already have.

'Turn key' cloud service providers: Amazon AWS, Google Cloud Platform, Microsoft Azure.

'Turn key' cloud service providers offer easy access to software that can take hours to set up or require very specialized knowledge. The type of 'turn key' software can be something as simple as an email service, a medium level complexity service like a database or a very specialized service like a machine learning framework[3].

This easy access to software services is one of the main selling points for this type of cloud server provider, however, with easy access also comes premium pricing. Practically everything offered by 'turn key' cloud service providers costs extra vs. the other two main cloud server provider options that offer 'no frills' and 'do it all yourself' cloud servers.

Is it worth paying a premium for 'turn key' cloud service providers ? This depends on your requirements, including how technologically advanced a project is, the growth curve estimate for a project, as well as the long term technical expertise required by a project. For example, if a project requires mixing dozens of technological diverse features (e.g. data analysis, image processing, document sharing), setting up the software to support these features requires time and resources, which only you can determine if its better to pay a premium over the lifetime of a project or to do it yourself at the outset.

The growth curve estimate for a project can also play a determining role either in favor or against opting for a cloud 'turn key' provider. Depending on your investment philosophy, having on-demand access to software services can be positive for a project that has the potential for exponential growth, as this lets you pay as you go with minimum up front investment. But at the same time, this can also represent an opportunity cost, after all, if you know a project will have exponential growth, why not make an up front investment to save on future costs. Here again, it will depend on the type of project you're trying to run on the cloud, both small and large companies alike can lean either toward the side of convenience with low up front investment vs. long term cost savings with high up front investment.

Another factor to take into account when considering a 'turn key' service provider for a cloud server is the long term expertise required for a project. Many projects that run on cloud servers are quite boring technologically speaking after the initial months, which means long term expertise requirements decline. In addition, most if not all projects once they mature rarely require the newest or greatest technological services, or as the old saying goes "if it isn't broke, don't fix it". All of which leads to questions with no simple answers, "Is a 'turn key' cloud database service cost effective at $X a month ? When you can hire a freelancer to install a database at a sunk-cost of $X that will require little to no future maintenance ?'

Now that you've asked yourself some of these important cloud server requirement questions, let's put some numbers on a 'turn key' cloud service offering. To make this analysis as objective as possible and ensure the comparison is fair -- apples to apples and not apples to oranges -- I won't go into any specific 'turn key' software service (e.g. analytics, database, machine learning), but instead concentrate on the raw processor(s) (CPUs), memory (RAM) and storage space offered by 'turn key' cloud service providers, so you have a solid benchmark to compare all cloud server providers.

Although as I mentioned earlier, everything offered by 'turn key' cloud service providers like AWS, Google Cloud and Azure costs a little extra, the silver lining is that everything is also metered, from every byte transferred over a network to the fractions of a penny it costs to do so. This means you'll only pay for what you use, but it also means the final bill can become quite complex, particularly if you try to compare it with other cloud service providers.

Let's start by looking at Amazon's AWS servers. There are over 40 different types of AWS cloud servers to choose from with different processors (CPUs) & memory (RAM), you can pay as go or for up to three-years of service to get a discount, not to mention you can lease cloud servers in many geographical regions (e.g. U.S, Europe, Asia). All of these cloud server variations influence the price you pay, so choosing an Amazon AWS server in an of itself can be daunting. That said and to establish a pricing benchmark, let's delimit the cloud server requirements to a common enough scenario: a cloud server in a U.S data center with 8 GB of memory (RAM) with an industry-grade processor (e.g. Intel), 100 GB of storage and the ability to pay as you go (e.g. at the start of each month).

If you go to the Amazon AWS on-demand pricing page you'll find the t2.large cloud server which has 8 GB of RAM, 2 vCPUs[4] and runs a Linux operating system, at a price of $0.094 per hour in a U.S (Ohio) data center. Now let's do some quick math, at an average of 30 days per month and with each day having 24 hours, this means a cloud server will run for 720 hours a month coming to a total cost of 720*$0.094= $67.78 a month.

If you look closely at this last AWS on-demand pricing page, you'll notice there isn't any other information regarding the amount of storage. This is because in AWS, storage is managed separately as a service called EBS. If you go to the Amazon AWS EBS pricing page you'll find the 'EBS General Purpose SSD' storage has a cost of $0.10 per GB-month. So to gain 100 GB of storage, this means the cloud server requires an additional expense of $0.10*100= $10 a month, bringing the total cost to $77.78 a month.

Next, if you look at the fine print, you'll realize the total cost up to this point doesn't include bandwidth, a concept that's also charged separately. Because bandwidth is a necessity to transfer data in and out of a cloud server, this also needs to be added to the total price. If you go to the same Amazon AWS on-demand pricing page, toward the bottom you'll see a table with 'Data Transfer out From Amazon EC2 To Internet' with the first two tiers indicating 'First 1 GB / month $0.00 per GB' and 'Up to 10 TB / month $0.09 per GB'. Let's assume our cloud server requires the somewhat conservative amount of 1 TB of bandwidth per month, this means that with 1 TB being equivalent to 1024 GB, the bandwidth cost requires an additional expense of $0.09*1024= $92.16, bringing the grand total of the cloud server to $169.94 per month.

Now let's break down the most important take aways from this cost exercise of using a 'turn key' Amazon AWS server which came to $169.94 a month:

The following table contains the cost break down for the same cloud server using the three major 'turn key' cloud service providers: Amazon AWS, Google Cloud Platform and Microsoft Azure.

Costs of a cloud server in a U.S data center with 8 GB (RAM), 2 vCPUs, running Linux, 100 GB of storage and 1 TB of outgoing bandwidth.

ConceptAmazon AWSGoogle CloudMicrosoft Azure
Linux 8 GB server (All with 2 core vCPUs)EC2 t2.large @$0.094 per hour* for 720 hours a month=
$67.78 a month
VM n1-standard-2 @$0.0950 per hour * for 720 hours a month=
$68.40 a month (NOTE: Server has 7.5 GB RAM)
VM b2ms @$0.047 per hour * for 720 hours a month=
$33.84 a month
100 GB storageEBS SSD @$0.10 per GB-month* for 100 GB =
$10 a month
Data storage @$0.02 per GB-month* for 100 GB =
$2 a month
Managed disk @$19.71 per month for 128 GB* =
$19.71 a month
1 TB Outgoing bandwidthOutgoing bandwidth @$0.09 per GB* for 1024 GB =
$92.16 a month
Outgoing bandwidth @$0.12 per GB* for 1024 GB =
$122.88 a month
Outgoing bandwidth @$0.087 per GB* for 1024 GB =
$89.08 a month
Total$169.94 a month$193.28 a month$142.63 a month

As you can see in this last table, the price difference for an identical cloud server is around 35% between the highest and lowest 'turnkey' cloud service provider. And as you can also see in this table, each 'turnkey' cloud service provider uses a loss-leader type strategy[5] for certain resources (e.g. Google Cloud under prices storage resources, Microsoft Azure under prices hardware resources).

Now that you have a solid benchmark with pricing for multiple 'turnkey' cloud service providers, some additional key points to take into account are the following:

Next, let's move on to discuss the second major option available for cloud servers, including the leading market participants and how they differ from 'turn key' cloud service providers.

'No frills' providers: Linode, Digital Ocean, Lightsail.

Unlike 'turnkey' cloud service providers, 'no frills' cloud service providers offer access to an environment with a standard operating system and a more limited range of resources (i.e. RAM, CPU and disk space). Just in case the name 'no frills' isn't clear enough, don't expect to gain access to a machine learning framework, an elaborate analytics database or be able to launch a 512 GB (RAM) cloud server in a few clicks. Although some 'no frills' cloud service providers support a few basic turnkey features (e.g. backups, load-balancers), most of these features are limited, particularly when you compare them to those offered by 'turnkey' cloud service providers described in the previous section.

All 'no frills' cloud service providers really focus on offering straightforward resource packages with a clean slate operating system environment where you can install anything you require. Based on the same cloud server benchmark used in the previous section, let's break down the costs of leasing a cloud server in a U.S data center with 8 GB of memory (RAM) with an industry-grade processor (e.g. Intel), 100 GB of storage and the ability to pay as you go (e.g. at the start of each month). The following table illustrates some of the major 'no frills' cloud service providers that offer this type of cloud server.

LinodeDigital OceanLightsail
Linode 8GB*
8 GB (RAM)
4 CPU Cores
96 GB SSD Storage
4 TB Outgoing transfer
Standard Droplet 8GB*
8 GB (RAM)
4 CPU Cores
80 GB SSD Storage
5 TB Outgoing transfer
Lightsail 8GB*
8 GB (RAM)
2 CPU Cores
80 GB SSD Storage
5 TB Outgoing Transfer
$40 a month$80 a month$80 a month

You can double-check if you want, but the total costs are correct. The same cloud server -- even with additional CPUs and bandwidth -- can cost 50% to 70% less with a 'no frills' cloud service provider than with a 'turn key' cloud service provider. This last pricing table should by an eye-opener as to how much of a premium you end up paying when selecting a 'turn key' cloud service provider.

The first question you may have about 'no frills' cloud server providers is, how can they afford these prices ? The reality is these type of 'no frills' cloud server providers don't mark up their prices as much. If you consider the fact that you can purchase an off-the-shelf 8 GB server with 1 TB of storage for a one-time payment of $449, it means even these cloud server providers can recoup their hardware investment in 6 months to a year. And with most hardware having a service life of 2-3 years there's still plenty of margin, never mind cloud server providers get better hardware deals than off-the-shelf pricing.

Another factor to consider about 'no frills' cloud server providers is their cloud server options are limited, which requires less investment and operational costs. In this sense, it's similar to walking into discount store where you only have access to 5 or 10 cloud server choices vs. some of the 'turn key' cloud service providers that offer 40+ types of cloud servers and hundreds of 'turn key' software services.

Is it worth the risk/savings to use a 'no frills' cloud service provider ? Much like the previous 'turn key' cloud server option, this will depend mostly on the type of problem you're trying to solve and your tolerance to deal with certain IT operational concerns.

Up to this point, I haven't mentioned anything about cloud server reliability or service levels, but now that you have a good understanding about two of the three major service provider models to run cloud servers, it's time to talk about this topic.

Hardware and networks will fail, repeat again, hardware and networks will fail and once more, hardware and networks will fail. It doesn't matter if you're paying $1,000 or $10,000 a month, no cloud service provider can guarantee 100% uptime and access to a cloud server. Most cloud service providers will offer 99%, 99.9%, 99.999% or even 99.999999% uptime guarantees. In layman terms, these percentage guarantees are based on yearly service levels, meaning if a cloud service provider offers a 99.99% uptime guarantee, it covers 364.96 days of the 365 days in a year, it other words, a cloud server can become inaccessible for .04 days=.96 hours=57.6 minutes a year. Similarly a 99% uptime guarantee, means a cloud server can become inaccessible for up 3.65 days of year.

Cloud server disruptions are mostly due to uncontrollable events beyond a provider's control, such as large Internet network failures or cloud server hardware failures that are taken care of behind the scenes by a provider's technicians. In the majority of cases, you as a customer don't need to do (or can do) anything, the cloud server will eventually become accessible, with at most requiring a server boot. All of which takes us to the related topic of data loss.

While on and off cloud server disruptions can be normal and annoying, cloud server data loss can be fatal, for both you as a customer and a provider's reputation. This is why you should always choose cloud service provider with a reputable track-record. All the cloud service providers I've mentioned up to this point, in both the 'turnkey' segment -- Amazon AWS, Google Cloud Platform, Microsoft Azure -- and the 'no frills' segment -- Linode, Digital Ocean and Lightsail -- have years of experience operating cloud servers and take the topic of data loss seriously. If and when you find a case of cloud server data loss associated with an established cloud service provider, it's generally a certainty it was initiated by a customer error.

Finally, to close out the topic of 'no frills' cloud servers and data loss, be aware there are hundreds or more likely thousands of 'no frills' cloud service providers offering cloud servers. That said, be aware that any cloud server offer that strays too much from established provider pricing -- see the previous pricing tables -- or that looks 'too good to be true' is most likely cutting corners in critical fronts to achieve such prices (e.g. lack of monitoring, sub-par hardware), all of which can lead to longer service disruptions and even data loss.

'Do it all yourself' bare metal and co-location providers.

Just in case you weren't aware , the two previous cloud service options operate for the most part with virtualization[6]. This means the environment that hosts the cloud server (e.g. 8 GB (RAM) and 100 GB storage) is a small piece of a larger whole. So does this means the hardware -- CPU, memory, storage -- is shared between multiple 'neighbors' ? Pretty much, but there's no need to worry too much about this, virtualization has been a proven and stable technology for years.

The more important question to ask yourself about virtualization is, what if you could bypass virtualization and not have to share the same piece of hardware with 'neighbors' ? Enter the bare metal and co-location provider markets. The term bare metal refers to a cloud server where you have direct access to the hardware -- CPU, memory, storage -- versus a virtualized server where a higher-level software (a.k.a. hypervisor) manages the hardware and assigns pieces of the whole to multiple 'neighbor' cloud servers. The term co-location refers to the ability co-locate your own hardware (i.e. bare metal) in a data center in close proximity or peered to a Tier 1 network[7].

If you thought the price savings on a 'no frills' cloud server vs. a 'turnkey' cloud server was considerable, the price savings for a bare metal cloud server is even more considerable. The following table illustrates a series of bare metal cloud server prices.

phoenixNAP Secured ServersLimestone NetworksQuadranet
Intel Xeon E3-1270 V2*
16 GB (RAM)
4 CPU Cores
1 TB SATA Storage
15 TB Outgoing transfer
Intel Xeon E3-1230 V5*
8 GB (RAM)
4 CPU Cores
1 TB SATA Storage
100 TB Outgoing transfer
Intel Xeon E3-1230 V2*
8 GB (RAM)
2 CPU Cores
500 GB SATA Storage
10 TB Outgoing Transfer
$76 a month$138 a month$119 a month

The first thing to notice about bare metal cloud servers is the wide range of prices. This variation in prices is due to providers offering the newest hardware to hit the market or hardware that's been 'payed off' by customers who have since moved on to newer hardware; providers that operate out of older or newer state of the art data centers; as well as providers that offer some type of hardware management or on-premise technical assistance.

For comparsion purposes, notice how it's possible to get a bare metal 16 GB (RAM) cloud server with 1 TB of storage and 15 TB of bandwidth for $76 a month! This is the same price for most 'no frills' cloud servers with half the RAM memory, 1/10th the storage and 1/3 the bandwith. Also notice how another bare metal cloud provider offers as much as 100 TB of bandwidth to accompany an 8 GB (RAM) cloud server for $138 a month! The 100 TB of bandwidth alone with a most 'turn key' cloud service provider would cost over $10,000 a month!

Is it worth the risk/savings to use a bare metal cloud service provider ? Much like the previous cloud server options, this will depend mostly on the type of problem you're trying to solve and your tolerance to deal with more intensive IT operational concerns.

If the thought of a failed hardware cooling fan or simultaneous disk drive failures will keep you up late at night, then a bare metal cloud service provider is probably not for you. If on other hand, you're looking for a cloud server that will offer the best 'bang for your buck' with large amounts of storage and/or large amounts of bandwidth, then you won't find a better deal than with a bare metal cloud service provider.

Finally, the cloud server co-location market is closely tied to the cloud server bare metal market. While cloud server bare metal providers offer you a choice between various hardware configurations, a co-location cloud provider offers cabinets/racks where you can physically install your own cloud server hardware in a state of art data center in close proximity to the Internet's backbone.

Co-location cloud providers offer the ultimate in terms of cloud server savings, primarily because you -- the customer -- take on the role of hardware purveyor. However, using a co-location cloud provider also requires the ultimate 'do it yourself' undertaking, where you either need fly or drive to the data center itself to perform the hardware installation, on top of monitoring the health of the hardware and performing any hardware maintenance operations yourself. Most co-location providers are generally data center operators, such as Hurricane Electric[8] and HopOne[9].


As you can now understand, there are three major types of cloud server providers that offer cloud servers: 'turn key', 'no frills' and 'do it all yourself'. After seeing the cost breakdowns for each type of provider for a similar cloud server, you can now get a clearer picture of the price premiums each type of provider charges.

Although 'turn key' cloud servers offer the utmost in convenience for deploying software in the cloud, it should now be clear that you can end up paying 5 to 10 times more -- sometimes even more -- for an identical cloud server offered by a 'no frills' or 'do it all yourself' cloud service provider.

If you don't mind managing and updating software with the intent to cut costs, then a 'no frills' cloud service provider offers an excellent middle-of-the-road option to purchase a cloud server. However, if you want the ultimate in long-term cost savings and are willing to endure a potentially high-risk/high-reward payoff, then a bare metal or co-location cloud service provider may be your best choice for a cloud server.

About the author: Daniel Rubio

Daniel Rubio

Daniel started working with technology fresh out of school for a Fortune 500 company, later on he moved on to doing contract work as an independent technology consultant. Throughout the years, he's continued to work at the code level -- as a developer and architect -- CTO-level advisor on platform selection strategies, professional technical writer and entrepreneur.

Daniel has been CTO/technical founder for sites that include: -- a data cleansing platform; -- a video processing engine; and -- an award reference site for film, music and television. Daniel's writing experience spans multiple articles and books, with his early years focusing on Java, Linux and Open source topics and his more recent focus being Python/Django, Cloud computing and JavaScript topics.