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Google, AWS, Microsoft earnings are in, and cloud is up up and away

Dive Brief:

  • No. 2 cloud provider Microsoft looked to be in healthy shape following its earnings call Wednesday. Microsoft reported a 15% year-over-year increase in intelligent cloud revenue in Q2, driven by a 98% year-over-year growth in Azure revenue.
  • In Alphabet’s earnings call Thursday, Google CEO Sundar Pichai announced that Google Cloud business — which encompasses the cloud platform and G Suite — is now bringing in $1 billion per quarter and that the company believes it “is the fastest growing major public cloud provider in the world.” G Suite hit a new milestone with four million paying customers, and the company tripled the number of $1 million plus deals across cloud products year-over-year. Alphabet CFO Ruth Porat said the cloud division saw the largest growth in headcount in Q4 2017.
  • Amazon Web Services reported $17.5 billion in sales in 2017 — a 43% growth year-over-year. The segment experienced 44% growth year-over-year in Q4 2017 with around $5.1 billion in net sales and a 39% growth year-over-year in operating income to $4.3 billion in Q4 2017. Amazon reported $60.5 billion in Q4 revenue. 

Dive Insight:

Last year saw the biggest cloud players continuing to grow their shares of the cloud market at the expense of smaller players.

Cloud infrastructure services revenues grew 44% year-over-year in 2017, according to Synergy Research Group. No. 1 Amazon grew its market share by 0.5% as Microsoft grew by 3%, Google by 1% and Alibaba by 1%; IBM lost 0.5% of its market share, and the next 10 cloud providers cumulatively lost 1% of the market, according to the report.

Cloud infrastructure services grew 46% in Q4 2017. 

 

AWS will continue experiencing growth erosion as Microsoft and Google continue to push into its lead. Microsoft has hinged long-term strategy on intelligent cloud in the enterprise, and its Q2 performance shows the company is continuing healthily down that path.

Alphabet is betting the Google Cloud Platform will become one of the biggest revenue generators for the company, and it is investing in its domestic and international workforce to bolster the cloud, hardware and YouTube segments that demonstrated strong growth last year.

IBM is the No. 3 IaaS provider by market share, but it was not until Q4 2017 that the company beat 23 quarters of lackluster performance and turned a profit. The company’s cloud business saw a 24% increase year-over-year in the quarter as it closed $17 billion in public, private and hybrid cloud revenue. 


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