The media has been talking about the cost of the energy crisis for a while now. And like other sectors, the cloud is no exception. The data centers and other infrastructures needed to provide cloud services actually need energy. Therefore, when the price of energy increases, the cost of these services also increases.
As Microsoft has just shown, the costs 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, Microsoft revealed during the traditional conference call the cost of the energy crisis.
Over the course of a fiscal year, it will pay $800 million more because of the energy crisis. According to Bloomberg, Amy Hood, Microsoft’s CFO, also clarified that a good part of this additional cost is imposed on the activities in Europe. “And it’s not just for winter”she would have added.
These additional costs will have an impact on Microsoft’s profits. But it also 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 relatively comparable scenario.
The Redmond company announced a quarterly revenue of $50.1 billion, a growth of 11% compared to the same period in 2021. As for the profit, this was $17.6 billion, a decrease of 14% year-on-year. According to the New York Times, the last time Microsoft saw such weak growth was in 2017.
The company’s revenue is affected by the rise in the dollar, which penalizes sales outside the United States. Without this increase in the value of the dollar, revenues would have increased by 16% and net income would have decreased by only 8%. Microsoft is also experiencing a decline in revenue from (declining) PC sales.
On the other hand, despite the energy crisis, cloud revenues have had good growth. “Microsoft Cloud revenue was $25.7 billion this quarter, up 24% (a 31% increase in constant currency) over the prior year. We continue to see healthy demand across our business activities, including another quarter of strong bookings as we deliver compelling value to customers”Amy Hood said.
Microsoft CEO Satya Nadella said that in the current environment, the company is trying to help its customers save money. The Redmond company continues its long-term investments, but it also needs to manage its costs “in a disciplined manner”.
A few days ago, Microsoft confirmed a new wave of layoffs. “Like all companies, we regularly assess our business priorities and make structural adjustments accordingly”a Microsoft spokesperson said, according to CNBC. “We will continue to invest in our business and hire in key growth areas in the coming year.”