Archive for January 27th, 2011

Facebook isn’t often cited as a cloud computing company since the ‘Social’ moniker has proven to be stickier. It does, however, meet the common definition of ‘Cloud’ i.e. the management of the hardware is highly abstracted from its users, the infrastructure is highly elastic, a variety of services (billing, authentication etc.) are bundled, and the underlying hardware is geographically dispersed.

What is fascinating is that Facebook, more than other cloud companies, gives us a glimpse into a future where computing and storage are virtually free and ubiquitous. With $2 billion in revenue for 2010 and about 500M users, Facebook has revenue of roughly $4 per user. With some back of the envelope math, it seems likely that the variable cost for each additional user is about $1 per year. Think of the services that Facebook is providing its users for $1. Unlimited photo storage and sharing. A contact database. Email. Instant messaging. A gaming platform.

The economics in the consumer cloud are compelling. They will become more so over time and as large enterprises realize that there is no strategic value in common IT, there will be a similar shift for businesses.