The Private Cloud Comeback: Why Companies Are Leaving Hyperscalers

The Pendulum Swings

For most of the 2010s, the default enterprise strategy was simple: move everything to public cloud. AWS, Azure, GCP — pick your provider and migrate. Analysts predicted on-premises infrastructure would be dead by 2025.

That prediction didn't age well.

37signals saved $7M over five years by moving off AWS. Dropbox's infrastructure repatriation saved them nearly $75M in two years. These aren't outliers anymore — they're the leading edge of a structural shift.

Why Now?

Three forces are driving cloud repatriation in 2025:

1. The Bill Finally Arrived

Public cloud pricing is designed for variable, unpredictable workloads. But most production infrastructure isn't variable — it's steady-state compute and storage that runs 24/7. When you're paying on-demand rates for always-on workloads, you're overpaying by 3-5x compared to dedicated hardware.

Egress fees compound the problem. Moving data into public cloud is free. Moving it out costs real money — creating an economic moat that keeps you locked in even when better options exist.

2. AI Changed the Math

GPU compute is expensive everywhere, but it's especially expensive on public cloud. An H100 instance on a major hyperscaler runs $3-4/hr on-demand. That same GPU on dedicated hardware costs a fraction of that on a monthly basis — and you get consistent performance without noisy-neighbor effects.

When your AI training job takes 72 hours and performance variance adds 20% to runtime, the cost difference between shared and dedicated hardware becomes enormous.

3. Data Sovereignty Is No Longer Optional

Regulatory pressure is intensifying globally. GDPR in Europe, NDPR in Nigeria, POPIA in South Africa, LGPD in Brazil — all require organizations to know exactly where their data lives and who can access it. Public cloud's shared-responsibility model makes this harder, not easier.

For regulated industries — finance, healthcare, government — the compliance overhead of public cloud often exceeds the infrastructure cost savings.

What Changed About Private Cloud

The private cloud of 2025 is not the private cloud of 2015. The technology gap has closed dramatically:

OpenStack matured. What was once complex and fragile is now production-grade. Managed OpenStack providers handle the operational burden while giving you full control over the environment.

Ceph solved storage. Enterprise-grade distributed storage that handles object, block, and file workloads — on commodity hardware, at a fraction of proprietary SAN costs.

Kubernetes works everywhere. Container orchestration doesn't care whether it's running on public cloud or bare metal. Your deployment pipelines are portable.

Bare metal got fast. Modern providers deploy dedicated servers in hours, not weeks. IPMI gives you full hardware access. NVMe drives deliver performance that shared cloud storage can't match.

The Hybrid Reality

This isn't about abandoning public cloud entirely. The smart play is workload-appropriate placement:

• Steady-state production → Private cloud or bare metal (predictable cost, consistent performance)
• Burst capacity → Public cloud (pay for spikes, not steady state)
• AI training → Dedicated GPU infrastructure (performance and cost)
• Development/staging → Wherever is cheapest and fastest to spin up
• Global edge delivery → CDN and edge compute from hyperscalers

The companies winning at infrastructure in 2025 aren't all-in on any single model. They're making deliberate placement decisions based on workload characteristics, compliance requirements, and total cost of ownership.

The Cost Transparency Problem

One of the biggest challenges with public cloud isn't the pricing — it's understanding the pricing. Bills with thousands of line items, reserved instance commitments that may or may not be optimal, data transfer charges that appear months later.

Private cloud pricing is simple: you pay for the hardware and the management. That's it. No egress fees, no per-API-call charges, no surprise bills when traffic spikes.

For CFOs and finance teams, this predictability is often worth more than any marginal cost difference.

What to Consider Before Repatriating

Cloud repatriation isn't free. Before making the move:

1. Audit your actual usage. What's steady-state vs. variable? What's your real egress spend?
2. Calculate total cost of ownership. Include staff time, not just infrastructure cost.
3. Assess your team's capabilities. Managed private cloud can fill gaps, but you need baseline infrastructure knowledge.
4. Plan the migration. Moving production workloads requires careful orchestration. Budget 3-6 months for a meaningful migration.
5. Start with the obvious wins. Large, steady-state workloads with predictable resource needs are the easiest to repatriate.

The Bottom Line

The cloud market is maturing. The "move everything to public cloud" era is giving way to a more nuanced approach where workload placement is a strategic decision, not a default.

For companies spending $50K+ per month on public cloud, the math on private infrastructure deserves a serious look. The technology is ready, the economics are favorable, and the operational burden is lower than ever.

The question isn't public vs. private. It's: are you putting each workload where it performs best and costs least?