Consumption-based Model
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In this lesson, you will learn about the consumption-based model in cloud computing and how it differs from traditional IT infrastructure models. We'll explore the two types of expenses involved in IT infrastructure—Capital Expenditure (CapEx) and Operational Expenditure (OpEx)—and highlight the benefits of the consumption-based model.
Capital Expenditure (CapEx) vs. Operational Expenditure (OpEx)
When comparing IT infrastructure models, it's essential to understand the differences between CapEx and OpEx.
Capital Expenditure (CapEx)
CapEx involves a one-time, up-front expenditure to purchase or secure tangible resources. Examples of CapEx include:
Operational Expenditure (OpEx)
OpEx involves spending money on services or products over time. Examples of OpEx include:
Cloud Computing and OpEx
Cloud computing falls under OpEx because it operates on a consumption-based model. Unlike traditional IT infrastructure, where you invest in physical resources up front, cloud computing allows you to pay for the IT resources you use. This model eliminates the need for significant initial investments in infrastructure, electricity, security, and other maintenance costs associated with a datacenter.
Benefits of the Consumption-Based Model
The consumption-based model in cloud computing offers several advantages:
Traditional Datacenter vs. Cloud-Based Model
With a traditional datacenter, you must estimate future resource needs. Overestimating leads to unnecessary spending, while underestimating results in capacity issues and decreased performance. Expanding a traditional datacenter involves ordering, receiving, and installing additional hardware, along with adding power, cooling, and networking resources.
In contrast, a cloud-based model allows for dynamic resource management. You can quickly add or remove virtual machines based on demand, ensuring that you only pay for what you use. This flexibility ensures that your applications and services can scale efficiently without the risk of over-provisioning or under-provisioning.
Cloud Pricing Models
Cloud computing uses a pay-as-you-go pricing model, where you pay only for the services you use. This model helps you:
Cloud resources are rented from a provider's datacenter, similar to how you would manage resources in your own datacenter. However, unlike owning physical resources, you return cloud resources when they are no longer needed and are billed only for the usage period.
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