Cloud Mini-Series Part 2: The Economics Behind the Cloud and the Protectionist Threat

Grazed from DisCo.org. Author: Matthias Langenegger.

This post is part of a series on the opportunities and challenges of cloud computing in the developing world. The previous post covered the transformative potential of the cloud and the different types of cloud services. Let us now turn to the economics behind the cloud. It’s a tough, fast-moving business involving substantial investments, and, most importantly, cloud services are effectively competing in a global marketplace.

The ‘borderless’, instantaneous nature of online communications means that cloud services can be provided from anywhere in the world, creating almost perfect markets in some areas. At least technically, competition is just a click away. That’s particularly relevant in an environment where many of the competing services are “free” to end-users (supported through ads, donations or other business models)…

At the heart of any cloud business is computing power and this is where the economics of data centres come into play. To be able to offer high performing, global services, cloud providers need to be able to exploit economies of scale. Having fewer, larger data centres increases operational and hardware efficiency because the larger a data centre, the less inefficiencies it creates in power and cooling. Also, larger data centres tend to allocate staff resources more efficiently…

Read more from the source @ http://www.project-disco.org/competition/032714-cloud-mini-series-part-2-the-economics-behind-the-cloud-and-the-protectionist-threat/

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