I’m driving a four-year old car with over 50K miles on the odometer. It runs like a top, requiring only routine annual maintenance and a quart or two of oil. When I was a kid, a 3-year old car represented an ongoing maintenance hassle. Other than the quirky guy down the street with the 190D, anybody who wanted to avoid constant breakdowns got rid of their car long before mileage reached 6 figures. Autos are a lot more reliable these days, which is why my 4-year old wagon still has a more comprehensive power train warranty than was typical for new cars in 1965.
Makers of the first generation of cars were understandably reluctant to accept any risk associated with the use of their products. Ford offered Model T buyers a 90 day warranty on materials, and only a 30 day warranty on labor. A significant number of mission-critical parts, including belts, glass, plugs and gaskets, were explicitly excluded from the warranty. I’ve got my grandfather’s expense records from the late 20s: he went through tires like candy and visited the garage once a month for a tune up. The reduction in the reliability risk of vehicle usage is one of the profound achievements of the 20th century, explaining why auto sellers today are competing on their willingness to reduce buyer risk.
Vendor competition to explicitly accept product risk is not characteristic of the cloud computing realm, Like Detroit in 1925, today’s sellers are putting their lawyers on overtime to create lists of things that are explicitly not covered by warranty.
Unsurprisingly, I’m hearing lots of complaints from potential and current cloud service buyers that are disappointed about their unwillingness of their suppliers to share some of the risk that their product might malfunction and impact their customers. They naturally ask “If you truly believe that your product is reliable, then why wouldn’t you offer to share the risk of using it? If use of your service entails minimal risk, then you should have no reluctance to allow some of it to be contractually transferred to you.”
The truth of the matter is that the provider actually has no idea of the likelihood of a loss event within their own offering. Cloud service providers are painfully aware that leverage and efficiency cut both ways: if a failure occurred, it could impact all of their customers simultaneously. They don’t have enough cash on hand to cover that portfolio risk, and they can’t find any insurer willing to underwrite it. Don’t expect any 100,000 mile warranties any time soon.