Cloud economics
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Cloud economics

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What is Microsoft's cloud and why do the new economics of Microsoft's cloud make sense for businesses today

What is Microsoft's cloud and why do the new economics of Microsoft's cloud make sense for businesses today

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  • 1. Economics of the cloud
    Slide 1
    Michel N’Guettia
    Business Group Lead
    micheln@microsoft.com
  • 2. TransformatiE van IT
    Today | Cloud
    2000s | Web
    1990s | Client / Server
    1970s and 80s | Mainframe
  • 3. HOW MICROSOFT VIEWS THE CLOUD
    Nieuwe Principe's
    Hoge beschikbaarheid
    Betalen naar gebruik
    Schaalbaarheid
    Multi-tenancy
    Keuze
    Locatie
    On premises
    Off premises
    Infrastructuur
    Heterogeneen
    Homogeneen
    OpEx
    CapEx
    Business model
    Lease/Rented
    Koop
    Eigendom
    3e partij
    Zelf
    Management
  • 4. Supply side economics of scale
    Larger datacenters have almost 50% lower TCO per server
    ANNUAL TCO/SERVER DECLINES W/SCALE
    MAIN DATA CENTER COST BUCKETS
    Server hardware costs (~45%)
    Facility & operations (~25%)
    Hardware labor costs (~15%)
    Power costs (~15%)
    47% Savings
  • 5. De Microsoft Cloud
  • 6. De Microsoft Cloud
    Microsoft has more than 10 and less than 100 DCs worldwide
    Amsterdam
    Dublin
    Chicago
    Quincy
    Japan
    Hong Kong
    Boydton
    Des Moines
    San Antonio
    Singapore
    Multiple global CDN locations
    "Datacenters have become as vital to the functioning of society as power stations."
    The Economist 
  • 7. Sustainable economics
    Improved Efficiency  Energy savings and Sustainable Environment
    Reduced TCO for supply of cloud services
    Relentless focus on PUE reduction
    Lower cost passed on to customers
    Competitive Advantage
    Less Raw Materials
    Less Wasted Power
    Less Idle Equipment
    Less e-Waste
    Less Carbon
    Less Empty Space
    Satisfied Customers
    PUE Ojective: 1.125
  • 8. shift to ultra-modularity
    Pre-manufacture the entire datacenter
    Low initial capital investment
    ITPAC  Modular Server Building Block
    Airside Economization PAC with adiabatic cooling
    Extremely efficient  PUE of 1.05 - 1.2
    400 to 2500 servers at a time
  • 9. DEMAND SIDE ECONOMIES OF SCALE
    Average server utilization rates are 5-10%
  • 10. UNCERTAIN GROWTH
    Uncertainty about future demand requires overprovisioning of resources. Pooling uncertainty dramatically reduces this inefficiency
    Server Demand
    Overprovisioning
  • 11. MULTI-TENANCY benefits
    Multi-tenant applications share resources between users and organizations
    SINGLE-TENANT APPLICATION
    Client
    Client
    Instance
    Instance
    Instance
    Client
    • Each client has a dedicated instance
    • 12. Instances separately administrated
    • 13. Dedicated resources
    • 14. Costs grow with scale
    Admins
    Admins
    Resources
    Resources
    Resources
    Admins
  • 15. MULTI-TENANCY benefits
    Multi-tenant applications share resources between users and organizations
    MULTI-TENANT APPLICATION
    Client
    Client
    Client
    Instance
    Instance
    Instance
    • One instance for all clients
    • 16. One group of administrators
    • 17. Fixed resources are shared
    • 18. Costs go towards zero with scale
    Resources
    Resources
    Resources
    Admins
    Admins
    Admins
  • 19. Cloud operating system
    Multi-tenant Cloud OS
    Developer ExperienceUse existing skills and tools
    Relational data
    Management
    Compute
    Storage
    Flexible APIs
    Data Market Marketplace
    Connectivity
    Access control
    Management
    Information Marketplace
    Reporting & BI
    Billing & Payments
    Marketplace
    Infrastructure
    Data Management
    Connectivity
  • 20. PUBLIC vs. PRIVATE CLOUDS
    CLOUD SCALE BENEFIT
    40x cost benefit for SMBs
    Private Cloud
    Public Cloud
    10x cost benefitfor Enterprises
    Public Cloud Cost at Scale
  • 21. Service models
    Service Categories
    (On-Premise)
    Infrastructure
    (as a Service)
    Platform
    (as a Service)
    Software
    (as a Service)
    You manage
    You manage
    Applications
    Applications
    Applications
    Applications
    Data
    Data
    Data
    Data
    Managed by vendor
    Runtime
    Runtime
    Runtime
    Runtime
    Managed by vendor
    You manage
    Middleware
    Middleware
    Middleware
    Middleware
    Managed by vendor
    O/S
    O/S
    O/S
    O/S
    Virtualization
    Virtualization
    Virtualization
    Virtualization
    Servers
    Servers
    Servers
    Servers
    Storage
    Storage
    Storage
    Storage
    Networking
    Networking
    Networking
    Networking
    Lower Cost & Higher Agility
    Higher Control & Higher Cost
  • 22. PLATFORM
    BUSINESS USERS
    BUSINESS APPS
    CLOUD SERVICES
    BUSINESS APPS
    COLLABORATION
    COMMUNICATIONS
    IDENTITY
    DESKTOP MGMT
    PLATFORM
    DATABASE
    PRODUCTIVITY
    ON-PREMISES & HOSTERS
    CLOUD SERVICES FOR BUSINESSES
  • 23. The Value of Cloud Computing
    Source: http://www.mckinseyquarterly.com/Business_Technology/BT_Strategy/How_IT_is_managing_new_demands_McKinsey_Global_Survey_results_2702?gp=1
  • 24. THE HORSELESS CARRIAGE SYNDROME
  • 25. THE HORSELESS CARRIAGE SYNDROME
    "If I had asked my customers what they wanted, they would have said a faster horse."
    Customers
    - Henry Ford
    “The horse is here to stay but the automobile is only a novelty, a fad.”
    Analysts
    - Bank analyst
    …designed whip holders into the automobiles for the first 6-7 years, even though there was no horse…
    Engineers
    “There will never be more than 1 million units because of the limited availability of good drivers”
    Forecasters
    - Daimler Company
    (there were 8 million by 1918, over 600 million today)
  • 26. © 2010 Microsoft Corporation. All rights reserved. Microsoft, Windows, Windows Vista and other product names are or may be registered trademarks and/or trademarks in the U.S. and/or other countries.
    The information herein is for informational purposes only and represents the current view of Microsoft Corporation as of the date of this presentation. Because Microsoft must respond to changing market conditions, it should not be interpreted to be a commitment on the part of Microsoft, and Microsoft cannot guarantee the accuracy of any information provided after the date of this presentation. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.
  • 27. DEMAND SIDE Economies of scale
    Time of Day Variance
    Query Volume