It's not everyday that you get to gauge the quarterly progress of the top three public cloud providers in real time. But that's what happened when Amazon, Microsoft and Alphabet reported earnings within minutes of each other.
Here's what we learned.
AWS: The big dog
Amazon's third quarter conference call was a bit business as usual when it came to Amazon Web Services. AWS' annual run rate is now topping $14 billion. AWS is the most profitable business at Amazon even amid price cuts. Amazon CFO Brian Olsavsky noted a few key themes. Consider:
AWS is taking database workloads and launching services at a rapid clip. Olsavsky said:
The innovation pace continues to accelerate. We are very proud of the launches in Q4: the Amazon Connect, which we think will provide customer service-like capability to customers; and Amazon Chime, which we also believe will resonate with customers. We've had a lot of adoption of our new services. We've got customers migrated more than 23,000 databases using the AWS data -- database migration service since that launched last year. And just generally, we continue to expand geographically. We've announced additional Availability Zones and regions worldwide. So again, we signed a number of big customers.
Deferred revenue is getting a boost due to AWS purchasing Reserved Instances on AWS. The upshot is that customers are putting sustained workloads on AWS and getting discounts.
Price cuts from Dec. 1 have kicked in. Amazon noted that price cuts are simply the norm. However, new services like Chime and new offerings can offset infrastructure as a service price cuts. The upshot is that AWS is moving up the stack. See: Amazon sees strong AWS growth in Q1 results | AWS opens up Amazon Lex AI platform to its customers | Stacking up the cloud vendors: AWS vs. Microsoft Azure, IBM, Google, Oracle
Microsoft Azure: Nailing the hybrid game
Perhaps the biggest takeaway from Microsoft CEO Satya Nadella on Microsoft's third quarter conference call was that the company is nailing the hybrid deployment and cloud migration game. Whether it's Office, Dynamics or Windows Server there's a clear migration path to Azure. In fact, Microsoft is one of the few traditional tech players that can grow on-premise sales and cloud. Nadella explained:
We do have a huge on-premise base that is still we're in need for the premise product that will continue but our focus is on transitioning to the cloud. And you've seen us do this successfully with Office 365. You've seen us do that with Azure. And now we're ready to do that mainstream across what has been traditionally known and CRM and ERP.
Like AWS, Microsoft is hooking customers into Azure and then up selling them premium services. See: Microsoft's Q3 strong as commercial cloud revenue hits $15.2 billion run rate
Commercial cloud revenue is on a $15.2 billion annual run rate, but Azure is just a part of that equation. Office 365 is likely the main driver for Microsoft's cloud revenue.
Google Cloud Platform: Getting its go-to-market down
Google CEO Sundar Pichai touted the company's Google Cloud Platform and emphasized that it is becoming much more enterprise friendly. Google is also gunning for digital transformation projects. Pichai said:
The heavy lifting, I would say, is around how we meet the enterprises in the market. We have reorganized, so we have one face to the customer. So it's not just sales reps. We've been thoughtful about how we have built out the interior go-to-market organization. So we created 2 new areas that customers can now take advantage of. One is the office of the CTO, which helps customers solve difficult technical problems. And the second is our Advanced Solutions Lab, where customers can get help for machine learning experts. And on top of that, now, we have a phenomenal support team that helps keep customers' applications up and running. So I think what we have done, our approach is One Google. When a customer signs up for Google Cloud, they get more than GCP and G Suite, they have access to the ads and analytics teams, YouTube teams and resources within our organization.
Pichai also added that Google's big challenge of convincing enterprises it is serious about the cloud has been handled. Pichai said:
People sense our commitment to the area. They understand the pace at which we are investing. They see that we have committed to machine learning and AI at a deep level. In general, I think there is a very strong recognition that we have pivoted to a being a deep enterprise company and conversations are very strategic. We are engaging at the highest levels within companies.
See: Alphabet beats Q1 earnings expectations