In a stunning Cloud Wars Top 10 development, Google Cloud added as much new cloud revenue in Q3 as did market leader Microsoft — $600 million — in a clear sign that Google Cloud is building enormous momentum around the new types of business outcomes customers expect from their cloud investments.
While Microsoft’s overall cloud business is about 4X larger than Google Cloud’s, the fact that Google Cloud gained as much new cloud revenue in Q3 compared to Q2 is a stunning achievement because achieving new-revenue parity with mighty Microsoft would have seemed unimaginable only a few quarters ago.
Here are the basics:
- Google Cloud: In Q2, Google Cloud’s revenue was $6.276 billion. In Q3, it was $6.868 billion, yielding a total of $592 million in additional new revenue in Q3 over Q2.
- Microsoft Cloud: For the quarter ended June 30 (Microsoft’s fiscal Q4), cloud revenue was $25.1 billion, and for the quarter ended September 30 it was $25.7 billion (slide 5). That’s a difference of — wait for it! — $600 million.
And I’m willing to round up Google Cloud’s $592 million to a cool $600 million to make the rather shocking point that while, as noted, Microsoft’s cloud business is 4X larger than Google Cloud’s, in the here and now, Google Cloud has matched mighty Microsoft dollar for dollar in incremental revenue.
Let’s also look at the growth rates for each cloud business for the just-reported quarter: for Google, it was 37.5%, and for Microsoft, it was 24% (31% in constant currency). That means Google Cloud grew more than 50% faster than the Microsoft Cloud business in Q3.
Now, 4X larger or not, that is a whopping discrepancy and speaks to which company has the momentum in the market right now. It also follows closely on my own observation, made two weeks ago on October 13, about a parallel but nonfinancial comparison of the two companies: Google Cloud Overtakes Microsoft as Innovation Leader in the Cloud.
Is that opinion worth the paper it’s written on? Maybe, maybe not — I did not come to that conclusion lightly and weighed a great deal of evidence before making that case. But yes, it is an indisputably subjective comparison.
But there is absolutely nothing subjective about these two facts: Google Cloud is not only growing much, much faster than Microsoft Cloud — 37.5% to 24% — but also fully matched Microsoft in the amount of incremental cloud revenue generated in the quarter ended September 30.
As momentous as that is, Microsoft is still by far the #1 player in the Cloud Wars Top 10. But seismic perturbations like this can sometimes lead to momentous disruptions — eruptions? — down the road.
So, well done, Google Cloud!
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