Google’s cloud CAPEX hits $30bn with more to come as giant plans 10 new data centres
And Snap is also set to help boost data centre investment as company has $2bn cloud contract with Google to use its cloud data centres.
Google’s cloud empire has cost the American giant $30bn over the years, nearly double of what Microsoft has invested in its Azure cloud infrastructure.
The figure was unveiled by Google’s parent company Alphabet chairman Eric Schmidt while taking to the stage at the provider’s annual conference Google Cloud Next held in San Francisco.
He said: “We put $30bn into this [Google cloud] platform. I know this because I approved it.”
As the company tries to catch up with Microsoft and especially AWS in terms of market share and revenues, a $30bn capital expenditure comes at no surprise.
Google is in direct competition with not only Microsoft and AWS, the world’s public cloud leader, but also IBM and Salesforce.
According to the most recent data by Synergy Research Group, AWS was in Q4 of 2016 the public cloud leader with more than 40% of worldwide revenues.
Microsoft is believed to be second, while Google and IBM keep fighting for the third place.
But can Google catch up? The company has today more than 20 cloud regions and operates 15 data centres, including eight in the US, one in Chile, four in Europe (Ireland, the Netherlands, Finland and Belgium) and two in Asia, in Taiwan and Singapore.
In 2016 Google’s overall CAPEX was higher than the preceding year amounting to $10.9bn, compared to $9.9bn in 2015.
Although the full amount was not solely directed towards the construction of data centres and direct cloud investments, the company’s CFO Ruth Porat said most of the investment went into building out the company’s cloud footprint.
The full year CAPEX followed from the company’s commitment towards investing in the cloud announced by Google’s SVP Diane Greene, precisely one year ago at Google Cloud Next 2015.
She said at the time: “We are dead serious about this business. (…) We are going to put them [Google data centres] to work as much as we can.”
Last week, the world got a better idea of what Google is planning next as the company unveiled plans to open more data centres in Canada, the US and Europe.
This follows from data centres which are expected to come online in the coming months in São Paulo (Brazil), Finland, Frankfurt (Germany), London (UK), Mumbai (India), Singapore and Sydney (Australia).
There are also reports that Google is planning to mimic Facebook and open a data centre in Sweden.
Moreover, helping Google’s case is a $2bn cloud contract with Snap, owner of social media app Snapchat.
The contract was unveiled by company filings put forward for an IPO that took place last week on Nasdaq.
The agreement signed on January 30, 2017, between Google and Snap includes the purchase of cloud services worth $400m for a period of five years.
Despite Snap’s deal with Google, the company has also a $1bn contract with AWS. Yet, Google has won this customer over AWS and is set to invest more to secure one of its largest cloud customers by building out its infrastructure.
Moreover, it is relevant to mention the investment Google is making towards powering its data centres with renewable energy.
Looking at the wider market, Google is not alone in regards to expansion plans. Also Microsoft and AWS have in the past few months announced intense growth roadmaps.
In AWS’ case, the web scale player operates 16 data centres across all continents except for Africa, accounting to 42 availability zones. The company is also the only public cloud provider to have a data centre – comprising two zones of service- fully dedicated to the US government.
Public plans announced by AWS include new regions in Paris, France, and Ningxia, China, where the company is already present in Beijing.
As for Microsoft, the company is the one out of the big three with more cloud data centre buildings at 31 facilities powering Azure in the US, Canada, Brazil, UK, Ireland, Germany, India, Australia, China, Japan, North Korea and more.
The company is currently building two data centres in France.
John Dinsdale, a Chief Analyst and Research Director at Synergy Research Group, said: “While a few cloud providers are growing at extraordinary rates, AWS continues to impress as a dominant market leader that has no intention of letting its crown slip.
“Achieving and maintaining a leadership position in this market takes huge ongoing investments in infrastructure, a continued expansion in the range of cloud services offered, strong credibility with the large enterprise sector, consistently strong execution, and the wholehearted and long-term backing of senior management.”