The document discusses the economics of cloud computing, highlighting key principles such as high availability, cost-effectiveness, and scalability. It underscores the benefits of multi-tenancy and demand-side economies of scale, emphasizing how Microsoft's cloud services reduce total cost of ownership while improving efficiency and sustainability. Additionally, it contrasts public and private cloud models and illustrates the evolution of technology through the 'horseless carriage syndrome' analogy.

1. Economics of the cloudSlide 1Michel N’GuettiaBusiness Group Leadmicheln@microsoft.com

2. TransformatiE van IT Today | Cloud2000s | Web1990s | Client / Server 1970s and 80s | Mainframe

3. HOW MICROSOFT VIEWS THE CLOUDNieuwe Principe'sHoge beschikbaarheidBetalen naar gebruikSchaalbaarheidMulti-tenancyKeuzeLocatieOn premisesOff premisesInfrastructuurHeterogeneenHomogeneenOpExCapExBusiness modelLease/RentedKoopEigendom3e partijZelfManagement

4. Supply side economics of scaleLarger datacenters have almost 50% lower TCO per serverANNUAL TCO/SERVER DECLINES W/SCALEMAIN DATA CENTER COST BUCKETSServer hardware costs (~45%)Facility & operations (~25%)Hardware labor costs (~15%)Power costs (~15%)47% Savings

5. De Microsoft Cloud

6. De Microsoft CloudMicrosoft has more than 10 and less than 100 DCs worldwideAmsterdamDublinChicagoQuincyJapanHong KongBoydtonDes MoinesSan AntonioSingaporeMultiple global CDN locations "Datacenters have become as vital to the functioning of society as power stations." The Economist

7. Sustainable economicsImproved Efficiency  Energy savings and Sustainable EnvironmentReduced TCO for supply of cloud servicesRelentless focus on PUE reductionLower cost passed on to customersCompetitive AdvantageLess Raw MaterialsLess Wasted PowerLess Idle Equipment Less e-WasteLess CarbonLess Empty SpaceSatisfied CustomersPUE Ojective: 1.125

8. shift to ultra-modularityPre-manufacture the entire datacenterLow initial capital investmentITPAC  Modular Server Building BlockAirside Economization PAC with adiabatic coolingExtremely efficient  PUE of 1.05 - 1.2400 to 2500 servers at a time

9. DEMAND SIDE ECONOMIES OF SCALEAverage server utilization rates are 5-10%

10. UNCERTAIN GROWTHUncertainty about future demand requires overprovisioning of resources. Pooling uncertainty dramatically reduces this inefficiencyServer DemandOverprovisioning

11. MULTI-TENANCY benefitsMulti-tenant applications share resources between users and organizationsSINGLE-TENANT APPLICATIONClientClientInstanceInstanceInstanceClientEach client has a dedicated instance

12. Instances separately administrated

13. Dedicated resources

14. Costs grow with scaleAdminsAdminsResourcesResourcesResourcesAdmins

15. MULTI-TENANCY benefitsMulti-tenant applications share resources between users and organizationsMULTI-TENANT APPLICATIONClientClientClientInstanceInstanceInstanceOne instance for all clients

16. One group of administrators

17. Fixed resources are shared

18. Costs go towards zero with scaleResourcesResourcesResourcesAdminsAdminsAdmins

19. Cloud operating systemMulti-tenant Cloud OSDeveloper ExperienceUse existing skills and toolsRelational dataManagementComputeStorageFlexible APIsData Market MarketplaceConnectivityAccess controlManagementInformation MarketplaceReporting & BIBilling & PaymentsMarketplaceInfrastructureData ManagementConnectivity

20. PUBLIC vs. PRIVATE CLOUDSCLOUD SCALE BENEFIT40x cost benefit for SMBsPrivate CloudPublic Cloud10x cost benefitfor EnterprisesPublic Cloud Cost at Scale