Read \"Counting the Cost of Cloud Computing\" in online news provider The Regist

Question

Read "Counting the Cost of Cloud Computing" in online news provider The Register for the benefits and limitations of cloud computing. (http://www.theregister.co.uk/2012/06/13/cloud_economics/)
A: Why does the author characterize cloud computing in terms of economies of scale?
B: What might this mean for the optimal size of firms providing cloud computing?
C: What are the limitations of utilizing cloud computing? Read "Counting the Cost of Cloud Computing" in online news provider The Register for the benefits and limitations of cloud computing. (http://www.theregister.co.uk/2012/06/13/cloud_economics/)
A: Why does the author characterize cloud computing in terms of economies of scale?
B: What might this mean for the optimal size of firms providing cloud computing?
C: What are the limitations of utilizing cloud computing? Read "Counting the Cost of Cloud Computing" in online news provider The Register for the benefits and limitations of cloud computing. (http://www.theregister.co.uk/2012/06/13/cloud_economics/)
A: Why does the author characterize cloud computing in terms of economies of scale?
B: What might this mean for the optimal size of firms providing cloud computing?
C: What are the limitations of utilizing cloud computing?

Explanation / Answer

A)

If marginal costs do not begin to increase and remain below average costs, average costs continue to fall. This is known as economies of scale. With economies of scale, the conditions will be ripe for monopoly – as the firm that produces the most can enjoy the lowest costs.

Many 'new economy' products have such cost features. Providing Internet technology using cloud computing involves high fixed costs, but the marginal cost of supplying services on the cloud is very low

B)Cloud computing has leveled the playing field and enabled smaller law firms to compete with larger firms by using technology hosted in the cloud. From Exchange servers to practice managements systems, cloud computing has a lot to offer firms of all sizes.But, sometimes it does not make sense for firms to move to the cloud, especially small to mid-size firms that have already made investments in software and hardware

C)Limitations-

Network connection
The concept assumes that the client has reliable network connection. If there are issues of network connectivity, accessing the cloud also is a problem. Upload and download speeds are slower as compared to that of a local server.

Control of data security
In a public cloud, the client does not have the control over security of his own data. The clients’ data can be susceptible to hacking . As the servers on cloud are interconnected it is faster for malware to spread.

Additional costs
Though cloud computing offers cost benefits, it has certain hidden costs as well. Clients are charged extra for data transfer or other services. Initial offerings are priced higher, till economies of scale work out for the service provider.

Peripherals
Peripheral devices like printers or scanners might not work with cloud. Most of them need software to be installed locally. Networked peripherals have lesser problems.

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