Ballmer’s million-server claim doesn’t seem so crazy

A recent statement by Steve Ballmer that Microsoft (s msft) is operating more than a million servers raised quite a few eyebrows, but do you really know what 1 million servers means? It probably means a lot of real estate, a lot of power and a lot of money. That’s according to Amazon VP and Distinguised Engineer (and former Microsoft employee) James Hamilton, who broke down Microsoft’s million-server claim in a blog post Tuesday night.

From an energy-consumption perspective, he wrote, one could estimate that a million servers would consume 2.6 terawatt hours of energy a year. That ends up being more than the total consumption of 230,000 American homes, according to data from the U.S. Energy Information Administration, and about in line with what Google reported in 2011 that it consumes.

Building enough data centers to house all those servers — somewhere between 15 and 30 — and then actually buying the servers could cost about $4.25 billion, Hamilton estimates. “That’s an athletic expense even for Microsoft but certainly possible,” he writes.

But is it that expensive? Microsoft is a huge company — certainly larger than Facebook (s fb), which claims “hundreds of thousands of servers” and is spending billions on data centers — and has been accumulating infrastructure for decades. Four billion dollars spread out since Microsoft built its first facility doesn’t seem so crazy.

In its last earnings statement, Microsoft claimed about $9.2 billion worth of assets in property and equipment (after accounting for depreciation), and a fiscal third-quarter invest of $930 million in property and equipment. That’s not all data centers and servers, of course, but it does show how much a company like Microsoft is willing to spend.

In its fiscal first quarter this year, Facebook claimed about $2.5 billion in property and equipments assets and a $327 million investment in property and equipment. Google: $12.3 billion and $1.2 billion, respectively.

Update: The chart below has been updated to account for the latest data from Microsoft and Google’s July 18 earnings statements. Microsoft spent more than Google on infrastructure in the last fiscal quarter.

[protected-iframe id=”cb376c696f1623518b0f29a57a6cfb05-14960843-6578147″ info=”//” width=”550″ height=”683″ frameborder=”0″ style=”border:none;” scrolling=”no”]

Given those numbers and the number of services Microsoft provides via the web, it seems about right that it would be second only to Google in server count. As GigaOM’s Jordan Novet noted in a post Wednesday morning, Microsoft’s server footprint covers a wide range of services. Bing, Office 365, Xbox,, internal operations, et cetera — whether they’re running on Windows Azure or their own infrastructure, they all need servers.

Perhaps Dave Campbell, Microsoft’s CTO for for its cloud efforts, will delve into this issue a little further at our Structure: Europe conference September 18 and 19 in London. I’ll be speaking with him about all things cloud and big data, and given how much discussion Ballmer’s claim has spurred, I’m not sure I can resist asking.