Some of the world's largest cloud computing firms, including Alphabet, Amazon, and Cloudflare, have found a way to save billions by extending the lifespan of their servers - a move expected to significantly reduce depreciation costs, increase net income, and contribute to their bottom lines.
Alphabet, Google's parent company, started this trend in 2021 by extending the lifespan 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 and increasing net income by $3.0 billion last year.
These savings will go towards 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 also recently completed a "useful life study" for its servers, deciding to extend their working life from five to six years. This change is predicted to contribute $900 million to net income in Q1 of 2024 alone.
Cloudflare followed a similar path, extending the useful life of its service and network equipment from four to five years starting in 2024. This decision is expected to result in a modest impact of $20 million.
Tech behemoths are facing increasing costs from investing in AI and technical infrastructure, so any savings that can made elsewhere are vital. The move to extend the life of servers isn't just a cost cutting exercise however, it also reflects the continuous advancements in hardware technology and improvements in data center designs.
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