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The paradigm of cloud computing has started a new era of service computing. While there are many research efforts on developing enabling technologies for cloud computing, few focuses on how to strategically set price and capacity and what key components are leading to success in this emerging market. In this paper, the authors present quantitative modeling and optimization approaches for assisting such decisions in cloud computing services. They first show that learning curve models help in understanding the potential market of cloud services and explain quantitatively why cloud computing is most attractive to small and medium businesses.
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