As a lover of fine chocolate, and a member of the Chocolate Tasting Club, I notice chocolate shops. They are liberally scattered throughout London.
The run up to Easter is a good time for chocolate, and numerous chocolate outlets appear at this time, either taking over shop sites, or or as pop-ups within shops, only to disappear shortly afterwards. The benefits are clear: it avoids the cost of running a chocolate shop all year round, and customers have access when they most need it.
An even more flexible stall shows up during the Wimbledon Tennis tournament, when numerous tourists arrive to enjoy the spectacle – and sometimes, the English summer sunshine. These tourists flood the local restaurants, where local shops adopt a tennis theme.
Near these 19th century shop fronts, at the top of Wimbledon Hill, you can find a couple of children sitting outside their back gate with a pop-up strawberries and cream stall, with soft drinks options. Based around a simple table, this lucrative set up carries out a brisk trade with those tourists who think that Wimbledon Station is the nearest one to the tournament. A few days later it vanishes without trace.
Pop-up agility contrasts with traditional bricks-and-mortar store inertia. A big infrastructure cost – long term staff, a wide product range – is not needed. Or rather it is passed on the the system as a whole. Short term staff have to be available when the pop-up needs them, and they bear the cost of finding other work the rest of the time. Shop space must also be available – and the landlord has to carry this cost at other times.
Without paying to reserve staff and space, you risk resources not being available when you need them.
The Cloud allows pop-ups for software distribution. Clients can use – and pay for – the resources they need, when they need them. The cloud supplier bears the risk of an under-utilised infrastructure.
But here technology comes to the rescue. Computers are cheap. Storage is cheap. The main cost of a cloud supplier is electricity and cooling, so unused systems are cheap to run. And the internet runs 24/7, so people can “hot desk” computer resources round the clock. This makes much more efficient use of capital than with local computers, unused at night or when people are on holiday or at lunch or just not using them.
Cloud purchase and maintenance costs are lower too, benefiting from economies of scale. The cloud is so cheap to make that cloud suppliers are happy to bear the cost of spare capacity. Unlike people, the computers are happy to be idle or busy. So using pop-up cloud infrastructure, you always have availability of both your “store” and your “staff”.
The cloud provides the flexible infrastructure for scaling usage up and down: money is made duplicating identical software. Software development itself does not benefit much from the cloud – it is more akin to developing the cloud itself. And this is literally true in the case of Forbidden’s Forscene cloud video platform.
By commoditising computer resources, the cloud cuts hardware costs and margins. This moves the value added further towards differentiated software – ever more accessible through pop-up cloud instances.
Stephen B Streater
Founder and Director of R&D