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Google’s server life extension delivers $1.7bn revenue boost in nine months

Although its public cloud market share is way behind AWS and Azure, GCP is forging ahead with its industrial cloud strategy

Alphabet, the parent company of Google, has reported revenue of $65bn for the quarter ending 30 September, an increase of 41% compared with the same quarter last year.

The company stated that Google Cloud revenue increased from $3.9bn to $5bn, and noted that the extension of the useful life of its datacentre servers, which occurred in January 2021, led to a reduction in depreciation expense of $2.1bn over nine months, resulting in an additional $1.7bn of income.

Ruth Porat, chief financial officer of Alphabet and Google, said: “Our consistent investments to support long-term growth are reflected in strong financial performance, with revenues of $65.1bn in the quarter. We continued to deliver across our business by providing helpful and valuable experiences for both consumers and our partners.”

Sundar Pichai, CEO of Alphabet and Google, said: “Five years ago, I laid out our vision to become an AI [artificial intelligence]-first company. This quarter’s results show how our investments there are enabling us to build more helpful products for people and our partners. As the digital transformation and shift to hybrid work continue, our cloud services are helping organisations collaborate and stay secure.”

During the earnings call, Pichai discussed how the company was focusing its cloud offerings. According to the transcript of the earnings call, posted on Seeking Alpha, Pichai wants Google to focus on industry value propositions, by “sharpening our solutions by vertical”.

Discussing the growth in public cloud, John Dinsdale, a chief analyst at Synergy Research Group, said: “This market continues to be a runaway success story for Amazon, Microsoft, Google and some other cloud providers.

“You would not normally expect to see growth rates actually increasing in such a huge and rapidly developing market, yet once again that is what our research has shown. Amazon, Microsoft and Google in aggregate are typically investing more than $25bn in capex per quarter, much of which is going towards building and equipping their fleet of over 340 hyperscale datacentres.”

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Analyst Forrester predicted that every hyperscaler will amplify its industry story, igniting a new war in the cloud world. During 2022, the analyst firm said it expects to see an explosion of these services by every major cloud service provider, with increasing availability of application and developer services that create meaningful new capabilities. “Expect major SaaS [software-as-a-service] platforms to similarly continue to build out industry options that go far beyond marketing veneer to save significant hours of customisations.”

However, Forrester said it did not expect Google Cloud Platform (GCP) to achieve its short-term ambition.

“With their market footprint still considerably behind AWS and Azure, GCP could go big by acquiring a major SaaS platform, but that path would be riddled with obstacles. Top-two or not, GCP will find cloud highly profitable and of value to its other investments,” Forrester said.

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