Anupama Singh
Benefit from massive economies of scale can someone explain this to me in more detail please ?
1 Answers
Codysseus
Follow this link: https://learn.acloud.guru/course/73233972-03dc-404e-a031-a03366e48d42/learn/c5cd11eb-10da-42ab-a547-cd594421d6a9/e5fa6ebc-d50d-4cc0-8a0e-2693f223ff00/watch. This is an explanation using Azure but it’s the same concept for AWS. In a tiny nutshell and within the context of cloud computing —> The more customers, the cheaper the product.
Economy of scale is a term for something that is very expensive to make once, becoming cheap when per unit, if you can make a million of them in a factory. Another benefit of economy of scale is that Amazon can offer a manufacturer a guarantee that they will buy a million of something. This means that manufacturer can spend more money on their initial design of the product, and that they can make sure to make repair of that item easier. They can afford to have a warehouse full of spare parts, and hire technicians that can come to Amazon’s datacenter to replace components on demand. This ability to make symbiotic guarantees to each other of Amazon saying "I will buy tons of this thing from you", and the manufacturer saying "I can provide better service and a lower price, since you’re buying so much", is the key to economy of scale, and something that an individual company, that only needs a few dozen servers, can’t necessarily do. There are a lot of datacenters that have outdated, unsupported hardware, because they couldn’t make these kinds of guarantees to their suppliers.