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.
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In today’s Cloud Wars Minute, I examine Google Cloud’s third quarter results and Sundar Pichai’s explanation for them.
Highlights
00:27 — Google Cloud’s Q3 cloud revenue was up 22% to $8.4 billion. Perhaps it’s unfair, but only in the Cloud Wars could a company at that scale, hitting a growth rate of 22%, in a market like this, be seen as anything except absolutely stellar.
01:01 —The CEO of Alphabet, Sundar Pichai, said this was due to “optimization.” In Q1 of this year, Google Cloud’s growth rate was 28%. In Q2, 28%. There was a similar thing with Microsoft over those two periods. In Q3, though, this fell to 22%. That’s a pretty big decline.
01:57 — Microsoft announced that its revenue was up 24% to $31.8 billion. Microsoft’s growth rate accelerated from Q2, which was 21%, to Q3, 24%. It went up. Whereas Google Cloud’s went from 28% in Q2, to 22%, in Q3. My guess is that AWS‘ number, which came in at the end of last week, and I couldn’t cover for this video, is going to be 12%, where it was in Q2.
03:19 — It was really puzzling that Sundar Pichai said this, in describing what happened to decelerate the growth rate at Google Cloud, “We have definitely started seeing customers looking to optimize their spend.” I just don’t think, in today’s market, in the current setting, that holds water.
04:11 — On the positive side. Pichai said that Vertex AI projects, if you look at the number it had in Q2, and then the number in Q3, sequentially it has seven times more projects with customers using Vertex AI for generative AI applications and offerings.
04:55 — Google Cloud has, up until now, been one of the fastest-growing companies in the Cloud Wars Top 10. For a long time, it was the fastest growing. This performance in Q2 is nowhere close to where it’s been before. We will see in Q4 if it can bounce back and get things back up into the mid- to high 20s.
