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Difficulty: EasyUnderstand concepts of cloud economics

A financial analytics startup is planning to launch a new forecasting application. Instead of purchasing physical servers and networking hardware upfront, the startup decides to host the application on AWS and pay only for the resources they use each month. Which cloud economics concept does this decision represent?

  1. Replacing upfront capital expenditures with variable operational costsAnswer
  2. B
    Converting variable operational costs into fixed capital expenditures
  3. C
    Relying on static scaling to eliminate the need for operational expenses
  4. D
    Using monolithic design to reduce the cost of running multiple servers

Answer

Replacing upfront capital expenditures with variable operational costs
Replacing upfront capital expenditures with variable operational costs is correct because the AWS Cloud allows customers to avoid high upfront hardware investments (CapEx) and instead pay for resource consumption on a pay-as-you-go basis as ongoing operational expenses (OpEx).

Step-by-Step Solution

1
Analyze the financial transition in the scenario
The startup is choosing not to purchase physical hardware upfront (avoiding Capital Expenditures) and is instead paying a monthly fee based on actual usage (paying Operating Expenditures).
This is a key differentiator of cloud computing economics compared to traditional on-premises data centers.
2
Match this financial model to the correct AWS Cloud economics benefit
This shift represents trading capital expenditures for variable operating costs.
By using AWS, organizations replace the fixed overhead of physical assets with flexible, consumption-based operating costs.

Key Concept

Shifting from Capital Expenditures (CapEx) to Operating Expenditures (OpEx)
Estimated Time:1m 0s
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Understand concepts of cloud economics

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