Microsoft extends its Cloud Server lifespan to six years from four years

Microsoft has found a way to make its hardware components last longer by leveraging existing software. During Microsoft's Q4 2022 earnings call held last week, their chief financial officer, Amy Hood announced that the lifespan of their server and network equipment had been extended by two years.

“Investments in our software that increased efficiencies in how we operate our server and network equipment as well as advances in technology have resulted in lives extending beyond historical accounting useful lives,” Hood said to the investors.

“We are extending the depreciable useful life for server and network equipment assets in our cloud infrastructure from four to six years."

With this new development, Microsoft is expected to significantly reduce their bottom line. Hood estimates about $3.7 billion difference in the 2023 financial year alone. The financial year is already underway and reports from the first quarter show that Microsoft has recorded a $1.1 billion benefit as a result.

Compared with the two other cloud giants, Google and AWS, Microsoft has the equipment with the highest useful life.

Early in February this year, Google also announced that they were extending the lifecycle of their server from three to four years. AWS followed shortly after with their plans to raise the usable life of their servers from four to five years and their network equipment from five to six years.

As expected this will have different implications for the parties involved.

For companies like Intel and AMD, this may negatively affect their bottom line seeing as they will be a lower demand for servers from the cloud giants.

The good news is they can still count on other big players in the data industry. Last week Facebook and Google both announced plans to spend billions on new servers to facilitate growth as they try to recover from the supply chain nightmare caused by the pandemic.

Cloud consumers on the other hand will be looking to see how these new developments affect the prices of current cloud offerings. They will be hoping to see cheaper offerings now that servers are being utilised for longer and saving Microsoft billions in the process.

Hopefully, the 6-year infrastructure can keep up with the continuous advancement in processors and innovations in networking and cloud computing.