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Google wants to stop being just an ad company by 2020

Google wants to stop being just an ad company by 2020


Eyes on the cloud

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The technology industry is flush with companies forecasting the rapid growth of cloud computing over the next five to 10 years. Now Google, a relatively small player in the cloud market, has chimed in. Urs Hölze, senior vice president of technical infrastructure, predicted today at the Structure conference that Google's cloud revenues would surpass its advertising revenues by 2020, according to Business Insider. Google made 89 percent of its total revenues last year from advertising delivered through its search engine.

It's a bold projection. But it mirrors the ambitions of Microsoft CEO Satya Nadella, who said in April that his company's cloud business would be notching $20 billion a year in revenue by 2018. At the time, Microsoft's cloud business was on track to hit more than $6.3 billion for the year; by October, the revenue run rate had exceeded $8.2 billion. However, Amazon is perhaps the biggest competitor of all, with its Amazon Web Services platform growing 78 percent last quarter to more than $2 billion in quarterly revenue.

Google, Amazon, and Microsoft are vying for dominance in the cloud

Google has a far longer road ahead. Its cloud revenues are still grouped under "Other Revenues" in its quarterly earnings reports, which makes it difficult to track the performance of the business. That division grew 11 percent to $1.89 billion in Google's latest quarter, which ended September 30th. Yet Advertising revenues were $16.79 billion during the same time period. The Information reported in July that Google's cloud revenues, when broken out from the greater "Other Revenues" division, may only amount to $400 million for 2015.

Hölze acknowledged the challenge, but compared the cloud race to the smartphone war, with Android ultimately blanketing the globe despite arriving later than Apple's iOS. "Our cloud growth rate is probably industry-leading ... and we have lots of enterprise customers — happy enterprise customers," Hölzle said. "I hope we're going to be the Android of that story."