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Cloud drives Q2 growth for Google, Amazon, and Microsoft

Alphabet, Amazon, and Microsoft continued to lean on cloud computing as the primary driver of revenue growth in Q2 2017. While Alphabet's revenue grew 20% year-over-year (YoY) to reach $26 billion in the quarter, $3.1 billion of that came from the segment that houses its cloud business.

Google closed three times as many cloud deals over $500,000 in the second quarter of 2017, than in the same period last year.

-Alphabet also made 1,614 new hires in the June quarter, with a "sizeable" number coming in the cloud division.

-Google's other revenues, which includes its cloud business, rose 42.2 percent year-on-year in the second quarter.

-Each of the three tech giants offers a different set of core services, as they all jockey for an increasing share of the cloud market.

  • Amazon Web Services (AWS) is the dominant cloud computing provider. Amazon continues its lead over the market, accounting for 34% of global public cloud services in Q2, according to Synergy Research Group. The AWS segment reported $916 million in operating income in the quarter, up nearly 28% YoY, and topping total operating income for the entire company, which hit $628 million in the quarter due to heavy operating losses in Amazon’s International segment. AWS’ Q2 performance helped Amazon gain 1% of total cloud market share in the quarter.
  • Microsoft ranks second in the cloud computing market. The company accounted for 11% of the global market for public cloud services in Q2. Revenue from Microsoft’s Intelligent Cloud segment, which houses Azure, increased 11% YoY. Azure revenue, which jumped 97% YoY, was a key driver of that growth. Microsoft improved its cloud market share by 3% in the same quarter last year.
  • Alphabet’s cloud business ranks behind Amazon’s and Microsoft’s. Alphabet’s Google Cloud Platform (GCP) accounted for 5% of the global cloud market in Q2. The company doesn't break out specifically how much of its cloud business drove revenue, but its “Google other revenues” segment, which includes Google cloud, saw 42% YoY growth in the quarter to reach $3.1 billion. GCP remains one of the fastest-growing businesses across Alphabet. Google boosted its share of the cloud market by 1% in Q2.

These company’s efforts in artificial intelligence (AI) and machine learning (ML) will play an integral role in the future of cloud computing processes. Though the technology is still nascent, AI and ML are anticipated to shape future cloud-based enterprise solutions. Already, tech giants are working on infusing their products and platforms with the power of AI. For instance, GCP leverages ML to sort through the massive stores of data and automate virtual computer processes, allowing businesses to run complex computations remotely, rather than transferring data to a local server. As more companies are faced with larger data sets, the attraction of AI-related services to parse data into actionable insights will become a bigger draw.

BI Intelligence, Business Insider's premium research service, has compiled a detailed report on cloud computing that:

  • Explains the different cloud computing strategies and benefits of cloud computing.
  • Evaluates key business considerations – security needs, demand predictability, existing infrastructure, and maintenance capabilities – for enterprises choosing between cloud implementations.
  • Provides and outlook for trends and major players in the cloud computing market.

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