The long run-up
1960s mainframes already sold time-sharing — many users, one expensive machine. John McCarthy predicted computation would be sold like electricity. Data centres, colocation and virtual private servers were the intermediate steps.
The 2006 inflection
Amazon released S3 and EC2, turning storage and servers into API calls billed by the hour. Azure and Google Cloud followed. The change was not technical novelty but the commercial model: no capital purchase, no procurement delay, elastic capacity.
Capex to opex
On-premises infrastructure means buying peak capacity up front and running it idle most of the time. Cloud converts that into operating expense that follows demand — with the trade-off that inefficiency now shows up on a monthly bill instead of in a depreciating asset.
- On-demand self-service and elasticity.
- Measured, metered billing.
- Broad network access and resource pooling.