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 its 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 that 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 it 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. Instead, 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 recent quarter, up 39% year over year. Microsoft reports only revenue growth for Azure. In its most recent quarter, Azure revenue grew 62%, 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's G Suite that are likely to make up much of the "other service offerings" portion of that segment.
Through that lens, it's clear that AWS is 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 the Google Cloud Platform and G Suite.
While the ways the 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 AWS's market share was at 47.8% at the end of 2018, compared with Microsoft's 15.5% and Google's 4%.
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