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Difficulty: EasyUnderstand concepts of cloud economics

ByteQuest Studios is migrating its game development servers from an on-premises data center to the AWS Cloud. By doing so, the company will no longer need to make upfront investments in physical servers and network hardware. Instead, they will pay only for the resources they use on a monthly basis. Which of the following describes the primary financial shift of this transition?

  1. A
    The shift from variable operating expenses (OpEx) to fixed capital expenses (CapEx)
  2. B
    The elimination of all operating expenses (OpEx) by using On-Demand pricing models
  3. The shift from upfront capital expenses (CapEx) to variable operating expenses (OpEx)Answer
  4. D
    The transition from dynamic elasticity to a fixed capital expense (CapEx) budget model

Answer

The shift from upfront capital expenses (CapEx) to variable operating expenses (OpEx)
The correct answer is correct because transitioning to the AWS Cloud allows organizations to trade capital expenses (CapEx)—such as investments in physical servers and data center infrastructure—for variable operating expenses (OpEx), where they pay only for the IT resources they consume.

Step-by-Step Solution

1
Analyze the pre-migration infrastructure costs where physical servers are purchased upfront.
Identify this upfront hardware investment as a Capital Expense (CapEx).
To establish the initial financial baseline of the on-premises datacenter model.
2
Evaluate the post-migration consumption model where resources are billed monthly based on usage.
Identify the flexible pay-as-you-go AWS usage billing as an Operating Expense (OpEx).
To determine how cloud consumption changes the corporate cost structure.
3
Compare the two models to determine the primary financial transition.
Confirm that the change replaces upfront CapEx with variable OpEx.
To select the matching option that represents this fundamental cloud economic shift.

Key Concept

Replacing upfront capital expenses (CapEx) with variable operating expenses (OpEx) to pay only for the resources consumed.
Estimated Time:45s
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Understand concepts of cloud economics

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