Cloudonomics: The Business Value of Cloud Computing, + Website

City in the Clouds

Allegedly, on May 23, 2007, a milestone was reached.28 For the first time, half the world’s population lived in cities.29 Why the shift? The answer has to do with the magnetic attraction of cities.

According to Brendan O’Flaherty, a professor of economics at Columbia University: “Urban agglomerations are a great idea. Concentrating a lot of activity in a small area saves on transportation; allows all sorts of convenience, sharing, and economies of scale; encourages the spread of new ideas; and simply satisfies the human desire to be social.”30 This concentration is similar to network effects such as at Facebook: People go there because that’s where the people are. But besides interpersonal network effects, there is another feedback loop at work. As O’Flaherty quipped, “The motels and garages are in [the city] because people who crash go [there], and people who crash go to [the city] because that’s where the motels and garages are.”31

Cities offer services and resources: libraries, parks, restaurants, theaters, museums, clubs and raves, specialists in chronic obstructive pulmonary disorder, antique shops specializing in the Han Dynasty, comic book shops specializing in Han Solo. The breadth of this collection of services and resources attracts those interested in the richness of city-dwelling. In other words, in a virtuous cycle, the availability of resources and services attracts customers, and the existence of customers attracts businesses offering these services. ...