Considering the cloud

Whether the cloud is ready to serve media depends on what you use it for.

But the topic of readiness isn’t just about technology, it’s also about commercials. 

One of the main benefits of adopting the cloud is its supposed financial flexibility. But does this necessarily hold up? The question is ‘compared to what?’ 

The general comparison tends to be with traditional approaches, where the client has to make some form of commitment in terms of capex or volume to achieve certain discount levels. 

Theoretically this is where the cloud appears to be a commercial step forward, with many services in public clouds being offered on a pay as you go basis. 

That said, even the Amazon Web Services and Azures of this world still provide preferential pricing to those clients who make volume commitments.

Even so, while it’s commonplace for service providers to create the impression of utility via some form of financing, whether this is true utility is open to debate.

First blood to the cloud.

Whilst true utility or pay as you go is available amongst large public cloud providers, it’s not so typical for the traditional media application vendors who are entering the ‘as-a-service’ space. 

But that’s not to say there aren’t encouraging signs. 

In fact we’re working with a wide selection of cloud application vendors such as encoders, transcoders and so on that have very interesting offers.

What is often the case though, is that they’ll probably make smaller chunks of margin over a longer timeframe.

I think we’d all prefer to get as much of our cash as early as possible in any transaction, so this does present a dilemma for application providers. 

So on closer assessment, there is no clear victor here for now.

But assuming everything’s moving in a cloud-like direction, which most would agree it is, let’s imagine you’ve got access to a shiny, dynamically scalable, full utility based cloud solution for your particular need. 

The question is, ‘is it cheaper than just buying the product upfront?’ 

If you’re simply dipping into something for a one-off task now and again, the cloud could be cheaper. 

If you’re consuming a utility based service for a period of years the total cost of ownership (TCO) will probably be greater if using a cloud based system. 

You also need to consider how you’re using your opex service, as public cloud price points vary greatly depending on things like volumes and speed of the service.

Generally, unfettered use of ‘as a service’ will typically reduce the timeline over which your TCO benefit exists for opex over capex – and in some cases, extremely quickly.

It’s hard to give a definitive answer as to whether the cloud is a) commercially ready or b) necessarily better value. 

But the reason to pursue opex isn’t just about a better TCO. 

It could be about your access to capital to make an investment. 

Ultimately, all of these things should be taken into the mix.

And if it is a path you choose to take, make sure you have a robust plan to control it.

Kris Hardiman is head of product management at Red Bee Media