Microsoft Outlines Economics of the Cloud

In a new white paper:

We believe that large clouds could one day deliver computing power at up to 80% lower cost than small clouds.  This is due to the combined effects of three factors:supply-sideeconomies of scale which allow large clouds to purchase and operate infrastructure cheaper; demand-sideeconomies of scale which allow large clouds to run that infrastructure more efficiently by pooling users; and multi-tenancy which allows users to share an application, splitting the cost of managing that application.

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