Google Cloud is now a $1 billion per quarter business - but it's still way behind Amazon

Stephen Lam/Reuters

• Google Cloud is now a $1 billion per quarter business, CEO Sundar Pichai told investors Thursday.
• That means cloud is 3% of the company's overall revenues, which mostly come from advertising sales.
• Amazon Web Services, the leading cloud computing provider, booked $5.1 billion in the holiday quarter of 2017.

Google may have made its name as a search engine, but cloud services are quickly growing in importance for the $817 billion company.

Google Cloud is now a $1 billion-per-quarter business, CEO Sundar Pichai told investors during the company's fourth quarter 2017 earnings call on Thursday afternoon. Doing simple multiplication, that means cloud computing could be a $4 billion business for Google annually.

While that's a drop in the bucket for Google parent company Alphabet, which raked in $32.3 billion in GAAP revenues for the quarter, it's a major landmark considering the company's broad focus.

The majority of Google's revenues come from advertising, which accounted for $27 billion in income for the company in the just-ended quarter.

Google's cloud rivals, however, still have much bigger pieces of the pie. Amazon reported $5.1 billion in sales across its cloud division for the fourth quarter. Microsoft's Azure, widely considered the number two cloud service, almost doubled in revenue from the year before, booking $5.3 billion in total cloud revenue.

It's worth noting that it's misleading to do a direct comparison between Google Cloud and Amazon Web Services: Google Cloud includes revenue from the search giant's cloud infrastructure services, as well as its popular G Suite productivity service. Meanwhile, Amazon Web Services does the vast majority of its business in cloud infrastructure. Microsoft, for its part, also includes revenue from infrastructure, productivity, and other business services in its figure.

Despite gains in the cloud, things were otherwise rocky for Google's partner company Alphabet. The company reported $25.9 billion in net revenues for the quarter - a miss compared to the $26.32 billion the analysts expected.

Click here to read more about Alphabet's fourth quarter 2017 earnings.

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