
Google Cloud Worth $225B, Deutsche Bank Says - suchitpuri
https://www.bloomberg.com/news/articles/2019-10-03/google-cloud-worth-double-ibm-s-market-cap-deutsche-bank-says
======
lacker
I was working at Google when AWS launched in 2006. The internal message was,
we don't want to build a competitor. We have the technology to compete in this
area, but it is fundamentally a low-margin business, whereas reinvesting in
our core business is high-margin, so we should keep our infrastructure to
ourselves.

I wouldn't say the Google strategy was wrong per se - their stock has about
10x'd since then. But it's interesting to see how much things change over
time.

~~~
exacube
I feel they entered the business because they AWS showed the industry that it
actually has pretty good margins.

However, I think the sentiment is probably true that selling VPS is low-margin
over the long-term, but i think the margins come from the other bits: global
economies of scale, good infrastructure management & practices, and providing
their proven internal technologies (ML/AI, managed distributed services).
Long-term, it seems like Google could come out the winner, but only if the
other aspects of business are also done well (like sales). It seems like
Google Cloud is picking up market share, but still far away from the 3 As
(AWS, Azure, Alibaba)

~~~
briffle
Market share is measured in some very, very funny ways. Like Office 365 being
part of their cloud division, including when people download and install
office on their computer. If Google was to switch things around, and have Ad-
words, Gmail, maps, etc, all pay a small, internal fee to google cloud to host
their servers own internal servers, I think the market-share conversation
would be very, very different.

~~~
hcnews
Most of internal Google services don't run on Google cloud. Was true as of a
couple of years ago and I haven't heard differently from my Google friends
recently.

~~~
wmf
Just reclassify Borg as Google Cloud Internal Edition and boom, everything
runs on Google Cloud. This sounds stupid but it's no worse than what MS and
IBM have done. Heck, when you are your own customer maybe you could even
double-count some revenue...

------
beambot
Google Cloud is worth $225B and Waymo is worth $100B [1], so the rest of
Alphabet is worth less than $500B in market cap? The math doesn't add up.

[1] [https://www.cnbc.com/2019/09/27/waymo-valuation-
cut-40percen...](https://www.cnbc.com/2019/09/27/waymo-valuation-
cut-40percent-by-morgan-stanley-to-105-billion.html)

~~~
swarnie_
It's DB, if they knew what they were talking about then maybe they could have
predicted their own share price sliding 97% in a decade.

~~~
gowld
If a company fails, does that mean everyone in the company is wrong about
their work?

~~~
wolco
97% slide means there is a lot of blame to go around.

------
michalu
This only means that Deutsche Bank is long on Google. 99% of these analyses
are extremely biased and purposeful.

I'm not trying to peddle "banks are evil" it's normal, it's how this business
works.

I worked in a leading asset management firm and never met a truly rich
analyst. Usually bureaucratic employees nobody at the trading desk takes
seriously.

~~~
jkaptur
You can search for "Chinese Wall" in the context of banks for more context on
this.

------
verdverm
Google is dumping money into their enterprise programs. They hired some
experienced people to run it. Their offerings are soooo much better quality
than AWS. Try getting a GPU vm with a local SSD on AWS, does not exist... In
GCP I can set custom values for CPU, MEM, GPU, SSD. Try to ssh to a machine,
and then one without a public network connect.

Google is the only provider with a good portal to their partner program. They
can actually communicate and we now have a dedicated account rep.

~~~
sieabahlpark
They're good until you get automatically banned for some reason and there is
zero people you can contact to fix it.

~~~
verdverm
I have people I can call, we have a business account.

We are going to be upgrading soon to a special partner account that gives us
an enhanced portal / cloud console to make managing our clients' accounts much
easier.

We migrate companies from AWS to GCP. If anyone is interested, please reach
out. Happy to provide reference accounts.

~~~
tpmx
Or they could just go visit
[https://cloud.google.com/support/](https://cloud.google.com/support/)
themselves.

------
nexuist
Not one mention of AWS.

[http://paulgraham.com/submarine.html](http://paulgraham.com/submarine.html)

~~~
pointytrees
I hadn't read this submarine article before. This just blew my mind. I've got
so many ideas for promoting my side business now.

~~~
ignoramous
The content farms (and Wikipedia) are modern day version of the print
publications.

Wouldn't it be ironic if pg was paid by a PR firm to write this piece? :D

------
sdan
Not surprised. If AWS can't make their UI a bit more user-friendly (especially
for beginners) and remove their AWS Educate for students (which by the way is
horrible), I think a good chunk of developers and possible institutions might
move over to GCP.

Other that UI, I think GCP in some instances may be cheaper (pretty sure I saw
some instances that were cheaper... although I can't say for sure).

~~~
whoisjuan
Why people keep saying that GCP UI/UX is good. Is it because of Firebase?
Because granted, that's a very nice UX. But when you log in to the GCP console
that thing is a fucking mess. Way more complicated than AWS, with a very
subpar UX...

And don't get me started with their documentation. What a piece of crap. It's
like nobody thought that things of this nature require a clear hierarchy. It's
just a blob of concepts organized in no meaningful way... Not saying that AWS
is perfect, but at least with their documentation, you just gotta keep reading
until you find what you need. With Google Cloud sometimes you hit these walls
that take you out of context and the only solution is to close that tab and
start again.

Ohh. And just to be fair with everyone crappiness in this space, Azure is even
worse. Their console is another horrible experience.

Nobody in this industry thought about the UX of these things. They are all
disastrous...

And believe me that I have studied this from multiple angles. I worked at AWS
for two years trying to solve UX issues and it's just an endless battle.
Developers deserve better user experiences... Nobody is thinking about this
with the intensity and focus that it deserves.

~~~
maktouch
In GCP, I çan see all my instances of all regions in one go. I can't do that
with aws.

In GCP, I can easily create networks between projects. It's really shitty to
do in aws.

In GCP, I can create a machine and everyone in my team automatically has ssh
access.

In GCP, I can make an instance, then mark the IP as reserved. In aws, I have
to reserve the IP first.

Aws UX is the worst. I use both on an everyday basis. I could go on and on..

~~~
whoisjuan
It seems that you are talking about features. I never said that AWS UX isn't
horrible. It is. But GCP is also pretty shitty. They don't deserve any praise
in this area at all. They have useful features but that doesn't mean their UX
is good.

~~~
maktouch
Well, UX means user experience. If some little features give you a better
experience to me, a user, isn't that a better UX?

They both have regions. One makes it easier to see at a glance.

They both have the concept of reserved IP, one doesn't need to be set first.

They both install ssh keys for you. One does it per user, the other per
instance.

One sets up cross region VPC for you. The other one makes you suffer and do it
yourself.

~~~
whoisjuan
Yeah, you're right. That's definitely a better UX. But since OP was talking
about GCP UI as a potential value differentiator, I was also focusing on that.
Certainly something like an easy VPC setup improves the overall experience
within the platform.

But I was referring to things like their documentation, the way they organize
resources inside the Web Console and the confusing paths to different
functionality within their UI.

------
techie128
Unfortunately, this is an opinion by a single analyst. Analysts are frequently
wrong about their prediction. I would not put a whole lot of stock in it. Post
Kurian, GCP has shown _some_ traction but it still has a long catch up game to
play. Google really needs to capitalize on its strengths (ML/AI, BigData) in a
major way. In addition it has to spend a major chunk of money in educating
first-time developers and making it super easy to migrate into the Google
ecosystem. We haven't seen major movement in these directions from GCP, yet.
Hope they're coming soon.

Disclaimer: I am long GOOGL.

~~~
dangerboysteve
its also Deutsche Bank one of the most reckless banks around.

~~~
kbenson
Reckless? Loaning hundreds of million to the same people that just refused to
pay you back the last few hundred you lent them, after they refused to pay
back other backs before that, is the investment strategy of the future! /s

------
resoluteteeth
Incredible. They don't even mention Amazon.

~~~
x86_64Ubuntu
Kind of telling how the chart has Oracle, Adobe and Intel as "peers" but AWS
is nowhere to be seen. I didn't even know Intel or Adobe had cloud offerings.

~~~
gundmc
The chart shows the entire market value of select other tech Giants, not their
cloud offerings.

The purpose of the graphic was to say "Google Cloud is now worth more than all
of Oracle", not to show Google's place in the cloud market relative to Amazon
and Microsoft.

~~~
llampx
You can't say tech giant without mentioning Amazon or Microsoft.

------
swarnie_
Working as a consultant in Europe.

Almost every business i walk in to has "something" in Azure (AD/SSO/Compute).
50-70% have "something" in AWS. Honestly under 10-15% have Google cloud
products.

I work in the ERP segment so i like to think i experience a wide range of
companies / cultures / budgets.

------
gok
"The unit could report compound annual growth of 55% between 2018 and 2022,
and reach annual sales of about $38 billion by 2025, the analysts wrote."

I'm curious how they're making basing these predictions since Google Cloud
revenues aren't currently reported.

------
justicezyx
So my realization after the years have been these:

* Cloud margin is very high, using IBM Orale and so on, aka the "old guards" (as said by Andy Jassy: my favorite tech executive by a big margin, got to mention this as a fan boy), as the comparison.

* Cloud is the foundation of the next generation of developer platform, being irrelevant in this market is detrimental to Google. Although that was not as obvious to Google as Browser. But the metaphor is obvious now.

* Cloud is enterprise oriented, an area that both Amazon and Google were vastly behind Microsoft at 2006. Microsoft then already had a top-tier relationship with enterprise customers. Amazon was way earlier in realizing that, but Google was at least maybe 5 years behind. Diane Green's joining symbolizes the inception of the changing perception, but I'd say Diane's execution is poor (Dianne seems very distracted to me, during their time in Google).

------
freejulian85
And WeWork is worth 40B according to the big banks.

~~~
ztratar
Softbank != "the big banks"

The public markets did what they were supposed to do to WeWork.

~~~
rrss
Goldman Sachs = the big banks

IIRC Goldman valued WeWork at $60B

~~~
rurp
Goldman valued WeWork at $60B, _as part of their sales pitch to lead the IPO_.
The context makes all the difference since the point of that valuation was to
aid a sales pitch, not be an accurate assessment.

~~~
racino84
This is incorrect. They pitched this at $60b but couldn't get a bookbuild at
that price which never happens.

The key distinction with pitching to lead to the IPO is they sought to find
investors (as opposed to wework management) at this price too, but not enough
people bit to fill the raise.

------
sidcool
How much are AWS and Azure worth?

~~~
outside1234
More. A lot more. Azure is growing 20 points faster than GCP and from a much
higher base too (and I will point out that it is in Microsoft's DNA to run
this sort of business, unlike Google's).

~~~
ehsankia
How is it in Microsoft's DNA? They've always run the software, not the
hardware. And for Azure, they just took all their Office customers and
rebranded them as "Azure" customers, pumping their cloud numbers.

~~~
mattlondon
I think the point was that Microsoft has typically been very present in
"enterprise" \- lots of sales people in lots of industries with lots of
connections and lots of experience making the sales and doing the deals.
Google less so.

The hardware is just the hidden infrastructure that businesses don't really
care about as long as it meets the SLAs, like I don't care about what the
physical building materials are when I go and buy groceries or get my hair cut
so long as the building meets it's SLAs (which for a building is I guess not
falling down when I am inside it etc) I just want the service.

~~~
ehsankia
That's fair. Their sales team and the relationships they had made over the
years is definitely a huge part of their success transitioning.

------
onlyrealcuzzo
Let me get this straight.

Wasn't Waymo valued at $210Bn like 5 months ago? Cloud is $225Bn. Google has
$117Bn in cash. It's total market cap is $839Bn. That means the rest of Google
is worth $287Bn. Really?

~~~
leoh
See
[https://news.ycombinator.com/item?id=21159401](https://news.ycombinator.com/item?id=21159401)

------
CodeSheikh
I am interested to know the valuation of AWS. If the values are apart then it
makes sense that AWS was ahead of teh game. If GCP has caught up then that
would be blazing-fast improvement.

~~~
bklyn11201
From Bloomberg re GCP: "The unit could report compound annual growth of 55%
between 2018 and 2022, and reach annual sales of about $38 billion by 2025"

AWS q2 2019 was was 8.4 billion so AWS in 2019 is near where GCP is projected
to be in 2025. AWS q1 to q2 growth was 37%, so much slower growth than Azure
and GCP.

From Barrons earlier this year: "He sees AWS revenues of $36.1 billion this
year, growing about 31% a year to $140 billion in 2024. He ... estimates the
value of AWS alone as $506 billion."

[https://www.barrons.com/articles/amazon-stock-web-
services-w...](https://www.barrons.com/articles/amazon-stock-web-services-
worth-half-a-trillion-dollars-51559060451)

~~~
samfisher83
AWS is probably worth more than Amazon retail. Amazon Retail is a low margin
very competitive business.

------
mylons
Amazon is under valued.

~~~
toomuchtodo
Or everyone is overvalued and these are fantasy numbers pulled from the
unicorn forest. There is no repercussion when an analysts predictions are
"overly optimistic" (see: everyone pitching $50B-$100B valuations to WeWork to
get their IPO biz).

Throwing darts would be just as accurate as the predictions investment banks
are throwing out.

~~~
pmart123
Well, AWS actually is highly profitable and changed the game so most of the
recent startups could actually be built. I wouldn't associate WeWork with it.
I won't even associate Tesla with WeWork. At least if you give $10B to Musk,
you get rocket ships and category-leading car companies out of it.

~~~
toomuchtodo
AWS is only highly profitable for an investor if you cut it loose from Amazon
retail so it's not subsidizing it (spin it out) and other Amazon endeavors
that aren't profitable. Otherwise, it's only of benefit to Amazon proper.

------
petercooper
And yet I still don't trust Google not to "sunset" services on a whim (despite
being an almost $1 trillion business) so I'd rather stick with AWS.

------
electriclove
How much are their shares of SpaceX worth?

------
murat124
GCP I'd say could worth definitely tens of billions, but not hundreds.

~~~
lern_too_spel
The thing that has confused most of the commenters here is that Google Cloud
contains both GCP, which is a dumpster fire, and GSuite, which is probably
very profitable.

------
tpmx
Not paywalled: [https://www.datacenterknowledge.com/google-
alphabet/google-c...](https://www.datacenterknowledge.com/google-
alphabet/google-cloud-worth-double-ibm-market-cap-deutsche-bank-says)

------
purplezooey
If only Google could say the same about their investment in MapR.

------
manishsharan
I do not want to sound like a nay sayer but which responsible enterprise CIO
would put their stack on Google Cloud. They have a well deserved reputation
for being unresponsive and opaque and downright irresponsible with their
customers' infrastructure.

~~~
fasteo
Not that I want to defend Google or anything, but there are some impressive
customers here [1]

[1] [https://cloud.google.com/customers](https://cloud.google.com/customers)

~~~
askytb
That list is probably the exact list of google customers that get any real
support from google

~~~
ehsankia
Anyone can get Google support with Google One [0] for as low as 2$ a month
(along side 100GB of storage).

The issue is people expect free products they haven't paid a penny for to have
live customer support, which doesn't make much sense at the billion user
scale.

[0] [https://one.google.com/](https://one.google.com/)

~~~
dnautics
Have you ever interacted with Google support as a paying customer?

It's miserable in my experience.

~~~
celestialcheese
Anecdote on the other side - Small customer (~5k/mo google cloud / firebase
spend). They're support has been decent. Sub 24hr email response and
technically competent enough to quickly escalate. It was comparable to AWS
basic support.

