Like energy, computing has become an essential component of any economy. Cloud computing is another information technology (IT) jargon, which is difficult for many of us to understand. In its simplest sense, it means that instead of having generator for every home, have a centralised large generator and connect that generator to all those homes-- to offer higher quality electrical power at the lower cost in a more convenient way than before. The economics of such centralised power delivery primarily depends on the utilisation factor and economies of scale.
Similar to power industry, instead of having individual storage and server, there will be a centralised facility, which will be shared among individual users over the internet. Among many reasons, resource utilisation factor and economies of scale are major opportunities of offering better computing facility to customers at lower costs to make profit. For example, on an average, half of the capacity of a disk or thumb drive remains unused over its life time, although payment has been made for the full capacity upfront. The business proposition is basically to lease the unused capacity to someone else to produce new revenue, which could be divided between both consumers and the provider of such shared service, known as cloud provider. For complete and original post see here
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