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A Cloud-Based Economy

Startups are finding that when it comes to compute resources, it pays to rent, not buy. The New York Times takes a look at how companies are benefiting from the low cost and seamless operation of Amazon Web Services, noting that while cloud computing is nothing new, "it is now powering all kinds of new businesses around the globe, quickly and with less capital."

Daniel Gross, a co-founder of a social networking service called Cue, estimates that his firm spends under $100,000 a month with Amazon but would likely spend around $2 million to bring the same capability in house, "without the speed and flexibility.”

The accessibility of cloud computing appears to be changing the entire culture of technology startups, who no longer have to account for a massive investment in IT. "I don't even know what the ballpark number for a server is," Gross tells the Times. "For me, it would be like knowing what the price of a sword is."

Other firms that are turning to the AWS cloud for all their compute needs include the Climate Corporation, Instagram, EdX, and GoodData — a business intelligence firm that mines data on other companies using AWS to find sales leads and other information of commercial use.

Of course, the efficiency of cloud computing has a down side — fewer IT jobs.

"The efficiency of this hyper-aware environment is already remaking jobs for many and will most likely dislocate more," the article states. This new model, in which it's possible to run a successful company with just one or two people, is "a huge change for Silicon Valley," says Graham Spencer, a partner at Google Ventures.

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