Welcome to the Cloud Wars Minute — your daily cloud news and commentary show. Each episode provides insights and perspectives around the “reimagination machine” that is the cloud.
In today’s Cloud Wars Minute, I discuss Google Cloud’s growth, the challenges it faces, and how it’s positioning itself in the competitive landscape.
Highlights
00:35 — In Q3, Google Cloud’s growth rate was 35%. In Q4, Google Cloud’s growth rate was 30%. Q3 hit $11.4 billion on that big growth spurt, and that happened at a time when Google Cloud’s growth rate had been accelerating for five or six straight quarters. The big jump from 29% in Q2 to 35% stood out.
01:23 — I was curious to see what Q4 would bring. Well, 30% is the number — just a hair under $12 billion. A terrific performance. But is this drop from Q3 to Q4 a big issue? It had five straight quarters of accelerating growth, capped off by this. Was it inevitable that it had to slip? How about the drop from 35% to 30%? That’s a big drop.
02:15 — Conversely, Google Cloud says two big factors were at play there. One, it said it had a tough comparable a year earlier. The second point was about how new demand for its products — both cloud and AI products — were constrained by a lack of capacity. That’s a good problem. In a similar way, when your growth slides but it’s still at 30%, that’s a pretty nice problem to have.
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03:22 — Google Alphabet CEO Sundar Pichai said that there were multiple billion-dollar deals that the company put together in Q4 and throughout the year. One of the biggest factors he cited was that first-time customers were up. It had twice as many in 2024 as it did in 2023. And again, there’s some pretty big competition there from Microsoft, AWS, and Oracle.
04:24 — It’s got some interesting numbers of how it’s making all its infrastructure much more efficient so that this surging demand for AI services doesn’t trigger prices to go through the roof. We see that always the cloud is not a short-term thing; it’s a long-term thing. So, Google Cloud is going to be playing the long game. We’ll see what happens next quarter.
