A minute for your Feedback please

Sunday, March 20, 2011

The simillarity between cloud computing and malls

In his excellent article in the HT Media weekly supplement 'Brunch'(full article can be read here) the noted foodie and journalist Vir Sanghvi explains the rise of restaurants in malls by rationalizing that the restaurateurs have found a way around the restrictions imposed by India’s corrupt real estate scene. The development of shopping malls all over the country has made it possible for restaurateurs to function without having to worry at all about dodgy landlords and corrupt Municipal officials. Moreover, the basics – water, electricity, security, air conditioning etc – are all guaranteed. Nor do restaurateurs have to spend money on marketing and advertising to announce their presence. At the malls, the customers are there for the taking.

This article reminded me of why Cloud computing is thought the way of the future. When the storage, processing power and software can all be obtained on a pay-per-use basis, fixed costs turn into variable costs. No longer does the entrepreneur need to fuss about technology cycles, IT Depts etc. Instead, he can use cloud computing to set up a virtual company online without much risk. Though spending on marketing will be still needed, Google Adsense allows even that costs to be variable(as opposed to flat rates for mass media). And while customers are not 'for the taking', sudden spikes/downturns in their number can be easily adjusted for in changed capacity, rather than facing the classic newsvendor/OM optimization problem. 

Granted that the above largely holds for 'digital businesses' like media, writing, IT etc. But even small conventional businesses seeking to have an e-commerce presence, will have an option beyond EBay. So like malls, cloud computing serves the same economic function of leveling the playing field for industries.

No comments: