For the first time, we heard the business performance of Cloud from Google, officially. Google Cloud, including both Google Cloud Platform (GCP) and G Suite, is now on a $10 billion revenue run rate. During the full year of 2019, Google Cloud generated $9 billion in revenue (5.5% of the total revenue) at a growth rate of 53% YoY, an acceleration from 44% in 2018. 

Comparably, both AWS and Microsoft Azure managed to deliver solid top-line growth respectively as we discussed last week. AWS ($35 billion run rate, 37% YoY) and Microsoft Azure ($17 billion run rate, 64% YoY) cemented their leadership positions by offering innovative products and pricing strategies. We summarized it for AWS and you can find Azure's here.

With significant investment and focused priority from the management, Google accelerated the growth of its cloud business and solidified #3 position, although still quite a distance from the other two. The management made it very clear during the conference call that Cloud is an enormous opportunity and they will keep investing in it, aggressively. Some highlights:     

• "...pleased with the growth trajectory of GCP, which we see in customer momentum, the growing size of the average contract..."

• "...the traction we're having with large customers who are making multi-year commitments with us is reflected in our backlog, which ended the year at $114bn, substantially all of which relate to Google Cloud..."

• "...given our position as a challenger, we're investing aggressively, focused on building our a) go-to-market capabilities, b) executing against product road map, and c) extending global footprint..."

• "...we have clearly focused on six industry verticals across 21 markets and so doubling down on those efforts, the team is on track to triple our sales force in three years

  ...vs. 2019, we anticipate relatively more spend on servers than on data center construction..."

We did anticipate the cloud war is intensifying in the coming years. The ramp-up of Cloud Capex spending is best illustrated in the chart below (source: MS Research), which is good news for cloud/data center related vendors (semi, equipment, and software/services, etc.)

MS Capex Tracker

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MS Capex Tracker