If you could spend $1 to make $10, you’d do it, right? By the same token, if you could spend $9 billion to make $90 billion, you’d do that, too, right? With hundreds of billions at stake in cloud computing, and winner-takes-most economics in play, Amazon Web Services, Microsoft, and Google spent $35 billion last year—and roughly $10 billion in the first quarter of 2018—to earn the right to take home multiples of that later. “The cloud isn’t cheap,” rightly .
Failure in cloud, however, is much more expensive. Given the rise of , it’s getting ever more costly, with some signs that AWS could turn its early lead into long-term dominance.
What all that cloud infrastructure money buys
As cloud pundit , the copious quantities of cash that AWS, Microsoft, and Google are plowing into datacenters reflects the magnitude of the payoff for winning: “This investment pattern reflects the realities of the cloud computing market: It’s a platform-based industry with enormous network effects that requires sufficient capacity to support exploding, spiky demand—much of which can emanate from geographies that require local infrastructure. That’s a recipe for needing to plow huge amounts of money into the business.”
We’re not talking about a few billion dollars up for grabs. We’re talking about hundreds of billions in play, as the future of enterprise computing gets defined today.