Cloud Economics: Principles, Costs, and Benefits

Abstract

Cloud computing is an important next step in the trend toward inexpensive and universal access to information and sophisticated computing resources that help close the digital divide between the computer haves and have-nots. In cloud computing, the end-users can access fully functional software and services online at little or no cost using inexpensive computers or mobile communication devices that connect them via the Internet. Innovative service providers no longer need to own and maintain development or production infrastructures and can automatically scale their production operations to meet growing demand much more easily and economically than possible with internal data centers, traditional hosting, or managed services arrangements. The cloud’s inherent ability to dynamically scale up or scale down the infrastructure commitment as demand changes on a pay-as-you-go basis has a positive impact on the service provider’s overhead costs, energy costs, and in reducing its carbon footprint.

Cloud economics as presented in this chapter refers to the economic forces, business drivers, and structural issues affecting the broad costs and benefits of adopting the cloud technologies or the creation of private or public utility clouds. Here, cloud economics also deal with the economy inside the cloud, which includes monetization, charging, billing, and taxation of products and services inside the cloud.