Cloudonomics: The Business Value of Cloud Computing, + Website

CHAPTER 16

Million-Dollar Microsecond

In August 2008, Michael Phelps swam into the history books, winning eight gold medals at the Beijing Olympics, an unsurpassed record. Immediately after, the endorsement value of such an accomplishment was estimated to be $100 million.1 Each medal, of course, contributed to the total of eight, but his closest victory was the one in the 100-meter butterfly, which he won by 1/100 of a second—10 milliseconds—in a photo finish.2

In the world of trading—currencies, commodities, or equities—it isn’t just milliseconds that matter, but microseconds and soon nanoseconds. The New York Stock Exchange (NYSE) Euronext’s Nouveau Système de Cotation (New Quotation System) delivered performance of 1.5 milliseconds per round trip. But that wasn’t good enough, so the exchange upgraded, developing the Universal Trading Platform, which can deliver up to ten times faster performance: 150 microseconds.3 As NYSE Euronext chief information officer Steve Rubinow responded to a vendor pitch regarding submillisecond performance, “Do you mean 900 microseconds or 100 microseconds? Because that’s a world of difference to us.”4 This is because of the “million-dollar microsecond,”5 where increasing performance by 1 microsecond—1 one millionth of a second—is worth $1 million—every day. The concern around microseconds has “come up in pretty much every customer meeting I’ve had,” claimed the CME Group’s Craig Mohan, who is responsible for the colocation services of the Chicago ...