Google Cloud just reported revenue for the first time - but it's hard to compare with Amazon and Microsoft because there's a lot they don't tell Wall Street about their clouds
- Google Cloud just reported revenue for the first time.
- Google's cloud unit brought in $2.6 billion in its most recent quarter, compared to Microsoft's $12.5 billion and Amazon's $9.9 billion - but there's a big flaw in that comparison because the companies report cloud revenue differently.
- Microsoft doesn't report revenue for its Azure cloud platform. Instead, its "commercial cloud business" includes a bunch of other products such as Office 365 and Dynamics 365. Google's revenue also includes G Suite, its productivity suite.
- In other words: Google and Microsoft lump in other products when they report cloud revenue, whereas Amazon's impressive cloud financials almost entirely represent its massive cloud infrastructure platform business.
- The way the companies report cloud revenue would suggest Microsoft is the No. 1 cloud player, but market share estimates yield a very different result with AWS at more than three times the size of Microsoft when it comes to cloud infrastructure.
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Google Cloud just reported revenue for the first time, giving us insight into a business that the company has often hyped up, but rarely given anything other than the most general details.
That's an important step for transparency - but it doesn't actually bring us much closer to knowing how it fares against leading rivals Amazon Web Services and Microsoft, because there's still a lot that all three companies aren't telling Wall Street.
The search giant on Monday reported Google Cloud revenue of $2.6 billion for the last three months of 2019, up from $1.7 billion in the same quarter the year before. Google Cloud includes the company's G Suite collection of cloud productivity tools and the Google Cloud Platform infrastructure service.
It's clear Google's cloud revenue is less than Amazon's or Microsoft's, but there's no way to tell exactly how the cloud businesses compare because there's a big disparity in what the companies include in cloud revenue. For instance, if you looked at this chart, you might - wrongly - believe that this tells the whole story.
The reality is a little more complicated - and makes it clear that Amazon Web Services is even more dominant than you might think.
Microsoft, for instance, doesn't actually break out revenue for its two most prominent cloud products, the Azure infrastructure platform and the business version of the Office 365 productivity suite. Rather, it lumps those products in with its Dynamics customer relationship management software and some other undisclosed cloud services to come up with a figure it calls "commercial cloud," which is what you see on the chart.
That business reached $12.5 billion in sales for its most revenue quarter, up 39 percent year over year. Microsoft reports only revenue growth for Azure. In its most recent quarter, Azure revenue grew 62 percent, up compared to the previous quarter, breaking a quarters-long cycle of slowing growth in the business.
AWS, meanwhile, reported about $9.9 billion in revenue for the most recent quarter. The AWS segment, according to securities filings, "consists of amounts earned from global sales of compute, storage, database, and other service offerings for start-ups, enterprises, government agencies, and academic institutions."
In other words, almost all AWS revenue comes from its cloud infrastructure business - Amazon doesn't have any other products on the scale of Microsoft Office 365 or Google G Suite that's likely to make up much of the "other service offerings" portion of that segment.
Through that lens, it's clear that AWS is incredibly massive in the cloud computing market: Its infrastructure cloud alone is almost as big as all of Microsoft's business cloud products combined, and four times larger than Google Cloud's figure, which includes both the Google Cloud Platform and G Suite.
All of which shows that why the way companies report cloud revenue would suggest Microsoft is the No. 1 cloud player, market share estimates suggest a very different result. Gartner's most recent cloud infrastructure report estimated put AWS market share at 47.8 percent at the end of 2018, compared to Microsoft's 15.5 percent and Google's 4 percent.
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