Google Spent $2.4B on Data Centers in 2007

Google spent $2.4 billion on capital expenditures in 2007, primarily for data centers and related equipment, up from $1.9 billion in 2006 ^[1]. The increase was expected, as Google announced four major new data center projects in the U.S. in 2007, including projects in North Carolina ^[2], South Carolina ^[3], Oklahoma ^[4] and Iowa ^[5].

Google’s capital expenditures for the fourth quarter of 2007 were $678 million, its biggest quarterly CapEx investment since the second quarter of 2006, when the company spent $699 million. For comparison purposes, here’s a look at Google’s quarterly CapEx numbers for 2006 and 2007.

• 4Q 2007: $678 million
• 3Q 2007: $553 million
• 2Q 2007: $575 million
• 1Q 2007: $597 million
• 4Q 2006: $367 million
• 3Q 2006: $492 million
• 2Q 2006: $699 million
• 1Q 2006: $345 million

Google’s earnings release also hinted at the focus of the company’s data center investment in 2008.

In recent weeks there have been reports that Google is considering a data center in Lithuania ^[6], and is scouting locations throughout Asia ^[7], evaluating up to 18 different countries for future data centers.

Google’s international revenue increased to $2.3 billion, or 48% of revenue in the fourth quarter. CFO George Reyes provided some details on the conference call:

Revenue growth in EMEA was primarily driven by a strong performance in France and Germany, where gains were made in the retail, technology, and finance verticals. We also saw solid gains in relatively smaller markets, such as Canada, Ireland, Spain, and the Nordics. Asia and Latin America continue to show impressive growth rates as well, with Brazil, Mexico, Argentina, and China being notable performers in the quarter.

Google co-founder Larry Page also noted that the company made “behind the scenes infrastructure improvements” to improve search quality, including an increase in the size of Google’s index. “We also had substantial improvements in latency and freshness, particularly in Europe, Middle East, and Asia-Pacific,” Page said.

With international business growing to nearly half Google’s revenue, Google seems focused on ensuring that its infrastructure delivers the same snappy results in overseas markets. And the numbers for annnual infrastructrue investment will continue to be large ones. “We expect to continue to make these significant investments in CapEx in future quarters,” said Reyes.

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URL to article: http://www.datacenterknowledge.com/archives/2008/02/04/google-spent-24b-on-data-centers-in-2007/

URLs in this post:

[1] $1.9 billion in 2006: http://www.datacenterknowledge.com/archives/2007/Feb/01/google_19_billion_on_data_centers_in_06.html

[2] North Carolina: http://www.datacenterknowledge.com/archives/2007/Jan/19/google_picks_nc_for_600m_data_center.html

[3] South Carolina: http://www.datacenterknowledge.com/archives/2007/Apr/04/google_announces_600m_so_car_project.html

[4] Oklahoma: http://www.datacenterknowledge.com/archives/2007/May/02/google_confirms_600m_oklahoma_project.html

[5] Iowa: http://www.datacenterknowledge.com/archives/2007/Jun/19/google_confirms_data_center_in_council_buffs_iowa.html

[6] data center in Lithuania: http://www.datacenterknowledge.com/archives/2008/Jan/08/report_google_data_center_in_lithuania.html

[7] scouting locations throughout Asia: http://www.datacenterknowledge.com/archives/2008/Jan/29/asian_nations_battle_for_google_data_center.html

[8] Rich Miller: http://www.datacenterknowledge.com/archives/author/richm/

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