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Why AWS Spent $35 Billion On Data Centers In Virginia

A new report by Amazon Web Services sheds light on the billions the public cloud giant spends each year on data centers in Northern Virginia, the data center capital of the world.

Amazon Web Services is arguably the world’s largest spender on building and equipping data centers across the globe. However, a recent report by the public cloud giant unveils new details around just how much AWS spends on data centers in Northern Virginia, which is the world’s data center hotspot and where Amazon operates dozens of the facilities.

The Seattle-based company spent $35 billion on its Virginia data centers alone over a nine-year period from 2011 to 2020, representing roughly $3.5 billion in annual data center spending in the region alone over the past ten years. Each year, Amazon significantly expands its data center operations in the region and around the world in order to provision more capacity to keep up with the explosion of growth in its cloud computing business.

AWS increased cloud computing revenues by nearly 40 percent year over year to $16.1 billion during its recent third quarter 2021.

[Related: Dell Spins Off VMware To Shareholders: 5 Things Investors Should Know]

AWS’ Northern Virginia cloud region includes more than 50 data centers with the region being the largest concentration of data centers across the globe due to the massive amount of IT infrastructure installed, vast interconnectivity capabilities and strategic location near Washington D.C.

The $35 billion data center investment from AWS includes spending on the construction data centers, IT equipment inside, data center employee salaries, utilities, security as well as third-party services to build and operate its facilities. The cloud computing giant said it continues to build data centers in Virginia at a rapid pace and scale to meet the needs of more businesses moving to the cloud.

Amazon ‘By Far’ The ‘Biggest’ Data Center Spender Globally

Data center capital expenditures (capex) has been spiking over the past several years with the big three public cloud leaders AWS, Microsoft and Google—known as hyperscalers—leading the way by spending billions each year on data center expansion.

In the first quarter of 2021, the 20 largest hyperscale data center operators on Earth spent a combined total of $38 billion on data center capex, representing a 31 percent increase year over year, according to data from IT market research firm Synergy Research Group.

“Among the 20 hyperscale companies, Amazon has been by far the biggest spender, followed by Microsoft, Google, Facebook, Apple, Alibaba and Tencent,” John Dinsdale, a chief analyst at Synergy Research Group, told CRN in June. “The hyperscale companies are once again breaking all records for their level of spending, driven by the continued aggressive growth of cloud and digital services in both enterprise and consumer markets.”

AWS’s US-East Virginia region is the company’s largest region that includes six Availability Zones, which are clusters of data centers that allows clients to run instances of an application in several isolated location. AWS first began offering IT infrastructures services in the Virginia in 2006, according to AWS report.

“The report shows the impact that can happen when government and industry work together to create growth opportunities for communities,” said Blair Anderson, director of AWS public policy at Amazon, in a recent blog post.

Last year, Amazon estimated its data center activities contributed $1.3 billion in gross domestic product (GDP) and supported more than 13,500 jobs in the state of Virginia. AWS is among the largest private-sector employers in the state, with over 8,800 full-time jobs in offices and data centers across Virginia.

Research firm Gartner predicts that data center systems spending in 2022 will hit $207 billion on a global basis, representing a 5.8 percent increase year over year. In 2021, worldwide data center systems sales is projected to be $196 billion, up nearly 10 percent compared to 2020.

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