Power

Cloud computing was a bright spot during the worst quarter in US history

Cloud providers weren't immune from the larger economic pressures that loom over 2020, but they've weathered the storm and are well-positioned for a recovery.

Data center

Assuming you can see past the current state of the U.S. economy, there is one prominent signal that the big cloud vendors still very much believe in the long-term growth potential of the cloud: capital expenditures.

Photo: Manuel Geissinger/Pexels

In what's now been declared the worst economic quarter in modern U.S. history, the worst thing you can say about the performance of the cloud computing giants is that revenue growth slowed a tad.

After Microsoft reported strong but slowing growth for its Azure infrastructure service last week, Amazon and Google weighed in Thursday afternoon with similar earnings results that indicate cloud computing continues to mature, as multiyear contracts become the norm and cloud latecomers start to dip their toes. It has been 14 years since AWS unveiled its first cloud services, and that business is now on a pace to generate $43 billion in revenue a year, Amazon CFO Brian Olsavsky said on the company's earnings call.

Sure, AWS revenue growth slowed to 29% year-over-year, but AWS still generated $10.8 billion in revenue. For its part, Google Cloud reported a 43% jump in revenue during the quarter, which was slower than the 52% revenue growth recorded for that segment during the first quarter.

On the company's conference call, Alphabet CFO Ruth Porat attributed Google Cloud's slower overall growth to a tough comparison against last year, when Google increased prices for G Suite customers. But she also said that revenue from Google Cloud Platform, the most AWS-comparable line item in the overall Google Cloud bucket, increased at a pace "meaningfully above" the overall number.

These are strange times to be doing business, and Amazon's Olsavsky acknowledged that its customers have different feelings about the current situation.

Companies in industries that are disproportionately affected by the pandemic — like travel — are thinking in the short term and are obsessed with reducing any costs associated with doing business this year, while other companies see the cloud as a lifeline. "One of the best ways to save money is to use the cloud," Olsavsky said, which ignores some short-term switching costs but is generally true in the long run.

Assuming you can see past the current state of the U.S. economy, there is one prominent signal that the big cloud vendors still very much believe in the long-term growth potential of the cloud: capital expenditures.

Amazon's investments are a little hard to gauge because the company spends so much on the fulfillment centers required to deliver same-day toilet paper supplies, but it more than doubled investments in property and equipment during the second quarter. A significant portion of that investment is required to maintain service levels for AWS, as well as to plan for future growth.

Google spent far less on capital expenditures in the second quarter of 2020 compared to last year, but Porat said it spent roughly the same amount of money on servers, delaying the expansion of new offices after announcing earlier this week that employees will be allowed to work from home until the middle of 2021. It will also delay the construction of new data centers thanks to improved server utilization efficiency, she said.

Capital expenditures are an imperfect metric for cloud computing competitiveness, but they are also a competitive moat. Simply put, operating a world-class cloud infrastructure service in 2020 is an expensive undertaking, and any money cloud providers can save on building expenditures for open-floor plan offices amid a pandemic can be redirected toward revenue-generating infrastructure.

That means that whatever short-term concerns continue to make the lives of cloud salespeople more challenging, all three of the big U.S. cloud providers continue to look to the future. A sizable amount of workloads remain locked up in old-school data centers, and there's still little incentive for startups to grow their businesses on anything other than cloud services.

Climate

The West’s drought could bring about a data center reckoning

When it comes to water use, data centers are the tech industry’s secret water hogs — and they could soon come under increased scrutiny.

Lake Mead, North America's largest artificial reservoir, has dropped to about 1,052 feet above sea level, the lowest it's been since being filled in 1937.

Photo: Mario Tama/Getty Images

The West is parched, and getting more so by the day. Lake Mead — the country’s largest reservoir — is nearing “dead pool” levels, meaning it may soon be too low to flow downstream. The entirety of the Four Corners plus California is mired in megadrought.

Amid this desiccation, hundreds of the country’s data centers use vast amounts of water to hum along. Dozens cluster around major metro centers, including those with mandatory or voluntary water restrictions in place to curtail residential and agricultural use.

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Lisa Martine Jenkins

Lisa Martine Jenkins is a senior reporter at Protocol covering climate. Lisa previously wrote for Morning Consult, Chemical Watch and the Associated Press. Lisa is currently based in Brooklyn, and is originally from the Bay Area. Find her on Twitter ( @l_m_j_) or reach out via email (ljenkins@protocol.com).

Every day, millions of us press the “order” button on our favorite coffee store's mobile application: Our chosen brew will be on the counter when we arrive. It’s a personalized, seamless experience that we have all come to expect. What we don’t know is what’s happening behind the scenes. The mobile application is sourcing data from a database that stores information about each customer and what their favorite coffee drinks are. It is also leveraging event-streaming data in real time to ensure the ingredients for your personal coffee are in supply at your local store.

Applications like this power our daily lives, and if they can’t access massive amounts of data stored in a database as well as stream data “in motion” instantaneously, you — and millions of customers — won’t have these in-the-moment experiences.

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Jennifer Goforth Gregory
Jennifer Goforth Gregory has worked in the B2B technology industry for over 20 years. As a freelance writer she writes for top technology brands, including IBM, HPE, Adobe, AT&T, Verizon, Epson, Oracle, Intel and Square. She specializes in a wide range of technology, such as AI, IoT, cloud, cybersecurity, and CX. Jennifer also wrote a bestselling book The Freelance Content Marketing Writer to help other writers launch a high earning freelance business.
Workplace

Indeed is hiring 4,000 workers despite industry layoffs

Indeed’s new CPO, Priscilla Koranteng, spoke to Protocol about her first 100 days in the role and the changing nature of HR.

"[Y]ou are serving the people. And everything that's happening around us in the world is … impacting their professional lives."

Image: Protocol

Priscilla Koranteng's plans are ambitious. Koranteng, who was appointed chief people officer of Indeed in June, has already enhanced the company’s abortion travel policies and reinforced its goal to hire 4,000 people in 2022.

She’s joined the HR tech company in a time when many other tech companies are enacting layoffs and cutbacks, but said she sees this precarious time as an opportunity for growth companies to really get ahead. Koranteng, who comes from an HR and diversity VP role at Kellogg, is working on embedding her hybrid set of expertise in her new role at Indeed.

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Amber Burton

Amber Burton (@amberbburton) is a reporter at Protocol. Previously, she covered personal finance and diversity in business at The Wall Street Journal. She earned an M.S. in Strategic Communications from Columbia University and B.A. in English and Journalism from Wake Forest University. She lives in North Carolina.

Climate

New Jersey could become an ocean energy hub

A first-in-the-nation bill would support wave and tidal energy as a way to meet the Garden State's climate goals.

Technological challenges mean wave and tidal power remain generally more expensive than their other renewable counterparts. But government support could help spur more innovation that brings down cost.

Photo: Jeremy Bishop via Unsplash

Move over, solar and wind. There’s a new kid on the renewable energy block: waves and tides.

Harnessing the ocean’s power is still in its early stages, but the industry is poised for a big legislative boost, with the potential for real investment down the line.

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Lisa Martine Jenkins

Lisa Martine Jenkins is a senior reporter at Protocol covering climate. Lisa previously wrote for Morning Consult, Chemical Watch and the Associated Press. Lisa is currently based in Brooklyn, and is originally from the Bay Area. Find her on Twitter ( @l_m_j_) or reach out via email (ljenkins@protocol.com).

Entertainment

Watch 'Stranger Things,' play Neon White and more weekend recs

Don’t know what to do this weekend? We’ve got you covered.

Here are our picks for your long weekend.

Image: Annapurna Interactive; Wizard of the Coast; Netflix

Kick off your long weekend with an extra-long two-part “Stranger Things” finale; a deep dive into the deckbuilding games like Magic: The Gathering; and Neon White, which mashes up several genres, including a dating sim.

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Nick Statt

Nick Statt is Protocol's video game reporter. Prior to joining Protocol, he was news editor at The Verge covering the gaming industry, mobile apps and antitrust out of San Francisco, in addition to managing coverage of Silicon Valley tech giants and startups. He now resides in Rochester, New York, home of the garbage plate and, completely coincidentally, the World Video Game Hall of Fame. He can be reached at nstatt@protocol.com.

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