Some of the world's largest cloud computing companies, including Alphabet, Amazon and Cloudflare, have found a way to save billions by extending the life of their servers, a move that is expected to significantly reduce depreciation costs, Increase net income and contribute to your fund. lines.
Alphabet, Google's parent company, started this trend in 2021 by extending the life of its servers and network equipment. By 2023, the company decided that both types of hardware could last six years before needing to be replaced. This decision led the company to save $3.9 billion in depreciation and increase net income by $3 billion last year.
These savings will go toward Alphabet's investment in technical infrastructure, particularly servers and data centers, to support the exponential growth of AI-powered services.
Amazon and Cloudflare too
Like Alphabet, Amazon has also recently completed a “lifespan study” of its servers and has decided to extend their lifespan from five to six years. This change is expected to contribute $900 million to net revenue in the first quarter of 2024 alone.
Cloudflare followed a similar path, extending the life of its service and network equipment from four to five years starting in 2024. This decision is expected to have a modest impact of $20 million.
Tech giants face rising costs for investing in artificial intelligence and technical infrastructure, so any savings that can be made elsewhere are vital. However, the move to extend the life of servers is not just a cost-cutting exercise, it also reflects continued advances in hardware technology and improvements in data center designs.
