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Difficulty: EasyUnderstand concepts of cloud economics

A media design agency is planning to migrate its video rendering workloads from an on-premises data center to the AWS Cloud. The agency wants to understand how this change will affect its financial and operational model. Which two options represent key economic benefits of this migration? (Select TWO.)

  1. Replacing upfront capital expenses (CapEx) with variable operating expenses (OpEx)Answer
  2. Lowering unit costs by leveraging AWS's massive economies of scaleAnswer
  3. C
    Increasing capital expenditures (CapEx) to reserve physical rack space in AWS data centers
  4. D
    Eliminating operational costs by transferring responsibility for application software patching to AWS
  5. E
    Paying a fixed, predictable rate for running all compute resources at maximum capacity 24/7

Answer

Replacing upfront capital expenses (CapEx) with variable operating expenses (OpEx), and lowering unit costs by leveraging AWS's massive economies of scale
Migrating to AWS allows organizations to shift from upfront capital expenses (CapEx) to variable operating expenses (OpEx), paying only for what they consume. Additionally, AWS's scale allows it to lower prices through massive economies of scale.

Step-by-Step Solution

1
Analyze how cloud migration affects capital and operational expenses.
Confirm that cloud services trade upfront hardware purchases (CapEx) for ongoing variable consumption costs (OpEx).
This represents a primary economic shift of cloud adoption.
2
Evaluate how the provider's overall size affects consumer pricing.
Identify that AWS's large volume of users allows it to pass savings on to individual customers.
This refers to the benefit of massive economies of scale.

Key Concept

Concepts of cloud economics including CapEx to OpEx shift and economies of scale
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Understand concepts of cloud economics

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