In the cloud business, Google is inferior to Amazon and Microsoft, but the last steps of the search giant prove that it sees a strategic segment for development in it. The revenue of the parent company Google Alphabet (GOOG, GOOGL) continues to grow at a rapid pace, the last reporting quarter showed an increase of 20% by compared to last year.
However, there is an income item, the quarterly growth of which is twice the growth of the main Alphabet article, digital advertising, the revenue of the latter grew by 17% to $ 33.9 billion, significantly exceeding analytical expectations. The “Other Revenues” article, which includes Pixel phones and cloud products, in the 3rd quarter showed revenue growth of 39% more than in the same quarter last year, amounting to $ 6.32 billion.
The cloud business constitutes a good long-term opportunity for the growth of the digital giant’s income and profits, as well as for the growth of its shares.
Recent research data shows that Alphabet is becoming more difficult to compete in the field of digital advertising, in addition, the company is subject to regulatory risk in relation to this business. This is an additional incentive for the company to consider cloud computing as a priority area of development.
Google CEO Sundar Pichai said in July that the company plans to triple cloud sales, calling it a key growth factor for Alphabet. The start of Alphabet’s true cloud business growth
Until recently, the main strength of Google’s cloud business was in consumer Internet applications, but today the situation has changed and the company is doing everything necessary to get more corporate customers by offering tools for sales and marketing. Amazon followed a similar path when it began to develop its cloud-based subsidiary AWS.
Alphabet’s efforts to prioritize the cloud are visible in which team the company forms and what steps it takes.
In November 2018, Alphabet relied on Thomas Curian, who had served as Executive Director at Oracle (ORCL) for 22 years.
Heading the cloud division, Curian set an ambitious goal to double segment revenues, focusing on large customers: government organizations, retailers, as well as manufacturing, healthcare, the media and finance.
He hired first-class professionals who have experience in sales and communications around the world, among them: Robert Enslin, leader of the cloud business group in SAP (SAP); Amit Zaveri, Executive Vice President, Oracle Cloud, and Kirsten Cliphouse, Microsoft Executive (MSFT).
In a fairly short time, Curian managed to enter into important partnerships with companies such as VMware (VMW), Wipro (WIT) and DXC Technology (DXC). He then secured the acquisition of Looker, a major player in the business intelligence market, for $ 2.6 billion.