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

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Cloud economics

  1. 1. Economics of the cloud<br />Slide 1<br />Michel N’Guettia<br />Business Group Lead<br /><br />
  2. 2. TransformatiE van IT<br /> Today | Cloud<br />2000s | Web<br />1990s | Client / Server <br />1970s and 80s | Mainframe <br />
  3. 3. HOW MICROSOFT VIEWS THE CLOUD<br />Nieuwe Principe's<br />Hoge beschikbaarheid<br />Betalen naar gebruik<br />Schaalbaarheid<br />Multi-tenancy<br />Keuze<br />Locatie<br />On premises<br />Off premises<br />Infrastructuur<br />Heterogeneen<br />Homogeneen<br />OpEx<br />CapEx<br />Business model<br />Lease/Rented<br />Koop<br />Eigendom<br />3e partij<br />Zelf<br />Management<br />
  4. 4. Supply side economics of scale<br />Larger datacenters have almost 50% lower TCO per server<br />ANNUAL TCO/SERVER DECLINES W/SCALE<br />MAIN DATA CENTER COST BUCKETS<br />Server hardware costs (~45%)<br />Facility & operations (~25%)<br />Hardware labor costs (~15%)<br />Power costs (~15%)<br />47% Savings<br />
  5. 5. De Microsoft Cloud<br />
  6. 6. De Microsoft Cloud<br />Microsoft has more than 10 and less than 100 DCs worldwide<br />Amsterdam<br />Dublin<br />Chicago<br />Quincy<br />Japan<br />Hong Kong<br />Boydton<br />Des Moines<br />San Antonio<br />Singapore<br />Multiple global CDN locations <br />"Datacenters have become as vital to the functioning of society as power stations." <br />The Economist <br />
  7. 7. Sustainable economics<br />Improved Efficiency  Energy savings and Sustainable Environment<br />Reduced TCO for supply of cloud services<br />Relentless focus on PUE reduction<br />Lower cost passed on to customers<br />Competitive Advantage<br />Less Raw Materials<br />Less Wasted Power<br />Less Idle Equipment <br />Less e-Waste<br />Less Carbon<br />Less Empty Space<br />Satisfied Customers<br />PUE Ojective: 1.125<br />
  8. 8. shift to ultra-modularity<br />Pre-manufacture the entire datacenter<br />Low initial capital investment<br />ITPAC  Modular Server Building Block<br />Airside Economization PAC with adiabatic cooling<br />Extremely efficient  PUE of 1.05 - 1.2<br />400 to 2500 servers at a time<br />
  9. 9. DEMAND SIDE ECONOMIES OF SCALE<br />Average server utilization rates are 5-10%<br />
  10. 10. UNCERTAIN GROWTH<br />Uncertainty about future demand requires overprovisioning of resources. Pooling uncertainty dramatically reduces this inefficiency<br />Server Demand<br />Overprovisioning<br />
  11. 11. MULTI-TENANCY benefits<br />Multi-tenant applications share resources between users and organizations<br />SINGLE-TENANT APPLICATION<br />Client<br />Client<br />Instance<br />Instance<br />Instance<br />Client<br /><ul><li>Each client has a dedicated instance
  12. 12. Instances separately administrated
  13. 13. Dedicated resources
  14. 14. Costs grow with scale</li></ul>Admins<br />Admins<br />Resources<br />Resources<br />Resources<br />Admins<br />
  15. 15. MULTI-TENANCY benefits<br />Multi-tenant applications share resources between users and organizations<br />MULTI-TENANT APPLICATION<br />Client<br />Client<br />Client<br />Instance<br />Instance<br />Instance<br /><ul><li>One instance for all clients
  16. 16. One group of administrators
  17. 17. Fixed resources are shared
  18. 18. Costs go towards zero with scale</li></ul>Resources<br />Resources<br />Resources<br />Admins<br />Admins<br />Admins<br />
  19. 19. Cloud operating system<br />Multi-tenant Cloud OS<br />Developer ExperienceUse existing skills and tools<br />Relational data<br />Management<br />Compute<br />Storage<br />Flexible APIs<br />Data Market Marketplace<br />Connectivity<br />Access control<br />Management<br />Information Marketplace<br />Reporting & BI<br />Billing & Payments<br />Marketplace<br />Infrastructure<br />Data Management<br />Connectivity<br />
  20. 20. PUBLIC vs. PRIVATE CLOUDS<br />CLOUD SCALE BENEFIT<br />40x cost benefit for SMBs<br />Private Cloud<br />Public Cloud<br />10x cost benefitfor Enterprises<br />Public Cloud Cost at Scale<br />
  21. 21. Service models<br />Service Categories<br />(On-Premise)<br />Infrastructure<br />(as a Service)<br />Platform<br />(as a Service)<br />Software<br />(as a Service)<br />You manage<br />You manage<br />Applications<br />Applications<br />Applications<br />Applications<br />Data<br />Data<br />Data<br />Data<br />Managed by vendor<br />Runtime<br />Runtime<br />Runtime<br />Runtime<br />Managed by vendor<br />You manage<br />Middleware<br />Middleware<br />Middleware<br />Middleware<br />Managed by vendor<br />O/S<br />O/S<br />O/S<br />O/S<br />Virtualization<br />Virtualization<br />Virtualization<br />Virtualization<br />Servers<br />Servers<br />Servers<br />Servers<br />Storage<br />Storage<br />Storage<br />Storage<br />Networking<br />Networking<br />Networking<br />Networking<br /> Lower Cost & Higher Agility<br />Higher Control & Higher Cost<br />
  23. 23. The Value of Cloud Computing<br />Source:<br />
  25. 25. THE HORSELESS CARRIAGE SYNDROME<br />"If I had asked my customers what they wanted, they would have said a faster horse."<br />Customers<br />- Henry Ford<br />“The horse is here to stay but the automobile is only a novelty, a fad.”<br />Analysts<br />- Bank analyst<br />…designed whip holders into the automobiles for the first 6-7 years, even though there was no horse…<br />Engineers<br />“There will never be more than 1 million units because of the limited availability of good drivers”<br />Forecasters<br />- Daimler Company<br />(there were 8 million by 1918, over 600 million today)<br />
  26. 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.<br />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.<br />
  27. 27. DEMAND SIDE Economies of scale<br />Time of Day Variance<br />Query Volume<br />