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, net revenue will increase and contribute to their bottom line profits. lines.
Alphabet, Google’s parent company, started this trend in 2021 by extending the life of its servers and networking equipment. By 2023, the company decided that both types of hardware could last six years before needing to be replaced. This decision led to the company saving $3.9 billion in depreciation last year and increasing net income by $3.0 billion.
These savings will go towards Alphabet’s investments in technical infrastructure, particularly servers and data centers, to support the exponential growth of AI-powered services.
Amazon and Cloudflare too
Like Alphabet, Amazon also recently completed a ‘useful life study’ for its servers, deciding to extend the lifespan of their servers from five to six years. This change is forecast to contribute $900 million to net income in the first quarter of 2024 alone.
Cloudflare followed a similar path, extending the life of its service and networking equipment from four to five years starting in 2024. This decision is expected to result in a modest impact of $20 million.
Tech giants are facing increasing costs from investments in AI and tech infrastructure, so any savings that can be made elsewhere are critical. However, the move to extend server lifespans is not just a cost savings, but also reflects continued advances in hardware technology and improvements in data center designs.