Anthony wrote:
On 5/9/07, William Pietri <william(a)scissor.com>
wrote:
Anthony wrote:
I've suggested before that a lease of servers
would make a lot more
sense than all those capital expenditures, and this is a good example
of why that's true.
Could you say more about that?
When I've looked at server leasing before I could never make the cost
numbers work out, as the server lease arrangements were either a) from
high-end companies that charged a premium for their gear, or b) were
through private lease-what-you-want companies that charged too much for
custom deals. But I haven't done mass gear purchases in a while, so I am
probably out of touch with how you whippersnappers do it these days. :-)
You could never make the cost numbers work out compared to what? A
lease is pretty much always going to cost more in the long run
compared to an outright purchase price, as you're essentially paying
to borrow money from someone. But, especially as interest rates are
currently low, this type of purchase is perfectly suited to a
corporation like Wikimedia which is experiencing such dramatic growth.
Leasing companies do not simply vary their leasing rates with the
current market interest rates. Also note that for a tax free company
the tax deductibility benefit from lease payments is not there.
Let's say the major fundraisers come twice a year.
Let's say a lease
can be had for 1/30 the purchase cost per month over 30 months.
Where are you ever going to find a 30-month lease that simply divides
the purchase price by 30. The ones that do that tend to have a stiff
buy out at the end of the contract. The server will more often than not
have a useful life that exceeds the 30 months.
That's a really high estimate, based on Dell and
rounding the cost up,
and surely the WMF can do better. Let's assume fundraisers of
$40,000, $100,000, $167,000, $300,000, and $500,000 (taken from the
financials, rounded, and estimating in order to break up into
semi-annual figures). Assume capital expenditures of $35,000,
$55,000, $85,000, $150,000, and $275,000 (same methodology).
The effects of fundraising should only have an indirect effect on
plans. It's far more useful to have a hardware plan that provides
regular replacement of equipment that is no longer useful. If we have
30 servers operational at a given time purchasing one replacement server
per month would be cheaper than the monthly lease payments on 30 servers.
With a lease, you spend $7000, $18000, $35000, $65000,
and $120000
each half year. With the extra cash flow you can easily hire a couple
of extra staff members plus pay a few consultants for "one-time"
things like security audits. From what I've seen of MediaWiki I have
little doubt the code contains serious security flaws, and I think we
all know that the system has numerous DOS attack points.
The downside of a lease - there's no capital left over at any stage of
the game. But considering that Wikipedia's value is currently about
99.9% goodwill anyway, I wouldn't call that much of a problem.
Goodwill remains an intangible asset, and that intangible asset needs to
be supported by very tangible hardware.. To do a proper analysis of the
situation we need to know the cash price for the piece of equipment, the
monthly lease payment, any setup fees for the lease, and the contract
buyout amount at the end of the lease.
Ec