From now on, Microsoft only wants to replace the server hardware for operating the Azure cloud services after six years – and thus save a lot of money.
Microsoft has announced that it intends to keep the hardware for operating its own cloud services in operation longer. Instead of after four years, as before, the servers and Co. will only be replaced after six years in the future. This is mainly for economic reasons.
The extension of the amortization period begins immediately with the recently started fiscal year 2023, as Microsoft’s Chief Financial Officer Amy Hood announced in an earnings conference call with investors. The company itself published the transcript of the investor meeting.
Billions in savings
The changeover is primarily for financial reasons, has a direct effect on further server hardware purchases and thus already on the balance sheets from June 30, 2022. With the extended amortization period to six years, Microsoft expects savings totaling $3.7 billion in fiscal year 2023, including $1.1 billion in the first quarter.
The extension of the deadline was made possible, among other things, by “investments in our software, which make the operation of our server and network equipment more efficient,” Hood continued. In combination with technical progress, server hardware can now be used longer than was previously possible.
Trend among hyperscalers
The other two hyperscalers AWS and Alphabet/Google recently announced that they intend to use the server hardware for longer in the future: Alphabet’s Google Cloud is expected to increase its useful life from three to four years, and AWS from four to five years, as reported by The Register.
It is not known how and whether the changeover will affect the prices for cloud customers. A recently published study by the Uptime Institute looks at the costs of cloud operations from a company perspective.
