Google has reportedly increased its capex on construction of new data center in year 2016. The company is focusing on continuing the similar expansion and investment pattern even in 2017 which might see a rise in Google’s infrastructure spending. Capital expenditure of Google in 2016 was around $10.9 billion whereas the company’s capex in the year before was only $9.9 billion. It is straightway a 10% increase in the spending.
Ruth Porat, Chief Financial Officer of Alphabet Inc. said its capital expenditures during the quarter reflected “investments in production equipment, facilities, and data center construction.”
In March 2016, Google clearly indicated that it will be ramping up spending on data centers to provide support and framework to company’s cloud services. The increase in capex is thus a planned move by tech giant which like its competitors is following an aggressive strategy to capture larger portion of data center market. At present, Amazon is leading in this industry with Microsoft on the second slot. Google is clearly trying to give a tough competition to them as well as companies like IBM and Salesforce to stay ahead in this business.
Structure Research reports that Google’s IaaS (Infrastructure-as-a-Service) market share in 2015 was 2.5%. AWS (Amazon Web Services) held 70.1% of this market while MS Azure registering 10.8%. Interestingly, in the same period the overall estimated worth of IaaS market was approximately $11 billion. Google, at this time was even behind Alibaba, Rackspace and IBM.
Interestingly, Google is currently operating a large worldwide network of large-scale datacenters. In March 2016, the company apart from indicating that it would ramp up capex in upcoming times also planned to add as many as 10 new cloud datacenter locations. In 2016 it had two new datacenters in Oregon and Tokyo and it’s trying to open the eight more.
The new locations targeted by Google in 2017 for opening of data centers are:
- Sao Paulo
- Hamina, Finland
- Northern Virginia
Not just that, the company has told that it will keep announcing the newer locations for its data center throughout 2017.
“We’re opening these new regions to help Cloud Platform customers deploy services and applications nearer to their own customers, for lower latency and greater responsiveness,” said Varun Sakalkar, Google Cloud’s product manager.