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Data centers spend billions of dollars behind the cloud revenue growth

Published in14:17 2015-11-06| Time reading| sourceDataCenterKnowledge| ZeroArticle comments| authorSverdlik Yevgeniy

Abstract:In the third quarter of the cloud computing industry, the major manufacturers of cloud computing industry funds, the corresponding development of the cloud computing companies need to maintain a lot of aspects.


Want to have a thriving cloud services business, the disadvantage is that a company needs a lot of money to invest in the data center infrastructure to support it. The faster it grows, the more money it needs to spend.

Each quarter, the cloud giant Amazon, Microsoft, IBM and Google servers and other hardware and cloud data center services in venues around the world spend up to billions of dollars, as of September 30, quarterly report is no exception.

It is difficult to extract accurate calls from the company in the data center. They usually do not disclose these numbers and other capital expenditures. However, cloud service providers have always stressed that the cost of data centers is one of the largest capital expenditures.

For example, in the last quarter of last year, Microsoft spent $1 billion 500 million for its cloud services to support growth in demand, the company's chief financial officer, Hood Amy, Thursday, the results of the topic to talk with analysts. Google's capital expenditure of about $2 billion 400 million in the quarter, mainly for the production of equipment, data center facilities.

Also Thursday,At Amazon's earnings conference,Phil Hardin said: Amazon's investment mainly in the maintenance of the data center, to expand the establishment of cloud regions, which are really needed spending". This means that it needs to spend big money in the short-term internal department of the new data center infrastructure to support the rapid growth and high profit Amazon Web services business.

Own or lease?

All major cloud providers also use commercial data center services, to expand the "network level" facilities in different degrees and to build around the world. IBM is ahead of other manufacturers. And SoftLayer is a digital real estate trust's main customer, the main wholesale data center provider.

But other people use the third party data center capacity is multi-megawatt facilities or small footprints printed on the network-rich retail hosting data center.

A leased data center site AWS to disclose the open office property trust company facility at Ashburn Virginia. Cloud infrastructure has been extended to China, IBM and Microsoft and China twenty-first Century Internet data center providers to expand their services market.

To make a profit.

In addition to the capital costs of leasing and building data centers, as there are driven operating costs, these costs are obviously a direct impact on profits.

"In addition to the cost of software development, we have to pay the cost of building and maintaining infrastructure to support cloud computing services. These costs will reduce our previously achieved operating profit margins." Microsoft mentioned in the earnings document submitted to the SEC.

Despite the cost, but from a year ago AWS trying to improve its profit margins in the third quarter of 2014 increased from 25% to fourth in the 8% quarter.

Microsoft's cloud edge is also a positive story. A substantial decline in the last quarter, the company's gross margin, a Windows 10 from the delay to the calculation of personal income and profit rate, productivity, product and business flow decreased, but from smart cloud segments to enhance the higher gross margin, including azure, the mobility of server products and enterprises, helping to offset the overall profit rate decreased.

A part of the public cloud knowledge picture

Although Microsoft's public cloud infrastructure services revenue is growing, but alone to compare with Amazon (such as IBM and Google) is still significantly less than. AWS in the last quarter of last year made a profit of $3 billion 200 million in revenue and $1.

However, Microsoft and IBM, due to their longsellThe legacy of local solutions, companies have a strong hybrid cloud strategy, which has a higher income than their public cloud services revenue.

Analysts asked whether Microsoft Azure Merged Companies on-prem business, the answer is negative. And "is expected to grow".

Microsoft Azure does not consider the "Quarantine", the company's chief executive officer Satir Nadella said on Thursday's conference call. Point of view of its local data center software, such as its ubiquitous server products, the entire cloud expansion. It combines Azure's distributed hybrid cloud.

Nadella said "Azure revenue and computing use more than doubled over last year." Not only from the company's income from Azure, the last quarter also earned $5 billion 900 million from the smart cloud segment, to achieve a 8% improvement, almost two times the original income. Azure's partial operations tend to the whole intelligent cloud school. Smart cloud includes Azure, server products and enterprise mobility.

Microsoft's other sources of revenue for the cloud, Office 365 (Enterprise Edition), this is another piece of productivity and business processes have some of the business. Although this part of the entire decline of 3%, about $6 billion 300 million, but Office 365 revenue grew by 70%.

To a large extent, the IBM strategy is more dependent on the hybrid cloud. The company did not break its previous cloud service revenue, but it reported a 12 month public cloud revenue rate, which is about $4 billion 500 million, higher than the $3 billion 100 million a year ago. Annual operation of the project for all IBM cloud services, including public, private and hybrid cloud, about $9 billion 400 million.

IBM's cloud services including softlayer, private cloud on-prem off-prem, and bluemix platform, and developers can using through the company's data analysis services, including Watson, for more directly statistical and computational technique. In late September, the company introduced the Local Bluemix, a more deep on-prem version of its PaaS hybrid cloud.

Heavy operation

Because of the capital and operational costs required to run the cloud services, public cloud has proved to be an extremely difficult supplier of commercial competition. Cloud computing giant enjoy more economies of scale, smaller companies are not available, which means small firms cannot in the price competition or geographic range for a place, which is in the market in a more and more important factors.

Unless the small companies can successfully occupied a professional experience, especially the public cloud market, this is become the heavyweights of the operation.

Text link:Billions in Data Center The Spending behind Cloud Revenue Growth(compile / Li Zijian / commissioning editor Li Zijian)

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