I heard that’s the reason why Microsoft took off in value the last few years, and it’s the real cash cow for Amazon. However, I don’t really understand what the cloud is other than online drives like Dropbox
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Cloud services refers to a variety of things from simple services like Dropbox to complete virtual data centers. Companies no longer have to worry about purchasing hardware or procuring physical locations, they can just outsource all of that to cloud service providers.
Cloud companies provide server space, storage, and compute power in various forms that companies need. As a matter of fact, most website you visit nowadays run on Amazon Web Services. And nearly all runs on the big 3 providers (Microsoft, AWS or Google). So it’s not just file storage, but entire compute engines, networking, file storage, databasing, etc etc etc.
Cloud can do more than just storage, it can be used for computational power as well as removing the need for companies to hire dedicated staff to maintain on site server systems.
In the before times, if a company had a website and internal services like a sales system or a production management system they would have to have a physical server that has enough performance to run these services simultaneously at peak times, and enough storage to hold all the required data.
These servers weren’t cheap. They had expensive hardware, required special backup power systems, you had to arrange for redundant systems and offsite data backup, along with the power and cooling that big ol’ computers require
“The Cloud” is just another word for “Someone else’s computer”. Amazon, Microsoft, and Google all maintain some big data centers scattered around both the world and the country. This scattering of datacenters provides great redundancy, you want backups in case there’s data corruption, but scattering datacenters around means a big storm in Tennesee shouldn’t take out your system because Michigan has copies of the same data. The cloud providers also aren’t buying a few dozen hard drives from CDW for their servers, they’re buying millions of hard drives direct from the manufactures which offers them good savings on each drive. Then they’re building a big empty building with a single large backup power system rather than each server needing its own little one. They’re also grouping together tons of customers onto the same machines so each server is always staying busy, and if the main customers aren’t using all the CPU time then they can just sell off the CPU time to others who need a lot of hours, but not high priority so their tasks can just fill in any gaps that show up.
The end result is that its cheaper per TB of storage and per hour of computer time to run a huuuuugeeee number of servers than for each company to run their own so all the companies took their former server budget and shifted a portion to getting cloud services instead
Think about your computer or laptop. Now think: “don’t buy it lease it”. Now think: have someone else house it, provide power (and ups backup), maintenance (replace dead drives, upgrade RAM), and supply big internet pipes as part of the lease. You access / run it over the internet. That’s a simplified cloud, except it is usually servers (think web sites, big databases, search engines, etc.) and not desktops / laptops.
Most answers will be about the cheaper cost of hardware that Amazon and Microsoft can achieve through economies of scale (they can purchase a lot more equipment hence ask for bigger discounts) – but the main reason companies adopt cloud infrastructure is to save on labour costs – individual companies no longer need a team of network engineers or DBAs or Sys Admins etc – that’s a lot of money saved and the MAIN reason why companies adopt the cloud.
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