How much revenue does Azure make?

Greg on June 14, 2023

Azure is the second largest cloud computing provider, and also the fastest growing. Unfortunately, most industry analysts use Microsoft’s reported revenue, growth, and margin numbers for “Server products and cloud services” as a proxy for Azure revenue, which is simply not accurate since a variety of other product lines are included in that total. Given the importance of Azure to Microsoft’s business, one could be forgiven for wondering if there’s some intentional obfuscation going on, if only to make it a little harder for competitors to understand the actual dynamics of the business.

Let’s walk through the 2022 numbers to illustrate.

  • Microsoft Intelligent Cloud made a reported $81.8 billion in revenue.
  • One layer down, “server products and Azure” generated $73.9 billion. Unfortunately, these numbers are not broken down further in a consistent fashion, rendering them somewhat useless since this line item includes Azure, SQL Server, Visual Studio, GitHub, Nuance, and other products. What a grab bag!
  • However, analyzing the reported growth rates and revenue totals by quarter, we can find that “Azure and cloud services” comes out to $49.6 billion, after removing server products and enterprise services.
  • Further breaking down “Azure and cloud services”, we estimate that GitHub and Nuance account for about $1.9 billion and can also be separated out.
  • Finally, we are left with an Azure-only revenue line of $47.7 billion for 2022. It’s still quite impressive, especially considering such a large business was still growing 35% year over year, but a very different number than what the company reports.

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What is actual Google Cloud Platform Revenue, not including Workspace?

Greg on June 8, 2023

Like a number of cloud computing providers, Google includes revenue in their official financial reporting that doesn’t fall into our definition of the cloud computing space. In Google’s case, the primary exception is Workspace, the productivity suite that includes GMail, Google Docs, and so on. Workspace is reported as part of Google Cloud revenue, making it a little harder to track the performance of the specific Google Cloud Platform portion of the business. As part of our work tracking the space, Cloud Industry Data backs out non-cloud-computing revenue in order to provide cleaner revenue, market share, and profitability numbers to support clearer business insights on cloud computing.

For 2022, we estimate that Google had 18% market share in the personal productivity suite space, with Microsoft accounting for most of the rest. That comes out to about $3.3 billion in Workspace revenue. Net of Workspace, GCP revenue was about $23.0 billion for 2022, not the reported $26.3 billion.

While the more accurate revenue number is a bit smaller than the reported one, it also obscures a higher than reported growth rate. GCP actually grew 40.3% from 2021 to 2022, about 2% faster year over year than the official numbers.

Amazon’s Bedrock AI

Greg on May 11, 2023

In mid-April, Amazon announced its entrants into the generative AI race: Bedrock, a platform for using different foundational models (FMs) for generative AI within AWS, and Titan, Amazon’s own large language model (LLM) for usage in a variety of language-related tasks. Amazon is partnership with Stability AI, Anthropic, and A21I Labs to offer access to their generative AI models.

While the reaction in the business press was quite positive, on further reflection it seems this announcement suggests Amazon is behind in the AI race, at least with regard to generative AI. OpenAI (and be extension Microsoft Azure) is the clear leader with GPT-4. Google went to “code red” internally in reaction to OpenAI and put out its Bard LLM in March as well, although the performance of the product seemed 1-2 years behind GPT-4. To its credit, Google updated Bard a month later with code generation and debugging, showing an ability to ship product that should keep it in the race. Amazon in contrast has mostly been silent and now comes out with an announcement with surprisingly little meat to it.

To be fair, Amazon does clearly state that Bedrock and Titan are in preview. From what I’ve seen, there is currently only one customer, Coda, presented as an adopter. It could well be that there is a lot of customer adoption and thinking about how to improve AI workflows behind the scenes, but at this point the offering feels a bit like a placeholder.