Microsoft extends life of cloud servers from four to six years

Banks billions by making gear last even longer than AWS or Google

Microsoft has extended the life of the machines powering its cloud by two years and will bank billions as a result.

"We are extending the depreciable useful life for server and network equipment assets in our cloud infrastructure from four to six years," chief financial officer Amy Hood told investors last week during Microsoft's Q4 2022 earnings call.

"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," she added.

Those investments will save Microsoft billions every year. Hood predicted the change will make a $3.7 billion difference to Microsoft's bottom line during FY 2023 alone, which is now underway, with a $1.1 billion benefit in Q1.

Google and AWS have already announced extended lifespans for their cloudy infrastructure. Google announced an extension of its lifecycle for servers from three to four years in February 2022. In the same month, AWS detailed plans to run servers for five years and networking equipment for six – a one-year increase to both lifespans.

All of which may not be welcome news for Intel, AMD, and the manufacturers that kit out and build the millions of servers that big clouds consume. Extended hardware lifecycles mean some purchases will be deferred.

It's not all gloom for those suppliers, though. Last week Facebook and Google signaled they'd each spend billions on new servers to enable growth and catch up with purchases that were impossible during COVID-19-related supply chain messes.

But news that Microsoft may run servers for six years is surely something cloud buyers need to consider. Microsoft has made three-year server reservations its best-priced offer for both IaaS and some of its software licences. With the software giant now sweating assets for longer – and banking massive savings – users surely need to ask for their share of that bounty when next negotiating a cloudy deal.

Customers will also need to ask themselves if they’re happy running on six-year-old kit. Microsoft's silicon suppliers – Intel, AMD, and Ampere – will have produced perhaps three generations of processor across that span of time, not to mention other worthy innovations in networking et cetera. Intra-cloud migrations may well become necessary for some users, if only to avoid being tied to old hardware.

On the upside, keeping old servers around for longer might help Microsoft ameliorate Azure's capacity shortages. ®