Those server farms are expensive

It’s only one sentence in a long quarterly report (the so-called 10-Q) filed with the U.S. Securities and Exchange Commission, but it says a lot about Google’s financial picture going forward (the full filing is here). The sentence says:

“The annual rate of growth in 2006 of our spending on property and equipment will be substantially greater than the annual rate of growth of our revenues.”

In other words, costs are going up and revenues — not so much. The search giant blames costs for the giant server farms that it is building (including the two or three that are under construction on the banks of the Columbia River, which the New York Times wrote about awhile back) as well as increased “cash compensation” for its employees. Apparently all those math geniuses need more than just free candy.

3 thoughts on “Those server farms are expensive

  1. That’s true to a certain extent, Markus — although it’s still the rate of growth that’s the concern, not necessarily the spending per se. And while processor speeds are doubling, power demands are continuing to grow as well, and that is arguably a bigger cost than buying the CPUs in the first place.

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