Why Amazon and Peers Are Focusing on Global Data Center Expansion
Tech players growing their data center footprint
Earlier in this series, we learned of Amazon’s (AMZN) data center expansion in the Nordic region. In late 2016, Google announced plans to add new cloud data centers in Mumbai, Singapore, Sydney, Finland, Sao Paolo, and Frankfurt, along with one in the United States this year.
In November 2016, IBM (IBM) announced plans to add four new cloud data centers integrated with cognitive intelligence in the United Kingdom (EWU). Through its data centers, IBM intends to provide Bluemix, Watson Analytics, blockchain offerings, and backend and analytics platforms for the IoT (Internet of Things).
Microsoft (MSFT), another strong player in the cloud space, opened German data center facilities in Magdeburg and Frankfurt in late 2016. It also opened its first two UK data centers in 2016.
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Double-digit growth in capital expenditure
According to The Wall Street Journal, Amazon’s, Microsoft’s, and Alphabet’s (GOOG) capex and capital leases totaled $31.5 billion in 2016, an increase of 22% year-over-year. Amazon, Google, and Microsoft spent $4.0 billion, $2.9 billion, and $2.0 billion in 4Q16. Amazon’s expenditure includes property and equipment acquired under capital leases.
These companies do not divulge how much capex was put towards data centers. However, as these companies’ major focus continues to be the cloud, it is safe to deduce that a significant chunk of their capex would be directed towards the enhancement of their cloud operations.