Modeling Costs

As described in Chapter 1, one of the defining characteristics of WSCs is their emphasis on cost efficiency at scale. To better understand this, let us examine the total cost of ownership (TCO) of a data center. At the top level, costs split into capital expenses (Capex) and operational expenses (Opex). Capex refers to investments that must be made upfront and that are then depreciated over a certain timeframe. Examples are the construction cost of a data center or the purchase price of a server. Opex refers to the recurring monthly costs of actually running the equipment, excluding depreciation: electricity costs, repairs and maintenance, salaries of on-site personnel, and so on. Thus, we have: