Cloud Giants Invest $31.5B in Infrastructure and Shift to Profitable Services

In 2016, Amazon Web Services, Microsoft Azure, and Google Cloud together spent $31.54 billion on capital expenditures and leases—proof that the era of buying on‑prem hardware is fading. Amazon’s latest expansion into a new Swedish region alone is estimated to cost several hundred million dollars, underscoring the massive scale and capital intensity required to stay competitive in the public cloud arena.

These leading providers are moving beyond raw compute and storage. AWS, for example, is pivoting toward higher‑margin, customer‑centric services such as Connect, a cloud‑native call‑center configuration platform that plugs directly into Amazon’s IaaS. The shift signals a broader strategy: delivering integrated business services that foster deeper, longer‑term relationships and higher profit margins. Microsoft and Google are following suit, steadily adding enterprise‑grade tools to their portfolios.

Serverless computing—also known as Functions as a Service (FaaS)—is one of the most exciting offshoots of this evolution. By abstracting server management, developers can deploy event‑driven code that runs only when triggered, eliminating over‑ and under‑provisioning. Amazon’s Lambda, launched in 2014, pioneered this model, and Azure and Google have since released their own versions, with Google’s platform currently in beta.

Despite the rapid growth of the cloud, on‑premises investments remain significant. A recent ActualTech Media survey found that 41% of respondents plan to purchase storage hardware this year, 36% to invest in virtualization, and 29% in networking gear. However, 42% of organizations identified cloud expertise as their top learning priority for 2017, followed closely by security and virtualization.

As cloud continues to reshape IT strategy, businesses must balance legacy hardware needs with the long‑term benefits of cloud‑native services.