What are economies of scale? How it relevant to the Cloud (cloud computing)?

 

Economies of Scale definition from Wikipedia states,

that it is the cost advantages obtained by a company or enterprise if they scale (increase) their operations which means overtime it can produce increasing output at decreasing cost per unit of producing output.

Now, let's take a simpler example, you probably know about amazon.com, let's assume that on daily basis amazon processes 1 million online orders on an average. But, on Prime Day, it is likely to handle and process 10 million online orders, which simply means that amazon needs to scale up their operation for Prime Day.

Now, one of the biggest advantages of cloud computing is Scalability, and that's where the connection lies, when a company goes from managing its own servers to a cloud service provider, they enable easily scaling of operations.