Google Cloud makes its first profit, 15 years after launching Google's cloud business has made a profit for the first time. For the quarter ended March 31, the G-Cloud won $7.4 billion of revenue and produced operating income of $191 million – a 2.5 percent profit. Not a massive profit. Amazon Web Services won $80 billion of revenue in 2022, producing operating income of $22.8 billion …
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True, but they represent a real thing - hardware no longer becoming useful and presumably being withdrawn from service. With the E2 series they can basically give people whatever they have to hand, and the only question is whether it's power-efficient and compatible with whatever service they want to add on.
No, it is a real expense.
The hardware costs actual money, and after a few years it becomes ewaste, or stuff you sell really cheap on ebay.
Because your rack full of servers will generate revenue over many years, you have to divide the cost of it over those many years, and that is where the calculation comes in. And you may not always get it right, because you don't necessarily know at the outset how long it will last, or how much someone will pay for it on ebay after those many years have passed.
As an example, I bought a Proliant Microserver N54L for about £160 as new-old stock about 12 years ago. I thought it would last me about 5 years, and be worth basically nothing at the end of that time.
It still works great now, and looking at prices on ebay, I recon I might actually be able to sell it for about £170 now, so instead of charging £32 per year depreciation, it should actually have been £0. But this very rarely happens, and usually you would need to hold it for 30-40 years before the value starts rising as a "vintage" rather than "obsolete" item.
The losses are accounting chicanery, not real cash money in my opinion.
In my opinion this is correct. Alphabet (Google's holding company) is spending $70 billion on buying it's own shares this year which leads you to think that it's not exactly short of cash.
Where has it all come from if all of the companies it owns are barely breaking even? The only believable answer is that there are some tax dodges such as paying licensing fees to Alphabet for licensing the Google name in "Google Cloud".
They changed their deprecation schedule for servers from 4 to 6 years and networking equipment from 5 to 6 years, and from what they said about its effect on their books took them from a ~$300 million loss last quarter to the small profit they showed.
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