Latency matters in proportion to how much of your edge depends on being first. For a position held for weeks it is irrelevant. For anything competing for queue-position or reacting to a print, it is the whole game.
The budget is cumulative and the slowest hop dominates. A microsecond-optimised strategy running on a feed that is milliseconds late is simply a slow strategy with expensive hardware.
Example: a retail path might be 40 milliseconds of internet transit, 5 milliseconds of platform processing and 2 milliseconds to the venue. A colocated firm runs roughly 20 microseconds end to end — about two thousand times faster. Both can be profitable; only one can win a race for the last 500 shares at a price.
Related: colocation, latency-arbitrage, direct-feed, fast-market