Google Assesses Its Strengths in Its $1B Per Quarter Cloud Business

Open source and machine learning are strengths as Google Cloud Platform goes up against bigger cloud competitors.

Mitch Wagner, Executive Editor, Light Reading

April 23, 2018

3 Min Read
Google Assesses Its Strengths in Its $1B Per Quarter Cloud Business

Google Cloud Platform is carving out a niche among enterprise customers, finding strength in areas such as open source support and machine learning as it goes up against much bigger competitors, Google CEO Sundar Pichai said on a quarterly earnings call Monday.

Google (Nasdaq: GOOG) is the fourth-largest cloud provider; it lags behind Amazon, Microsoft and IBM, according to a recent report from Jefferies & Company Inc. Amazon, in fact, is so far in the lead it has more cloud-based revenue than the next four competitors combined, including Google. (See Google & Alibaba Cloud Gaining Fast in Public Cloud – but AWS Still Rules.)

But Google is growing fast, Pichai said in a quarterly earnings call for parent company Alphabet Inc. Monday afternoon.

Figure 1: Open source and machine learning are strong points Google sees in itself as it goes up against bigger competitors in enterprise cloud. Open source and machine learning are strong points Google sees in itself as it goes up against bigger competitors in enterprise cloud.

Boost your knowledge of cloud-native software and innovations driving data center transformations! Join us in Austin at the fifth-annual Big Communications Event May 14-16. The event is free for communications service providers -- secure your seat today!

Google doesn't break out cloud revenue from other revenue, but Pichai noted Monday that cloud revenue exceeded $1 billion per quarter last year, with momentum increasing and revenue growth accelerating in the first quarter. The company is signing bigger customers.

What's drawing in enterprise customers to Google Cloud ? Security and analytics, Pichai said. Customers are also drawn by machine learning, support for open source standards, particularly Kubernetes. And Alphabet sees synergies between G Suite and Google Cloud Platform, he said.

Alphabet reported revenues of $31.1 billion, up 26% year-over-year for the first quarter 2018 quarter ending March 31, and beating analyst expectations of $30.36 billion. Operating income was $7 billion, with diluted earnings per share of $9.93 adjusted, compared with $9.28 expectations.

In the category of "other revenues," which includes Google Cloud Platform, Alphabet saw revenues of $4.35 billion, up a hefty 36% year-over-year, the company said. "Other revenues" also include Google's hardware, as well as the Play Store. As of this quarter, "other revenues" includes Nest hardware, previously included in a category Alphabet calls "other bets."

Revenue increased 14% to $150 million in the "other bets" category, which including Google Fiber and the life sciences brand, Verily. Losses there narrowed, to $571 million from $703 million in the year-ago quarter.

Google continues to be the main engine driving Alphabet's business, pulling in $22 billion, up from $17.4 billion year-over-year. And ads still dwarfed other revenue sources, with ads pulling in $26.6 billion, up 24% year-over-year.

Alphabet stock traded at $1,073, down less than 1% in after hours trading.

Alphabet's complete earnings press release is here.

Related posts:

— Mitch Wagner Follow me on Twitter Visit my LinkedIn profile Visit my blog Follow me on FacebookExecutive Editor, Light Reading

About the Author(s)

Mitch Wagner

Executive Editor, Light Reading

San Diego-based Mitch Wagner is many things. As well as being "our guy" on the West Coast (of the US, not Scotland, or anywhere else with indifferent meteorological conditions), he's a husband (to his wife), dissatisfied Democrat, American (so he could be President some day), nonobservant Jew, and science fiction fan. Not necessarily in that order.

He's also one half of a special duo, along with Minnie, who is the co-habitor of the West Coast Bureau and Light Reading's primary chewer of sticks, though she is not the only one on the team who regularly munches on bark.

Wagner, whose previous positions include Editor-in-Chief at Internet Evolution and Executive Editor at InformationWeek, will be responsible for tracking and reporting on developments in Silicon Valley and other US West Coast hotspots of communications technology innovation.

Beats: Software-defined networking (SDN), network functions virtualization (NFV), IP networking, and colored foods (such as 'green rice').

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like