google-cloud-business-model

Google Cloud Business Model In A Nutshell

In 2021, Alphabet’s (Google) Cloud Business was an over $19 billion unit within Alphabet’s Google overall business model; to gain a bit of context; Microsoft intelligent cloud netted $60 billion and Amazon AWS netted over $62 billion in the same year.

How does Google cloud business model work?

Google Cloud revenues consist primarily of revenues from Google Cloud Platform comprising G Suite productivity tools and other enterprise cloud services provided on either a consumption or subscription basis.

The cloud business unit is extremely important for Google as the whole company was built in the cloud. Now the Cloud includes Google Cloud Platform and G Suite enabling developers to build, test, and deploy applications on Google’s infrastructure.

The G Suite productivity tools comprise apps like Gmail, Docs, Drive, Calendar, and more.

Alphabet is also devoting significant resources to developing and deploying enterprise-ready cloud services, including Google Cloud Platform and G Suite.

How does Microsoft Intelligent Cloud business model work?

microsoft-business-model
Microsoft has a diversified business model, spanning from Office to gaming (with Xbox), LinkedIn, search (with Bing), and enterprise services (with GitHub). In 2021, Microsoft made over $168 billion in revenues, of which over $52 billion came from Server products and cloud services and $39.8 billion came from Office products and cloud services. Windows generated over $23 billion, Gaming generated over $15 billion, LinkedIn over $10 billion, and search advertising (through Bing) over $8.5 billion. 

Microsoft’s Intelligent Cloud segment consists of our public, private, and hybrid server products and cloud services that can power modern business.

The segment primarily comprises:

  • Server products and cloud services, including SQL Server, Windows Server, Visual Studio, System Center, and related CALs, GitHub, and Azure.
  • Enterprise Services, including Premier Support Services and Microsoft Consulting Services.

Server Products and Cloud Services

The key value proposition for Microsoft’s server products and cloud services is to make IT professionals, developers, and their systems more productive and efficient.

As Microsoft highlights:

Server software is an integrated server infrastructure and middleware designed to support software applications built on the Windows Server operating system.

This includes the server platform, database, business intelligence, storage, management and operations, virtualization, service-oriented architecture platform, security, and identity software.

Microsoft also acquired GitHub which provides a collaboration platform and code hosting service for developers.

Azure is a comprehensive set of cloud services that offer developers, IT professionals, and enterprises the freedom to build, deploy, and manage applications on any platform or device.

Enterprise Services

Enterprise Services, including Premier Support Services and Microsoft Consulting Services, assist customers in developing, deploying, and managing Microsoft server and desktop solutions and provide training and certification to developers and IT professionals on various Microsoft products.

What does Amazon AWS comprise?

amazon-aws-business
Amazon AWS follows a platform business model, that gains traction by tapping into network effects. Born as an infrastructure built on top of Amazon’s infrastructure, AWS has become a company offering cloud services to thousands of clients from the enterprise level, to startups. And its marketplace enables companies to connect to other service providers to build integrated solutions for their organizations.

AWS arrangements include global sales of computing, storage, database, and other services. The Amazon AWS business model proved incredibly scalable and it’s among the most profitable units for the organization.

Amazon AWS’s story is quite interesting as it shows how by tinkering organizations scaling up might come up with whole new business units that while seemingly disconnected from the main business, in reality, are the foundation and then become key business units that run their own business model.

Related To Google Business Model

Google

how-does-google-make-money
Google (now Alphabet) primarily makes money through advertising. The Google search engine, while free, is monetized with paid advertising. In 2021 Google’s advertising generated over $209 billion (beyond Google Search, this comprises YouTube Ads and the Network Members Sites) compared to $257 billion in net sales. Advertising represented over 81% of net sales, followed by Google Cloud ($19 billion) and Google’s other revenue streams (Google Play, Pixel phones, and YouTube Premium).

Amazon

amazon-business-model
Amazon has a diversified business model. In 2021 Amazon posted over $469 billion in revenues and over $33 billion in net profits. Online stores contributed to over 47% of Amazon revenues, Third-party Seller Services,  Amazon AWS, Subscription Services, Advertising revenues and Physical Stores.

Microsoft

microsoft-business-model
Microsoft has a diversified business model, spanning from Office to gaming (with Xbox), LinkedIn, search (with Bing), and enterprise services (with GitHub). In 2021, Microsoft made over $168 billion in revenues, of which over $52 billion came from Server products and cloud services and $39.8 billion came from Office products and cloud services. Windows generated over $23 billion, Gaming generated over $15 billion, LinkedIn over $10 billion, and search advertising (through Bing) over $8.5 billion. 

How Big Is Google?

how-big-is-google
Google is an attention merchant that – in 2021 – generated $209 billion (over 81% of revenue) from ads (Google Search, YouTube Ads, and Network sites), followed by Google Play, Pixel phones, YouTube Premium (a $28 billion segment), and Google Cloud ($19 billion). Over $31.5 billion went toward R&D (12.3% of its revenues).

Google Traffic Acquisition Costs

what-is-google-tac
The traffic acquisition cost represents the expenses incurred by an internet company, like Google, to gain qualified traffic – on its pages – for monetization. Over the years Google has been able to reduce its traffic acquisition costs and in any case, keep it stable. In 2021 Google spent 21.75% of its total advertising revenues (over $45.56 billion) to guarantee its traffic on several desktop and mobile devices across the web.

How Does Google Make Money

how-does-google-make-money
Google (now Alphabet) primarily makes money through advertising. The Google search engine, while free, is monetized with paid advertising. In 2021 Google’s advertising generated over $209 billion (beyond Google Search, this comprises YouTube Ads and the Network Members Sites) compared to $257 billion in net sales. Advertising represented over 81% of net sales, followed by Google Cloud ($19 billion) and Google’s other revenue streams (Google Play, Pixel phones, and YouTube Premium).

YouTube Business Model

how-does-youtube-make-money
YouTube was acquired for almost $1.7 billion in 2006 by Google. It makes money through advertising and subscription revenues. YouTube advertising network is part of Google Ads, and it generated more than $28B in revenue by 2021. YouTube also makes money with its paid memberships and premium content.

Google Organizational Structure

google-cloud-business-model
In 2021, Alphabet’s (Google) Cloud Business was an over $19 billion unit within Alphabet’s Google overall business model; to gain a bit of context; Microsoft intelligent cloud netted $60 billion and Amazon AWS netted over $62 billion in the same year.

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