Alphabet is not exactly a secretive company, but they do their best to keep our prying eyes away from the numbers we are looking for. We still don’t know how much money they make from YouTube – although several estimates are floating around – and it might be many more quarters – if not years – before we know exactly how much money their Google Cloud Platform is bringing in.
What we do know, undeniably, is that Google Cloud has started to yield results for the advertising giant.
Alphabet does not lead us directly to its cloud revenue numbers, because those numbers share their home with a few other Google business units. An excerpt from Google’s 2016 Annual Report, Page 26:
Google other revenues consist primarily of revenues and sales from:
• Apps, in-app purchases, and digital content in the Google Play store;
• Licensing-related revenue; and
• Service fees received for our Google Cloud offerings.
So there are app revenues from Play Store, Google devices like Pixel, Home and Chromecast, licensing revenues, and then Google Cloud buried deep within an almost apologetic “service fees received” item.
Google has been pushing hard on the hardware side with Google Pixel, Google Home and Google WiFi hitting the market over the past six months or so, but we also know that they are getting aggressive with their cloud offerings, steadily increasing their data center count around the world and increasing the footprint of their Google Cloud services.
But now, look at this:
In 2015, Google Other Revenues were $7,154 million, up from $6,050 million in 2014, a growth rate of 18.25%. But things moved really fast after that: Google Other Revenues increased to $10,080 million in 2016, a stunning growth rate of 40.90%. If you look closely at the following chart, you can really see how this segment’s revenue numbers have been accelerating over the past four quarters.
Google Picked Diane Greene to head their cloud division in November 2015, and it’s not mere coincidence that Google Other Revenues have picked up steam in 2016, and continue to gallop on their growth journey.
Admittedly, a sizable portion of that growth will have come from device sales, but the emergence of Google Cloud is obvious, especially if you’ve been keeping up with news about Google Cloud strategy.
At the Google Cloud Next 2017 conference last month, Greene made it very clear that they’re not going the acquisition route to build a sales team for their cloud offerings, alluding to Microsoft’s purchase of LinkedIn for $26 billion.
“If I could inexpensively pick up a killer sales force without a lot of the other things that I don’t necessarily need, yeah, I’d be all there. We’re taking the most optimal route to serve our customers.”
Instead, they’re partnering with the likes of Rackspace and Pivotal. She’s also made it amply clear that building a strong sales force is more important than building the best cloud.
“If I had to have my druthers — the best technology, the best cloud …. if I had to choose between that and building out a sales force, and building out customer support, I would pick the latter. It’s just a matter of block and tackling, there’s no rocket science there.”
Now, if that is construed as a strategy to sell the product rather than improve the product so that it sells itself, then so be it! Greene doesn’t seem to care. Her focus is on selling the service, above all else.
That kind of makes sense in a twisted sort of way when you realize how late Google has been to the cloud race. Amazon, Microsoft and IBM are far ahead, and unless Google focuses on sales and customer support, it’s not going to get anywhere, even with the “best” possible cloud service in the world.
Besides, there’s no such thing. “Best” is what works best for the client, not something based on hypothetical case studies that “prove” that one service is better than another.
And, in our own way of egging Google on toward a stronger presence in the cloud, we’re tempted to say:
“Welcome, Google Cloud. It’s time to grow – and grow fast!”
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