google-cloud-business-model

Google Cloud Business Model In A Nutshell

Business / By / August 9, 2023

In 2022, Alphabet’s (Google) Cloud Business was over $26 billion unit within Alphabet’s Google overall business model; to gain a bit of context, Microsoft intelligent cloud netted $75 billion, and Amazon AWS passed $80 billion in the same year.

How does Google’s 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 $198 billion in revenues, of which over $67 billion came from Server products and cloud services, and $44.8 billion came from Office products and cloud services. Windows generated $24.7 billion, Gaming generated over $16 billion, LinkedIn over $13 billion, and search advertising (through Bing) over $11.5 billion. Enterprise (GitHub) generated $7.4 billion, and devices (PC) generated almost $7 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-platform-business-model
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.

Cloud Business Models Overview: Google, Microsoft, Amazon AWS

  • Google Cloud Business Model:
    • Components: Google Cloud Platform (GCP), G Suite productivity tools.
    • Revenues: Primarily from GCP and G Suite on consumption or subscription basis.
    • Importance: Google Cloud integral for Google; built on it. Includes GCP and G Suite for app deployment and productivity.
    • G Suite: Productivity tools like Gmail, Docs, Drive, Calendar, etc.
    • Focus: Developing and deploying enterprise-ready cloud services.
  • Microsoft Intelligent Cloud Business Model:
    • Components: Server products, cloud services (Azure, SQL Server, Windows Server), Enterprise Services (Premier Support, Consulting).
    • Revenues: $67B+ from Server products and cloud services, $44.8B+ from Office products and cloud services (2021).
    • Value Proposition: Enhancing productivity and efficiency for IT professionals, developers, systems.
    • Server Products and Cloud Services: Server infrastructure, middleware, software suite.
    • Azure: Comprehensive cloud services for application building, deployment, management.
    • Enterprise Services: Premier Support, Consulting for Microsoft solutions.
  • Amazon AWS Business Model:
    • Components: Computing, storage, database services, marketplace for cloud solutions.
    • Model: Platform business, taps into network effects.
    • Revenues: Global sales of cloud services, one of Amazon’s most profitable units.
    • Scalability: Evolved from Amazon’s infrastructure, offers services to enterprises and startups.
    • Marketplace: Connects service providers to build integrated solutions.

Key Takeaways:

  • Google: Cloud comprises GCP, G Suite; pivotal for Google, built on it.
  • Microsoft: Diversified model, Azure and Server products cater to IT efficiency.
  • Amazon AWS: Evolved from Amazon’s infrastructure, scalable, taps into network effects, offers wide range of cloud services.

Related To Google

Google Business Model

google-business-model
Google is an attention merchant that – in 2022 – generated over $224 billion (almost 80% of revenues) from ads (Google Search, YouTube Ads, and Network sites), followed by Google Play, Pixel phones, YouTube Premium (a $29 billion segment), and Google Cloud ($26.2 billion).

Google Other Bets

google-other-bets
Of Google’s (Alphabet) over $282 billion revenue for 2022, Google also generated over a billion dollars from a group of startup bets, which Google considers potential moonshots (companies that might open up new industries). Those Google’s bets also generated a loss for the company of over $6 billion in the same year. In short, Google is using the money generated by search and betting it on other innovative industries. Of Google’s (Alphabet) over $282 billion revenue for 2022, Google also generated over a billion dollars from a group of startup bets, which Google considers potential moonshots (companies that might open up new industries). Those Google’s bets also generated a loss for the company of over $6 billion in the same year. In short, Google is using the money generated by search and betting it on other innovative industries. 

Google Cloud Business

google-cloud-business-model

How Big Is Google?

how-big-is-google
Google is an attention merchant that – in 2022 – generated $224 billion (almost 80% of its total revenues) from ads (Google Search, YouTube Ads, and Network sites), followed by Google Play, Pixel phones, YouTube Premium (a $29 billion segment), and Google Cloud ($26.3 billion).

Google Traffic Acquisition Costs

traffic-acquisition-cost
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, to keep it stable. In 2022 Google spent 21.75% of its total advertising revenues (over $48 billion) to guarantee its traffic on several desktop and mobile devices across the web.

How Does Google Make Money

google-revenue-breakdown
Alphabet generated over $282B from Google search and others, $32.78 billion from the Network members (Adsense and AdMob), $29.2 billion from YouTube Ads, $26.28B from the Cloud, and $29 billion from other sources (Google Play, Hardware devices, and other services).

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 reported more than $29B in revenues by 2022. YouTube also makes money with its paid memberships and premium content.

Google vs. Bing

google-vs-bing

Google Profits

google-income

Google Revenue Breakdown

google-revenue
In 2022, Google generated over $282 billion in revenues, of which over $162 billion from Google Search, over $29 billion from YouTube Ads, and almost $33 billion from Network Members’ properties. In addition, Google generated over $29 billion in other revenue, over $26 billion from Google Cloud, and over a billion dollars from other bets.

Google Advertising Revenue

how-much-money-does-google-make-from-search

Apple vs. Google

apple-vs-google

Google Employees Number

google-employees-number

Google Ad vs. Facebook Ad

google-ad-vs-facebook-ad

YouTube Ad Revenue

youtube-ad-revenue
YouTube, by 2022, generated over $29 billion in advertising revenues.

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About The Author

Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
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