Google parent Alphabet posted a $1.5bn drop in net income for the quarter to 31 March 2022. Revenue for the quarter grew by 23%, down 11% on last year’s first-quarter revenue growth of 34%.
The company grew its Google Cloud business by 44% to $5.8bn during the quarter, a $1.8bn increase compared with the same quarter last year. Google Cloud posted an operating loss of $931m.
“GCP’s [Google Cloud Platform] revenue growth was again greater than [Google] Cloud’s, reflecting significant growth in infrastructure and platform services,” chief financial officer Ruth Porat stated in the transcript of the earnings call posted on Seeking Alpha.
“Cloud’s performance in the first quarter reflects growing deal volume and strength across multiple industries and regions. Customers are increasingly choosing Google Cloud to help them digitally transform their businesses using our global infrastructure offerings, our data analytics and AI [artificial intelligence] capabilities, and the collaboration benefits of Workspace,” she said. “We continue to invest aggressively in [Google] Cloud given the sizeable market opportunity we see.”
Porat revealed the company had increased its headcount by 7,400 people in the first quarter, the majority of whom were hired for technical roles. “The biggest increases in headcount this quarter across product areas were again in [Google] Cloud, for both technical and sales roles,” she said.
She added that the company had also experienced “solid growth” in Google Workspace, both in terms of seats and average revenue per seat. Workspace is Google’s unified collaboration service, providing Google Meet for online video conferencing, chat and voice, along with its G Suite office productivity tools.
When asked about the growth of Google Cloud, CEO Sundar Pichai said: “Overall, across the board, I’m excited because there’s a lot of product innovation across the key areas, be it data and analytics, cyber security, our open multicloud, as well as Google Workspace. When I look at the innovation in the product pipeline and the overall demand we are seeing and how early our journey is, there’s a lot to look forward to.
“Cyber security has been a particular focus. We are excited about our acquisition of Mandiant, which will help us serve customers deeper. Overall, the execution has been great. We are scaling up, particularly in our go-to-market.”
However, Google Cloud Platform appears to have a long way to go before it starts to eat away at Microsoft Azure and Amazon Web Services’ (AWS) market share. According to Canalys, in the fourth quarter of 2021, AWS represented 33% of the cloud infrastructure market, Azure held 22%, while just 9% of cloud spending was on GCP.
As for the Google Workspace product, in its Magic Quadrant report for unified communications as a service (UCaaS), analyst Gartner rated Workspace as a “challenger”. One of the areas of caution, according to the report, is Google’s service-level agreement target of 99.9% for all Workspace services, which it said is considerably lower than most UCaaS competitors.
Gartner also noted that telephony services were not as fully functional in Google Workspace. “Google’s telephony capabilities will satisfy the needs of organisations that require only a basic feature set, but not those that require a more complete set of telephony features,” it stated.
As an example, Gartner pointed out that Google does not support E911 device tracking or E911 emergency on-site notifications. Video resolution in Google Meet is limited to 720p and there is a limit of 250 standard users.