Google steadily builds capacity in its Data Centers, $2.35B Q1

Google released its Q1 numbers yesterday, and I waited until GigaOm’s Derrick Harris through up the nice graphic of the quarterly spend.


Derrick’s post is here.   One nice part I liked is he inserted the CFO’s comments about the infrastructure spend.

Here’s what Google Senior Vice President and Chief Financial Officer Patrick Pichette had to say on Wednesday’s earnings call, according to a transcriptpublished by research firm Morningstar:

As it relates to CapEx, listen, you’re right, that we – and I’ve mentioned this in the last couple of quarters, where we have – and just a reminder to everybody, right, if you think of the CapEx categories, right, data centers first and data center construction, then production equipment, then all other facilities is kind of like the hierarchy of needs. In the case of data center construction, we have found that the option value of having more capacity on standby and available to us to grow versus not having it is actually a real strategic issue for the Company. In that sense, if for whatever reason, we had a spike in demand that was really pronounced and sustained for a couple of quarters and we did not have the capacity, it would be a real issue strategically for us relative to the quite low cost of having the infrastructure in place. So that’s why we’re really pushing ahead of the curve, and so it’s with this view of long-term. So, from that perspective, you’re also right that, that’s the mindset we’re applying. And we’ve always said that CapEx was lumpy, so you have a good manifestation of it right now right here.

Google is one the few Cloud companies who can keep up with their demand by building data centers.  Most need to dip into Wholesale providers.  Think about if the big guys can’t anticipate their loads and build everything why should the rest of you?  Google is the exception with a $9bil annual spend. ;-)