- Amazon, Microsoft, and Google all reported earnings on the same day, giving us an update on the state of the cloud computing war.
- It’s hard to directly compare Amazon’s $US18 billion ($AU23.43 billion) Amazon Web Services business with its rivals, Microsoft’s Azure and Google Cloud.
- But by all indications, Amazon is far and away the leader in the public cloud computing market.
When Amazon, Microsoft, and Google all released their quarterly earnings on Thursday, they did more than give onlookers an update on their particular businesses.
As the three major players in the cloud computing market, the companies provided a glimpse of the state of affairs in that ongoing battle. The reports make clear that Amazon Web Services, which is on track to post $US18 billion in revenue this year, continues to have the upper hand.
But its rivals are anything but broken. Microsoft’s commercial cloud business, which includes Azure, its direct competitor to AWS, is gaining momentum. It’s now on a $US20 billion annualized run rate, reaching that milestone sooner than expected.
While Google Cloud is still battling for scraps behind those two, the search giant is investing heavily in improving its position.
The primary battleground in the cloud war is the cloud computing market, which was all but invented by AWS. Such services offer developers basically unlimited supercomputing power on a pay-as-you-go basis.
But the contenders are battling on other fronts too. For example, in the market for cloud-based productivity software, Microsoft’s Office 365 service is going up against Google’s G Suite.
Here’s what the three companies had to say about their cloud businesses in their earnings reports:
Amazon Web Services reported $US4.6 billion in revenue for the quarter. AWS has already brought in $US12.3 billion in 2017 so far, with a quarter left to go.
With sales growing quickly and projected to jump again next quarter, AWS is expected to hit $US18 billion in revenue for the full year. As a bonus, it’s already the single most profitable part of Amazon’s business.
Microsoft doesn’t disclose the revenue it generates from Azure, its product that competes directly with AWS. However, it did say Azure’s sales grew 90% from the same period last year.
Meanwhile, the company’s overall commercial cloud business, which includes not just Azure but its Office 365 cloud suite and other cloud services for business, posted $US5 billion in revenue in the quarter. That business is now on track to hit $US20 billion in annual sales. And just by itself, the business-targeted version of Office 365 saw a 42% jump in revenue from the year-ago period.
Google Cloud is the biggest cipher of the three, in terms of financial performance. Instead of breaking out the amount of revenue it generates from its cloud business, Google lumps together its cloud sales with the revenue it generates from the Google Play app store and from its hardware business. That combined category posted $US3.4 billion in revenue last quarter.
But Google indicated on its earnings call that it’s taking the cloud market seriously. The company’s overall headcount increased by 2,495 last quarter, with most of its new hires going to fill technical and sales jobs in its cloud business.
That’s “consistent with the priority we place on this business,” Ruth Porat, chief financial officer of Google parent company Alphabet, said on the call.
The bottom line is it’s impossible to get a definitive assessment of the state of the cloud war, given the differences in how each of the three major players discloses and classifies its cloud revenue. Still, its pretty clear AWS is dominating the biggest front in the war — cloud computing — and, at least in that area, its rivals are struggling to gain ground.
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