Google Brags About Its Growing Aloud Activities. But It's Still Dwarfed By Amazon


Google's parent company, Alphabet, says its cloud service activities are gaining momentum.

The company said on Thursday as part of its second-quarter earnings report that its cloud unit, including its data center operations plus corporate versions of Gmail and Google Docs, has annual sales of more than $ 8 billion. Run rate is a prediction of future financial results based on the most recent income.

The news shows the progress in a company that Google has invested heavily in recent years because it wants to include competitors such as Microsoft Azure and AWS from Amazon.

The latest run rate prediction comes after Google CEO Sundar Pichai refused to disclose financial details about the cloud business in the first quarter. Early last year, Alphabet said its cloud business had annual sales of $ 4 billion.

Last year, in an effort to get its cloud business off to a flying start, Google hired a new leader for the division, Thomas Kurian, former president of Oracle. He invested heavily in the cloud, including the recent purchase of cloud company Looker for $ 2.6 billion.

The cloud company led to the largest increase in the number of employees for the Alphabet product areas. The Alphabet workforce in the second quarter was 107,646. Google refused to provide more details.

Whatever the case, recruitment is expected to continue. Pichai said Thursday that the division's sales team will triple in the coming years.

But Google Cloud is still struggling with heavy competition from Amazon, which said on Thursday that the annual revenue of the cloud unit is $ 33 billion, almost four times as high as that of Google.

All in all, Alphabet outperformed Wall Street's expectations by reporting $ 38.9 billion in quarterly revenue versus an estimated $ 38.2 billion. That turnover represents an increase of 19% compared to the same period last year.

Alphabet contributed its revenue growth to its search ads, followed by YouTube and then to its cloud activities. The company's cloud business would be the main source of growth in the "other revenue" category, including mobile devices and the Google Play Store. The 'other revenue' category grew to $ 6.18 billion this year from $ 4.43 billion in the second quarter of last year.

Alphabet reported a quarterly profit of $ 9.95 billion, up from $ 3.2 billion in the same quarter a year ago.

The results, plus a promised buy-back of $ 25 billion, have helped Alphabet's shares increase by more than 9% to $ 1,239.50 per share in trading after closing time.

Cloud CEO Kurian, who took over at the helm of the unit in November, has a strong focus "on gaining a competitive advantage in Google's cloud business," said Pichai on Thursday. Kurian has also worked on expanding the executive team that handles consumer-focused activities such as sales and marketing.

In April, Google Cloud hired SAP veteran Robert Enslin as president of global customer activities. The organization then hired Kirsten Kliphouse, formerly from Red Hat and Microsoft, as North American sales manager this month.

Google has also expanded its cloud footprint worldwide. It announced the opening of a data center in Osaka, Japan in May and plans to open a seventh American facility in Las Vegas.

Pichai said he is convinced that the company will continue to expand its cloud services, whether through acquisitions or organic growth.
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