> ## Content Index > Fetch the complete content index at: https://www.sotkn.com/llms.txt > Use this file to discover other available public pages before exploring further. # What Is a Cloud Commitment? Why the Signature Is Not Revenue - URL: https://www.sotkn.com/explained/cloud-commitment-explained/ - Published: 2026-11-12T01:18:41.000Z - Updated: 2026-11-12T01:18:41.000Z - Description: A cloud commitment locks a lower cloud price for a set term. Delivery and usage still have to happen before that promise becomes revenue. - Author: Sean - Tags: #desk-explained, Mechanism EXPLAINED · Mechanism · Last reviewed: 12 Nov 2026 · Next review: after Amazon, Microsoft and Alphabet report results for the quarter ending 31 December 2026 A cloud commitment is a customer's promise to pay a cloud provider for a set amount of computing, for a set period, in exchange for a lower price. The signature locks a price and a clock. It does not put revenue in the accounts, and it does not mean the chips and the hall are already in service. In short. The customer has agreed to spend. The provider still has to deliver, and the customer still has to use what was delivered. The companies that sell the promise are the [hyperscalers](https://www.sotkn.com/explained/hyperscaler-explained/). They are already paying for buildings, power and servers. The commitment names who is supposed to pay them back. ## What is a cloud commitment? A cloud commitment is a contract to spend, or to reserve resources, for a term. Public menus run one to three years. Negotiated contracts run longer. The customer gets a price below on-demand. The provider gets a promise that the capacity will be paid for. Do not add the two kinds together. The price-list kind has a printed term and a printed rule for an idle hour. AWS calls the dollar-per-hour version a Savings Plan. Microsoft offers Azure reservations and a spend promise, the Microsoft Azure Consumption Commitment, or MACC. Google Cloud offers committed use discounts, some in resources and some in spend. The negotiated kind is a private term, amount and delivery duty. Amazon's quarterly report describes two. They are not Savings Plans, and they are not the portfolio total printed beside them. The customer is promising to spend on cloud. A purchase commitment points the other way: the cloud company promising to acquire equipment, buildings or power. ## How do AWS, Azure and Google Cloud write the promise? The menus look alike from a distance. The unit changes, and so does the rule when usage falls short. Every percentage below is a ceiling the vendor publishes, not a measured discount on a named AI chip. | Promise | What you commit | Term on the public menu | If you use less | | ----------------------------------------- | ------------------------------------------------------- | ---------------------------------------------------------------------------------- | ------------------------------------------------------------- | | AWS Compute Savings Plan | A dollar amount per hour of compute | 1 year, which AWS defines as 365 days, or 3 years, which AWS defines as 1,095 days | That hour cannot be carried into the next hour | | Google Cloud resource-based committed use | A count of vCPUs, memory, GPUs or local SSD in a region | At least 1 year or 3 years | The monthly fee is billed even if the resources sit unused | | Azure reservation | A named product, applied as a discount on matching use | 1 year or 3 years | An hour with no matching resource is lost. Refunds are capped | | Azure consumption commitment (MACC) | A minimum spend on eligible Azure services | Usually 1, 2 or 3 years | A shortfall becomes an Azure prepayment credit | AWS says a Savings Plan trades an hourly compute commitment for a price below on-demand. The published saving is "up to 72%". That is a ceiling. In the same guide an example AWS labels hypothetical shows discounts from 0% to 40%. You can pay all upfront, part upfront, or nothing upfront. Each hour can be used only inside that hour and cannot be carried over. The cost-and-usage guide describes a recurring hourly charge on no-upfront and partial-upfront plans, and says an all-upfront plan's matching line shows the unused portion. An empty hour is not saved for a busy day. A worked clock, from that hypothetical and not from a real bill: $50 an hour for a 365-day year is $438,000\. Our arithmetic: 50 × 24 × 365 = 438,000\. It is not a disclosed average. Google's resource-based version is a promise to pay for a minimum of specific resources, including GPUs, for at least one or three years. Google puts the GPU discount at up to 55% for most types and up to 65% for some. The monthly fee is billed even if nothing runs. That page does not describe a rolling cash-refund cap. Microsoft puts the Azure reservation ceiling at up to 72% off pay-as-you-go, the same kind of ceiling, not a chip invoice. Monthly payments total the same as paying upfront. Microsoft calls the discount use-it-or-lose-it: an hour with no matching resource is lost. Refunds exist, and they stop at $50,000 in a rolling 12-month window across the agreement. The idle hour still dies. Cancelling is a separate, capped act. A MACC commits a minimum Azure spend, usually over one, two or three years, rather than one machine type. Miss the milestone or the total, and Microsoft applies a shortfall charge as an Azure prepayment credit. Usage covered by that credit does not count toward the commitment. The page does not call the shortfall revenue. A Savings Plan can follow many instance types. A reserved GPU block from a specialist cloud is a named pool. The idle hour is the shared problem. The contract is not. ## What did Amazon report at 30 September 2026? Amazon's Form 10-Q for the quarter ended 30 September 2026, dated 29 October 2026, is the filing this page uses for dollar figures. It keeps three ideas apart: prepaid cash, unrecognized long contracts, and two named expansions. Prepaid cash is unearned revenue, recorded when payment is received or due before the service, and Amazon says it relates mainly to AWS prepayments and Prime memberships. At 30 September 2026 the current line was $21.708 billion, plus $6.5 billion in other long-term liabilities. Our arithmetic: 21.708 + 6.5 = $28.208 billion. Amazon does not split that sum, so it is not a pure commitment number. Cash collected before delivery is deferred revenue. Long contracts are a different line. Amazon reports performance obligations, primarily related to AWS, for commitments in customer contracts that it expects to fulfill and has not recognized. For contracts with an original term longer than one year, those unrecognized commitments were estimated at approximately $578 billion as of 30 September 2026\. The weighted-average remaining life was 6.1 years. Amazon says the amount and the timing depend on customer usage and on Amazon performing, and that performance can run past the original term. That $578 billion is not revenue, not cash, and not the sum of the two deals below. The accounting name for the unrecognized bucket is remaining performance obligation. This page is about the promise that feeds it. The named expansions are examples. Amazon says that in the first quarter of 2026, AWS and OpenAI Group PBC announced an expansion of an existing $38.0 billion commitment by $100.0 billion over 8.0 years, including obligations related to the performance of AWS chips. It says that in the second quarter of 2026, AWS and Anthropic announced an expansion by more than $100.0 billion over 10.0 years, again including performance of AWS chips. "More than $100.0 billion" is the filing's phrase. This page does not add it to the OpenAI figure or to the $578 billion. Our read: on those two arrangements, part of Amazon's job is to deliver capacity on chips AWS is responsible for. The filing states the obligation. It does not give the chip mix, the date revenue starts, or how much of the $578 billion either expansion is. The public menu is one or three years. The remaining life of the long-contract portfolio is 6.1 years. Our arithmetic: 6.1 ÷ 3 = 2.03, about twice the longest standard menu. That is two disclosed numbers, not a claim that every customer signed for six years. ## Why does the price fall while the equipment bill rises? AWS net sales were $45.984 billion in the quarter ended 30 September 2026, against $33.006 billion a year earlier. Amazon calls the change a 39% increase, and says it "primarily reflects increased customer usage, partially offset by pricing changes primarily driven by long-term customer contracts." Usage rose. Prices written into long contracts pulled the other way. A commitment is how that lower price gets onto paper. The customer gives up the later on-demand rate. AWS gives up some price per unit now, in exchange for a longer promise. Reported AWS growth is what remains after that trade. The equipment bill did not wait. Cash capital expenditures were $75.9 billion in the third quarter of 2026, against $34.2 billion a year earlier. Amazon says the outlays primarily reflect technology infrastructure, the majority of it to support AWS growth, plus more fulfillment capacity. The $75.9 billion is not an AWS-only figure. Cash that leaves for halls and chips before they bill is cash capex. The AWS asset line is cleaner. Property and equipment, net, allocated to AWS was $190.055 billion at 31 December 2025 and $313.009 billion at 30 September 2026\. Our arithmetic: 313.009 − 190.055 = $122.954 billion over nine months. Amazon says those segment assets are mainly property and equipment, receivables and operating leases, and that technology-infrastructure assets are allocated by usage, most of them to AWS. The $122.954 billion is the net book value assigned to AWS, not a GPU receipt. Suppliers were paid, or were owed, while the $578 billion of long commitments was still unrecognized. ## Who gets paid — and where is the stuck step? Suppliers of buildings, power gear, servers and chips are paid as the hyperscaler spends. Their clock is the build, visible in cash capex and in the AWS equipment balance, not in the customer's later usage. The hyperscaler is paid when the service is used. On the public menus an idle hour is not a rain-check. On the negotiated contracts, recognition waits on usage and on Amazon performing. A 2026 signature can still be unrecognized years later. The 6.1-year remaining life is that clock, not a promise of equal cash each year. The customer pays for the lower price and carries the idle hour. AWS will not move it. Google bills the month. Azure drops the unmatched hour, inside a refund cap of $50,000 over twelve months. A missed MACC comes back as prepayment credit, and usage covered by that credit does not burn the commitment down. The stuck step is the gap. Capacity has to be built before usage can burn a commitment, and usage has to happen before the lower price becomes revenue. Power, chips and a finished hall sit in front of both. A larger signature lengthens the clock. It does not skip it. ## What would change the view? This page treats a cloud commitment as a price-and-delivery contract, not as revenue, and treats an unused public-menu hour as gone. That reading would weaken if Amazon later said the long commitments are recognized on a fixed timetable that ignores usage and performance, or if AWS stopped describing those contracts as a price offset to sales growth. It would also change if a Savings Plan hour could be carried forward, if Google stopped billing unused committed resources, or if Azure stopped treating an unmatched hour as lost. A higher refund cap would loosen the Azure customer. It would not turn the promise into revenue. Microsoft and Google offer the same family of contract. Their unrecognized totals were not in the documents fetched for this review, so they are not stated here. ## Common misconceptions - People assume a signed cloud commitment is revenue. Actually Amazon's approximately $578 billion is the estimated amount of long customer commitments not yet recognized at 30 September 2026. - People assume a cloud commitment and a purchase commitment are the same promise. Actually one is the customer agreeing to spend on the cloud, and the other is the cloud company agreeing to buy kit. - People assume "up to 72%" is the discount on an AI GPU hour. Actually it is a ceiling AWS and Microsoft each publish. AWS's own worked example, labeled hypothetical, illustrates discounts from 0% to 40%. - People assume an unused hour is saved for later. Actually AWS says a Savings Plan hour cannot be carried over, and Microsoft says an Azure reserved hour with no matching resource is lost. ## FAQ ### What is a cloud commitment? A cloud commitment is a customer's promise to pay a cloud provider for a set amount of computing, for a set period, in exchange for a lower price. AWS, Microsoft and Google each sell a public version. The largest deals are negotiated one by one. ### Is a cloud commitment the same thing as a purchase commitment? No. A purchase commitment is the cloud company's promise to buy equipment, buildings or power. A cloud commitment is the customer's promise to spend on the cloud. The cash moves in opposite directions. ### Does an unused committed hour roll forward? No, on the rules fetched here. AWS says each Savings Plan hour can be used only in that hour. Microsoft says an Azure reservation hour with no matching resource is lost and cannot be carried forward. Google bills the monthly commitment fee even when the resources are unused. ### Has Amazon already earned the $578 billion? No. Amazon reported approximately $578 billion of commitments, in customer contracts longer than one year, that had not yet been recognized as revenue at 30 September 2026\. Recognition still depends on customer usage and on Amazon performing. ### What happens if an Azure consumption commitment is missed? Microsoft applies a shortfall charge for the unmet amount, in the form of an Azure prepayment credit. The billing page does not call that charge Azure revenue, and it says usage covered by the credit does not count toward the commitment. ### Why do long-term contracts show up inside AWS growth? Amazon said third-quarter 2026 AWS sales growth reflected higher usage, partly offset by pricing changes that were primarily driven by long-term customer contracts. The commitment is where that lower price is written down. ## Related terms - [Remaining performance obligation](https://www.sotkn.com/explained/remaining-performance-obligation-explained/) is the accounting name for contracted cloud revenue not yet recognized. - [Deferred revenue](https://www.sotkn.com/explained/deferred-revenue-explained/) is cash already collected for a service that is still owed. - [Purchase commitment](https://www.sotkn.com/explained/purchase-commitment-explained/) is the buyer's promise to purchase kit, not the customer's promise to spend on cloud. - [Reserved versus on-demand GPUs](https://www.sotkn.com/explained/reserved-vs-on-demand-gpu/) is the hour-by-hour version of the same idle-hour problem. - [Cash capex](https://www.sotkn.com/explained/cash-capex-explained/) is the cash that leaves for halls and chips before those assets bill. ## Markets and stack doors Cloud commitments are a hyperscaler contract. The layer page is [hyperscalers](https://www.sotkn.com/stack/hyperscalers/). The filings cited here are United States reports, so the matching markets page is the [United States](https://www.sotkn.com/markets/us/). ## Sources 1. Amazon.com, Inc., Form 10-Q for the quarter ended 30 September 2026, dated 29 October 2026\. Unearned revenue, unrecognized long-term commitments, the OpenAI and Anthropic expansions, AWS net sales, cash capital expenditures, and AWS property and equipment. [SEC filing](https://www.sec.gov/Archives/edgar/data/1018724/000101872426000040/amzn-20260930.htm?ref=sotkn.com). 2. Amazon Web Services, "What are Savings Plans?", Savings Plans User Guide, as reviewed 12 November 2026\. Definition, 365-day and 1,095-day terms, the up-to-72% ceiling, and payment options. [AWS documentation](https://docs.aws.amazon.com/savingsplans/latest/userguide/what-is-savings-plans.html?ref=sotkn.com). 3. Amazon Web Services, "Understanding how Savings Plans apply to your usage", as reviewed 12 November 2026\. An hour cannot be carried over, and the hypothetical example rates. [AWS documentation](https://docs.aws.amazon.com/savingsplans/latest/userguide/sp-applying.html?ref=sotkn.com). 4. Amazon Web Services, "Understanding Savings Plans", Cost and Usage Report user guide, as reviewed 12 November 2026\. The recurring hourly charge, and the unused portion on an all-upfront plan. [AWS documentation](https://docs.aws.amazon.com/cur/latest/userguide/cur-sp.html?ref=sotkn.com). 5. Google Cloud, "Resource-based committed use discounts", Compute Engine documentation, as reviewed 12 November 2026\. Term, GPU discount ceilings, and the monthly fee billed if unused. [Google Cloud documentation](https://docs.cloud.google.com/compute/docs/instances/signing-up-committed-use-discounts?ref=sotkn.com). 6. Microsoft, "What are Azure Reservations?", Microsoft Learn, as reviewed 12 November 2026\. One-year and three-year terms, the up-to-72% ceiling, equal upfront and monthly cost, and the $50,000 rolling refund cap. [Microsoft Learn](https://learn.microsoft.com/en-us/azure/cost-management-billing/reservations/save-compute-costs-reservations?ref=sotkn.com). 7. Microsoft, "How an Azure reservation discount is applied", Microsoft Learn, as reviewed 12 November 2026\. The use-it-or-lose-it hour. [Microsoft Learn](https://learn.microsoft.com/en-us/azure/cost-management-billing/reservations/reservation-discount-application?ref=sotkn.com). 8. Microsoft, "Track your Microsoft Azure Consumption Commitment", Microsoft Learn, as reviewed 12 November 2026\. The shortfall charge as an Azure prepayment credit. [Microsoft Learn](https://learn.microsoft.com/en-us/azure/cost-management-billing/benefits/macc/track-consumption-commitment?ref=sotkn.com). 9. Microsoft, "Azure purchasing models", licensing guidance, as reviewed 12 November 2026\. A MACC term is usually one, two or three years. [Microsoft licensing](https://www.microsoft.com/licensing/guidance/Azure-Purchasing-Models?ref=sotkn.com).