With Google Cloud’s 82% Q2 revenue growth giving it a 2.5X growth-rate advantage over rivals Microsoft Cloud and AWS, it will be fascinating to see how those competitors attempt to spin that massive customer-preference gap when calendar-Q2 numbers are released by Microsoft on July 29 and AWS on July 30.
For the record, here are the numbers — and yes, I’m aware that I’m comparing Google Cloud’s Q2 results with the Q1 numbers from Microsoft Cloud and AWS.
- Google Cloud: 82% growth rate to $24.8 billion for quarter ended June 30
- Microsoft Cloud: 29% growth rate to $54.5 billion for quarter ended March 31
- AWS: 28% growth rate to $37.6 billion for quarter ended March 31
While chronologically imperfect, that comparison is still highly relevant, and here’s why. First, let’s assume that later this week, both Microsoft Cloud and AWS report explosive calendar-Q2 growth (and I’m saying “calendar Q2” because for Microsoft, the three months ending June 30 are its fiscal Q4). And let’s say that for the three months ended June 30, Microsoft’s cloud-revenue growth rate soars to 40% from the 29% it reported in the previous quarter, and that AWS also jumps to 40% in Q2, a massive leap from Q1’s 28%.
If that happens — and while it is possible, I think it’s highly unlikely — then even with those enormous accelerations for Microsoft Cloud and AWS, Google Cloud would still be outgrowing each of those rivals by more than 100%.
Now I’m sure some of you are asking, “Who cares?” I’ll answer that in a moment, but first here’s a detailed comparison of the latest numbers for the three companies.
So who cares?
Well, the numbers show that *customers* care, and they’re the constituents whose preferences matter most.
And here are a few other things the numbers show:
- The numbers show that customers don’t view the hyperscalers as some homogenous blob where there’s not even a dime’s worth of difference among the companies. Quite the contrary: while growth rates for all three companies have accelerated over the past few quarters, Google Cloud’s rate of growth absolutely dwarfs the performance of its rivals — and that dynamic is a very direct expression of customer preferences.
- The numbers also show a powerful quantitative shift among customers for the AI and cloud solutions that Google Cloud is offering, because Google Cloud added an astonishing $4.8 billion in incremental Q2-over-Q1 revenue, by far the biggest sequential quarter-to-quarter jump ever reported by any hyperscaler. That shows that right here in the present — not two or three or four years in the past — more and more customers are choosing Google Cloud as their preferred provider.
- The numbers also show that in spite of the enormous incumbent size advantage both competitors hold over Google Cloud — compared to Google Cloud’s Q2 total of $24.8 billion, Microsoft Cloud’s latest quarterly revenue is $54.5 billion, and AWS’s is $37.6 billion — Google Cloud is winning far more new AI-centered business, with the prime evidence being the $4.8 billion quarter-over-quarter revenue total cited above.
- The numbers also show that in terms of future business as defined by backlog and/or RPO, Google Cloud is surging. For Q2, it’s backlog rose 390% to $514 billion. We’ll find out in a couple of days what the AWS backlog did in Q2, but going back to Q1, the AWS backlog was $364 billion with a growth rate of 49%. For Q2, can AWS add $150 billion in sequential Q2-over-Q1 revenue to match Google Cloud’s new backlog total $514 billion? Well, theoretically it’s *possible*, but that’s another bet I would not take.
Final Thought
When Amazon releases its Q2 numbers on July 30, I’ll be interested to see if CEO Andy Jassy tries another of the numerical shell-games he’s trotted out in a few recent earnings calls to try to deflate the significance of Google Cloud’s remarkable growth surge. In the past, Jassy has played variations on the theme of “they’re not as big as we are, and so it’s easier to post relatively high growth rates when your revenue base is relatively small.”
Right.
And no doubt, when Jassy asks senior AWS management why Google Cloud is winning big accounts that AWS used to dominate, Jassy will be completely mollified if the AWS leaders tell him it’s not their fault because, “After all, Google Cloud is smaller than we are and therefore has a relatively high growth rate and that growth has to come from *somewhere,* right, Andy?” Oh yeah — he’ll love that one.
In the Cloud Wars, the ultimate truth-tellers are always — always — the customers. And right now, the truth those customers are telling is that Google Cloud is gouging huge chunks of market share out of Microsoft Cloud and AWS.
The numbers — including the Q2 growth-rate disparity that will likely be about 2.5X or at a minimum 2X — don’t lie.
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