Google Cloud loses $3 billion despite delayed server purchases • The Register

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Google Cloud racked up another year of losses, despite extending the life of its hardware by a year.

Last year, the search and advertising giant revealed it was extending the operational life of its cloud servers from three to four years and found it could squeeze a few extra years out of some upgrade kits. network, sometimes elapsing five years between updates.

In its fourth quarter 2021 earnings announcement, Google’s parent company, Alphabet, revealed the financial impact of this change: For the full year, Google Cloud reduced depreciation expense by 2 .6 billion and recorded an increase in net income of $2 billion.

But even with those old servers generating savings, Google Cloud generated losses: $890 million in the fourth quarter and $3.1 billion for the year.

The past four years of Google Cloud have produced the following numbers.

$5,838 $8,918 $13,059 $19,206
($4,348) ($4,645) ($5,607) ($3,099)

On Alphabet’s earnings call, executives preferred to focus on Google Cloud’s revenue growth, which was 45% year-over-year. CEO Sundar Pichai also revealed that Alphabet’s backlog revenue grew more than 70% to $51 billion, most of which was attributable to spending commitments on Google Cloud.

He listed top-notch customers who have committed to G-Cloud to demonstrate where that money will come from, noted that the sales force has more than tripled, and channel partners have more than doubled their revenue contribution.

These customers are presumably happy to have their code running on older servers, although Intel is promoting its newest Xeon Scalable silicon as offering “an average 1.46x performance improvement across generations.”

Google Cloud’s red ink didn’t dampen Pichai’s overall mood, as Alphabet generated $257.6 billion in revenue in 2021, up 41% year-over-year. Net profit exceeded $76 billion. Do the math: that’s over $200 million in profit every day of the year.

Advertising sales increased and Pixel handsets set new sales records. The company’s stock price briefly topped $3,000 during the quarter. Alphabet has announced that in July it will conduct a twenty-for-one stock split, meaning shareholders will be awarded 19 new shares for each one they currently hold. This is a tactic often used to make investing less daunting for small buyers.

The company is now targeting connected TVs to boost its profits even further.

Philipp Schindler, senior veep and chief commercial officer, told investors that smart TVs have become “Alphabet’s fastest growing screen, and we think there’s a ton of avenues to explore.”

“Brands… can personalize ads at scale and use video ad sequencing to tell powerful stories,” he said, adding that advertisers can target connected TVs “meaning users benefit from ‘a more useful viewing experience and brands can generate more online sales and/or leads.’

Directly in your eyeballs, at home. And most likely powered by software running on four-year-old servers and five-year-old routers. ®

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