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Difference between Cloud Server and Physical Server (On Premises)

There are so many difference between cloud server and physical server. There are clear benefits having the Cloud Server.

Having a Physical  Server is a very expensive cost for any company to buy and maintain.

Both the initial upfront and running costs are very costly.

Difference between Cloud Server and Physical Server

Tabluation of the Difference between Cloud Server and Physical Server (On Premises)

Cloud Server

Physical Server (On Premises)

Total Cost of Ownership

  • Hardware and Software – eliminates the need for physical and virtualized hardware,storage, and software licensing
  • Management and Maintenance – Microsoft provides full management and maintenance of Exchange Online with 24/7 Support
  • Backup – Microsoft provides automatic real-time backup and recovery for alternating datacenters
  • OPEX – Operating  Expediture
You will need to buy hardware and software for

  • Hardware Server
  • OS Server Software
  • Antivirus Software
  • UPS
  • Backup Software
  • SAN/NAS Storage
  • Extended Maintenance Services for 24/7 (for Server)
  • Extended Warranty for Server and other Network Devices
  • Higher Service Level  Agreement (SLA) for Internet Services
  • Redundancy Hardware and Services (for failover)
  • CAPEX – Capital Expenditure

Running Overhead and related Supporting Costs

  • Electricity Costs of running Server, Air-Con, UPS, Backup, Switch
  • Maintenance services costs for hardware/software
  • Extended Warranty costs for Hardware
  • Repair costs for Hardware
  • Maintenance cost of servicing air-con for Server Room
  • Rental of Backup generator in case of building electricity servicing (requirement by PUB)
  • Need Internet Services with Static IP
  • Need to pay for redundant Internet Services, in case of primary internet access failure.
  • Rental Cost of Office Space
  • Cost of Server Rack or any furniture.
  • Cost of Cabling/Labeling/Documentation
  • Cost of Replacement Battery for UPS

High availability

  • High availability and redundancy is built in and there is a financially-backed 99.9% SLA for Exchange Online.
  • Need to get 2nd Secondary WAN
  • Limited Warranty of the physical hardware (max 5 years)

Future Proof

  • No need to upgrade anymore.
  • No more downtime for migration to newer version or hardware
  • Need to engage time-consuming and expensive migration exercise every 4-5 years.
  • Migration may cause some downtime.
  • Newer version every 3 years


  • Can scale up and scale down computing power accordingly to changing needs and requirements
  • Can stop and start at anytime
  • Have to buy hardware and project computing usage for the next 5 years
  • Cannot Reduce or downgrade
  • Little Resale Value if operation ceases

Migration Costs

  • Lower Costs
  • Shorter downtime
  • Higher Costs due to manual and physical work
  • More Downtime during migration

Location Independent

  • Faster Location Migration
  • Can be located in anywhere desired according to user location (to minimize network latency)
  • Slow Location Migration
  • Need to pack and unpack if operation relocate.
Difference between Cloud Server and Physical Server

Top 3 cloud infrastructure service (IaaS) provider

You can get cloud server services from these top 3 cloud infrastructure service (IaaS) provider


Google Cloud
Launch year
Geographical Regions
Availability Zones
140 (countries)
Key offerings
Compute, storage, database, analytics, networking, machine learning, and AI, mobile, developer tools, IoT, security, enterprise applications, blockchain.
Compute, storage, mobile, data management, messaging, media services, CDN, machine learning and AI, developer tools, security, blockchain, functions, IoT.
Compute, storage, databases, networking, big data, cloud AI, management tools, Identity and security, IoT, API platform
Compliance Certificates
Annual Revenue
$33 billion
$35 billion
$8 billion

Canalys Year-onYear Growth of Worldwide Cloud Infrastructure Spend from 2018 to 2021 – Jan 2022

Worldwide cloud infrastructure services expenditure topped US$50 billion in a quarter for the first time in Q4 2021. Total spending grew 34% to US$53.5 billion, up US$13.6 billion on the same period a year ago. Industry-specific applications continued to diversify the use of cloud infrastructure services, especially in healthcare and the public sector. This combined with more workload migration and cloud-native application development as part of digital transformation projects, which increased demand for services. In addition, lasting pandemic-related consumption drivers, such as remote working and learning, ecommerce, gaming and content streaming, remained important contributors. New immersive use cases are emerging, such as the metaverse, which will drive future demand and the need for more powerful, distributed, intelligent and scalable services with lower latency. The leading cloud service providers are best placed to provide the infrastructure. The top three in Q4 2021, namely AWS, Microsoft Azure and Google Cloud, collectively grew 45%, to account for a combined 64% share of customer spend.

For full-year 2021, total cloud infrastructure services spending grew 35% to US$191.7 billion, up from US$142.0 billion in 2020. The reopening of economies post-lockdowns and growing customer confidence during the year increased multi-year contract commitments with cloud service providers.


canalys cloud infrastructure Q4 2021 Difference between Cloud Server and Physical Server


Canalys Top 3 Cloud Service Providers Q4 2021 – AWS, Azure and Google Cloud – Jan 2022

Amazon Web Services (AWS) led the cloud infrastructure services market in Q4 2021, accounting for 33% of total spend. It grew 40% on an annual basis. Meta, previously Facebook, recently chose AWS as a long-term strategic cloud service provider and continues to deepen the relationship as Meta begins to move away from social media to become a broader metaverse company over the next five years. AWS also announced key customer wins across retail, healthcare and financial services and emphasized a key agreement with Nasdaq to migrate markets to AWS to become a cloud-based exchange.

Microsoft Azure had a 22% market share and was the second largest provider. It grew 46%, driven by long-term consumption commitments. Across its metaverse technology stack, Microsoft Azure has prepared Digital Twins to model physical objects, Azure IoT to connect physical assets to the cloud and Azure Maps, an indoor private mapping service. It continued to grow its cloud business across multiple sectors in Q4 2021, with key wins in healthcare and financial services

Google Cloud was the third largest provider and grew 63% to account for 9% of the market. The Google for Startups Cloud Program recently expanded support for investor-backed startups and won key customers, including some in the virtual reality space. It also continued global expansion plans with a dedicated US$1 billion five-year investment across Africa to support digital transformation efforts


canalys top3 cloud providers Q4 2021 Difference between Cloud Server and Physical Server