1. ECONOMICS OF
THE CLOUD
Michel N’Guettia
Business Group Lead
micheln@microsoft.com
Slide 1

2. TRANSFORMATIE VAN IT
Today | Cloud
2000s | Web
1990s | Client / Server
1970s and 80s | Mainframe

3. HOW MICROSOFT VIEWS THE CLOUD
Nieuwe Principe's
Schaalbaarheid
Betalen naar
gebruik
Hoge
beschikbaarheid
Keuze
Locatie
Infrastructuur
Business model
Eigendom
Management
Multi-tenancy

4. SUPPLY SIDE ECONOMICS OF SCALE
Larger datacenters have almost 50% lower TCO per server
MAIN DATA CENTER COST BUCKETS
•
•
Server hardware costs
(~45%)
Facility & operations
(~25%)
Hardware labor costs
(~15%)
$5,000
TCO/Server
•
ANNUAL TCO/SERVER DECLINES W/SCALE
$4,000
$3,000
$2,000
$1,000
$0
•
Power costs (~15%)
1k Server DC
Server Hardware
Facility
100k Server DC
Hardware Operations
Power

5. DE MICROSOFT CLOUD
Monolithic design and
construction effort
Typical large datacenter = 11 football fields
High Investments $$$
Typical construction costs = $10M to $15M per Megawatt
Long lead time
18 to 24 months from design to online

6. DE MICROSOFT CLOUD
Microsoft has more than 10 and less than 100 DCs worldwide
Chicago
Quincy
Dublin
Amsterdam
Japan
Boydton
Des Moines
Hong Kong
San Antonio
Singapore
Multiple global CDN locations
Quincy, Washington
27MW
100% Hydro power
San Antonio, Texas
27MW
Recycled water for cooling
Chicago, Illinois
Up to 60MW
Water side economization, Containers
Dublin, Ireland
Up to 50MW
Outside air cooling, PODs
"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
Less Raw
Materials
• Lower cost passed on to customers
Less Wasted
Power
• Competitive Advantage
Less Idle
Equipment
Less Carbon
Less Empty
Space
Less
e-Waste
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%
100%
CPU Utilization
75%
50%
25%
0%
Time

10. UNCERTAIN GROWTH
Uncertainty about future demand requires overprovisioning of resources.
Pooling uncertainty dramatically reduces this inefficiency

11. MULTI-TENANCY BENEFITS
Multi-tenant applications share resources between users and organizations
SINGLE-TENANT APPLICATION
Client
Client
Instance
Instance
Instance
Admins
Admins
Admins
Resources
Resources
Resources

12. MULTI-TENANCY BENEFITS
Multi-tenant applications share resources between users and organizations
MULTI-TENANT APPLICATION
Instance
Instance
Instance
Admins
Admins
Admins
Resources
Resources
Resources

13. CLOUD OPERATING SYSTEM
Multi-tenant Cloud OS

14. PUBLIC VS. PRIVATE CLOUDS
$8,000
CLOUD SCALE
BENEFIT
TCO/Server
$6,000
$4,000
$2,000
$0
100
1,000
Cloud Size (# of Servers)
10,000
100,000

15. SERVICE MODELS
Service Categories
Platform
Infrastructure
Applications
Applications
Applications
Applications
Data
Data
Data
Data
Runtime
Runtime
Runtime
Middleware
Middleware
Middleware
Middleware
O/S
O/S
O/S
Virtualization
Virtualization
Servers
Servers
Storage
Storage
Networking
Networking
Higher Control & Higher Cost
Managed by vendor
You manage
Runtime
You manage
(as a Service)
Virtualization
Servers
O/S
Virtualization
Servers
Storage
Storage
Networking
Networking
Lower Cost & Higher Agility
Managed by vendor
(as a Service)
Managed by vendor
(as a Service)
You manage
(On-Premise)
Software

16. CLOUD SERVICES FOR BUSINESSES
BUSINESS APPS
BUSINESS USERS
PLATFORM

17. THE VALUE OF CLOUD COMPUTING
http://www.mckinseyquarterly.com/Business_Technology/BT_Strategy/How_IT_is_managing_new_demands_McKinsey_Global
_Survey_results_2702?gp=1

18. THE HORSELESS CARRIAGE SYNDROME

19. THE HORSELESS CARRIAGE SYNDROME
Customers
"If I had asked my customers what they wanted, they would
have said a faster horse."
- Henry Ford
Analysts
“The horse is here to stay but the automobile is only a
novelty, a fad.”
- Bank analyst
Engineers
…designed whip holders into the automobiles for the first 67 years, even though there was no horse…
Forecasters
“There will never be more than 1 million units because of
the limited availability of good drivers”
- Daimler Company
(there were 8 million by 1918, over 600 million today)

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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.