Why would their use case seem better suited to renting a bunch of servers? The 400% jump in video utilization upon the release of the iPhone 3gs probably repre

Why would their use case seem better suited to renting a bunch of servers? The 400% jump in video utilization upon the release of the iPhone 3gs probably represented a major inflection in their rate of storage growth, and their peak need for media processing capability. That may have been something they could have anticipated, but it would have been easy to end up dramatically over- or under-provisioned. In addition, I'd expect that their load varies a lot. Some of it may be predictable, but short lived (like increased photo and videoposting around the holidays), so renting 2x as many servers for a week a few times a year seems like a hassle. Other spikes are going to be unpredictable and of unknown duration. Keeping too much extra capacity around for these situations can quickly eat up the savings from renting servers. At the very least, "cloud computing" is going to be valuable for handling large peaks, even if they have some more permenant infrastructure in place. Look at electrical power generation. Utilities invest heavily in steam plants to achieve high efficincies andclow costs for meeting their base load. To meet peak demand, they fire up less efficient gas turbines. The higher operating cost is more than offset by the fact that they are so much cheaper to build and can be spun up and down quickly.