MOUNTAIN VIEW, Calif.—A short piece posted to CircleID last week has caught our attention, not least because it puts the size and scale of Google into a perspective that people will probably appreciate, but it also provides insight into Google’s future ambitions, especially with respect to cloud computing.
The piece by Peter van Eijk, an author and IT strategist, took a look at Google’s latest Q3 financial results and honed in on the amount of money the company is spending on IT, and in particular how many servers the money will buy. His postulation leaves the head spinning.
First, he provided a few quotes from the Q3 report:
Other cost of revenues, which is comprised primarily of data center operational expenses, amortization of intangible assets, content acquisition costs as well as credit card processing charges, increased to $747 million, or 10% of revenues, in the third quarter of 2010
In the third quarter of 2010, capital expenditures were $757 million, the majority of which was related to IT infrastructure investments, including data centers, servers, and networking equipment.
van Eijk then theorized how the spending of that money might play out.
“So let us modestly assume that half the capital and half the operational expense is server related, $400 million each,” he wrote. “Let us assume a cheap Google server costs $1000, and the associated network, datacenter facilities and such, another $1000. The run cost of the datacenter (power, cooling, etc.) could match that. This leads to an investment pattern of 200,000 servers per quarter, 800,000 per year. With an average lifetime of 3 years, this puts the ballpark estimate of the size of Google's server farm at 2.4 million servers. There are entire countries that do not have that many servers. There are entire countries that do not have that many PCs.”
Google, of course, is pretty much a country unto itself at this point, and more to the point, is doing better financially than many countries, especially in terms of the intelligence of its investments, as van Eijk pointedly states.
“Since 2004, the server farm increased in size by a factor of 16, while revenue increased 10 fold (per my 2005 estimates),” he wrote. “Once more, Google increases the amount of computer power that goes into a dollar of revenue, Moore's law notwithstanding.”