The last quarter results of 2020 were groundbreaking for Alphabet, the parent company of Google. And the highlight of the quarterly result was the Google Cloud’s sales figures. Fourth largest technology company by revenue detailed the sales figure for the subsidiary for the first time.
Why it is such a big thing?
Google Cloud services incurred the whooping loss of $5.6 Billion in the fiscal year. At first glance, it may seem that the company is not going in the right direction but let us check the other facts as well.
Google cloud services reported a loss of $4.3 billion in the year 2018 which increased in the year 2019 to $4.6 billion. At the same time, the revenue of the organization grew from $5.8 billion in 2018 to $8.9 billion in 2019. And very impressive 2020 saw a revenue increment of $13 billion.
The revenue share of Cloud services grew to $13 billion in the year 2020.
Thomas Curian is the CEO of Google’s Cloud unit which includes all the Google Workspace, cloud infrastructure, and platform services. Data centers are real expensive deals, the company had four new regions in the year 2020 and started to work on others more.
Clearly, the company is looking to lead the cloud computing business in the coming years.
Can Google Cloud Services really compete with AWS and Azure?
The road for Google Cloud will not be an easy one. AWS first ran into losses for nine years to become profitable in the tenth year. On the other hand, today it is a $45 billion business.
Additionally, Alphabet doesn’t rely solely on the Cloud business for revenues as Amazon does. The core Ad business gives the deep pockets (nearly $170 billion of revenue) to the giant to work and compete in one of the most competitive technology business.
If you look at the trends, the top CEOs like Satya Nadela lead Azure, Thomas Curian of Google who was leading in Oracle is now handling the significant divisions. Cloud Computing is the dominant business and it will run the show in coming years.
Thankfully, Alphabet is not dependent on Google’s cloud business, as Amazon relies on AWS, to make considerable profit every quarter, thanks to Google’s dominant ad business that brought in a staggering $52.9 billion in revenue last quarter alone and nearly $170 billion for the year.
To look at the broader picture we can predict that the competition between ace cloud companies will intensify in the coming years. We can easily make out that Google will continue to invest heavily in the Cloud business, and, while it may see a jump in the revenue it would be an uphill road for the tech giant.