Ed Felten at Freedom to Tinker recently posted an article about the economics of cloud computing (partially in response to last week’s New York Times op-ed about the cloud). While I agree with Felten’s main contention – namely, that the cost of resource management is a driving force in the movement towards the cloud – I would argue that there are also much more important factors at play.

Within the last few years, startups and small companies have seen a growing focus on web- or phone-based applications, from which customers expect much higher uptime, performance, and reliability. Even beyond the cost factor, there’s no real reason for a small company to grow their own servers* when alternatives exist with much better guarantees of all three of those expectations. This is particularly true near the start of an application life cycle, when the amount of data required to run effectively is often disproportionate to the size of the actual user base – if a small company were to run their own servers, they would have to endure remarkably low resource utilization. But even with established applications, it makes much more sense from a practical standpoint not to waste CPU cycles during low traffic times of the day or year. So ultimately I see the movement to the cloud as being spawned mostly from four separate factors:

• The desire for greater reliability
• The fact that most companies would prefer to focus on their primary objective (e.g. developing software) rather than working on supportive infrastructure Continue reading Economy of the Cloud →