The media have been talking about the cost of the energy crisis for a while now. And like other sectors, the cloud is no exception. Indeed, the data centers and other infrastructures necessary to provide cloud services need energy. Therefore, when the price of energy increases, the cost of these services also increases.
As Microsoft has just shown, the cost of this crisis for the cloud can be astronomical. Like Google, the Redmond company has just published its quarterly results. And according to the American media, during the traditional conference call, Microsoft revealed the cost of the energy crisis.
Over a fiscal year, it will pay 800 million dollars more, because of the energy crisis. According to Bloomberg, Amy Hood, Microsoft’s chief financial officer, also clarified that a good part of this additional cost is charged to the activities in Europe. “And it’s not just for winter”she would have added.
These additional costs are going to have an impact on Microsoft’s profits. But at the same time, it seeks to help companies save money, for example by moving apps to the cloud instead of using their own data centers.
Growth is also slowing at Microsoft
As we mentioned in a previous article, although Google’s revenue continued to increase, the growth was very weak. And at Microsoft, we have a fairly comparable scenario.
The Redmond firm announced quarterly revenue of $50.1 billion, a growth of 11% compared to the same period in 2021. As for profits, these were $17.6 billion, down by 14% year-over-year. According to the New York Times, the last time Microsoft saw such weak growth was in 2017.
The company’s revenues are affected by the rise in the dollar, which penalizes sales outside the United States. Without this rise in the value of the dollar, revenues would have increased by 16%, and net income would have fallen by only 8%. Microsoft is also seeing its revenue from (declining) PC sales decline.
On the other hand, despite the energy crisis, cloud revenues have seen good growth. “Microsoft Cloud revenue was $25.7 billion this quarter, up 24% (up 31% in constant currency) year-over-year. We continue to see healthy demand across our business operations, including another quarter of strong bookings, as we deliver compelling value to customers”said Amy Hood.
Satya Nadella, CEO of Microsoft, said that in the current environment, the company is trying to help its customers save money. The Redmond firm continues its long-term investments, but it must also manage its costs “in a disciplined manner”.
A few days ago, Microsoft confirmed a new wave of layoffs. “Like all businesses, we regularly assess our business priorities and make structural adjustments accordingly”said a Microsoft spokesperson, according to CNBC. “We will continue to invest in our business and hire in key growth areas in the coming year.”