Cloud Goliath Versus a Federation of Cloud Davids: Survey of Economic Theories on Cloud Federation

Kibae Kim (), Songhee Kang () and Jörn Altmann
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Kibae Kim: College of Engineering, Seoul National University
Songhee Kang: College of Engineering, Seoul National University

No 2014117, TEMEP Discussion Papers from Seoul National University; Technology Management, Economics, and Policy Program (TEMEP)

Abstract: Cloud computing, which can be described as a technology for provisioning computing infrastructure as a service, runtime platform as a service, and software as a service, is considered as a keystone for innovation in the IT area. However, a limiting factor to innovation through cloud computing could be the economies of scale and network externalities that give more benefits to larger cloud providers. Due to the economies of scale and network externalities in an oligopolistic environment, a giant cloud provider can offer resources at lower cost than smaller providers. To overcome the disadvantage of small clouds, some research proposes architectures, in which small clouds can federate through common virtual interfaces. Therefore, academy and industry ask whether the federation of small cloud providers is economically feasible and can compete with a giant cloud provider. However, it is hard to solve those problems because the specifications of a cloud federation and the conditions of cloud market are unclear. To fill this gap, in this paper, we survey the conceptual background of cloud computing and the federation of small cloud providers. The results of this paper are expected to guide how to define the economic problems on cloud federation and provide constraints to the problems.

Keywords: Cloud Computing; Economic Analysis; Infrastructure-as-a-Service; Platform-as-a-Service; Software-as-a-Service; Service Ecosystem; Economies of Scale; Cloud Federation. (search for similar items in EconPapers)
JEL-codes: D01 D02 D24 D85 L23 L86 M15 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2014-07, Revised 2014-07
New Economics Papers: this item is included in nep-com
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in Proceedings of the 11th International Conference on Economics of Grids, Clouds, Systems, and Services (GECON 2014).

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