Economies of scale refers to the cost advantages that an IT organization obtains due to expansion.• The average cost per unit decreases as the scale of output increases.• Reductions in unit cost as the size of a facility and the usage levels of other inputs increase.• The more computer resources being used, the cheaper the price per resource.Cloud computing economies of scale promises to dramatically reduce the cost of computing over time and inevitably lead to greater adoption of the technology. Better communication prices: large data centers are positioned to negotiate better prices with communication providers, purchasing a great deal of bandwidth without paying such a high rate per gigabyte for a guaranteed service.Network virtualization is gained if the network is tailored to support the networking hardware. For example, Google designs its own switches.
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