Cloud Computing is changing how innovation takes place in the economy. IDC predicts the cloud services industry that supplies Cloud Computing to other companies will generate $100 billion in sales by 2017. However, Cloud Computing’s broader impact will be much larger. The entertainment industry has been upended by Netflix, the media industry redefined by Google and retail reshaped by Amazon. These changes go beyond the types of distribution disruptions enabled by the Internet; firms are innovating in ways that were not possible before. For example, startups with few resources can comb large genetic databases for disease markers to bring new products to market, a task that was only possible at major research institutions prior to Cloud Computing.
Three main benefits are articulated for Cloud Computing:
1. Cheaper computing: Cloud providers can take advantage of economies of scale in hardware, power, and system administration to drive computing costs lower than individual firms can.
2. Switch from fixed to variable costs: Previously firms had to make large up-front investments to grow or experiment, discouraging both activities. Now firms can do this at a low initial marginal cost.
3. Increased capabilities: Cloud providers can better integrate tools, giving (particularly small) businesses the ability to do new types of tasks. This may be particularly valuable for tasks that require rare skills, for which many firms might have trouble hiring.
• According to industry experts, once the cost of using a public cloud provider gets above a few thousand dollars per month, cost effectiveness actually favors in-house servers.
• Recent research suggests that a single machine can run many tasks faster than hundreds of Cloud Computing machines clustered together because of the overhead required to split the job over many computers
This project aims to make clear where the benefits of cloud computing are, and for whom they can be achieved.
However even these claims about cost effectiveness and capabilities are controversial: