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Google Cloud Worth $225B, Deutsche Bank Says

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Re: Google Cloud Worth $225B, Deutsche Bank Says

#141

Post by muststopmyths »

ehsankia wrote: post #75
outside1234 wrote: post #56

Earlier quoted context omitted.

More. A lot more. Azure is growing 20 points faster than GCP and from a much higher base too (and I will point out that it is in Microsoft's DNA to run this sort of business, unlike Google's).

How is it in Microsoft's DNA? They've always run the software, not the hardware. And for Azure, they just took all their Office customers and rebranded them as "Azure" customers, pumping their cloud numbers.

I'm a Satya naysayer as much as any Windows Phone victim, but Office 365 is not part of the "Intelligent Cloud" unit that Azure earnings are reported in.

Re: Google Cloud Worth $225B, Deutsche Bank Says

#142

Post by sdan »

maktouch wrote: post #110
sdan wrote: post #24

Earlier quoted context omitted.

I don't really consider either having superior UI... but AWS's endless list of services when you click for the dropdown is a bit too much to handle. Not to mention how you'll have to use their search bar to get to what you want. One thing I do credit them on is SSHing into an instance is a lot easier than GCP's "gcloud" way (I say this since I recently found the "gcloud" sdk to take over 10g on my laptop) and even if…

You don't need to use gcloud to ssh. Just add your keys in your projects' Metadata, and you'll have ssh access to all servers. Each member of your team can do it, and it works retroactively.

Yeah that does work (which I have managed to pull off)... but I feel like it's a bit more of a pain (very slightly) to change the metadata, open up the ports and whatnot to ssh. I think AWS just tells you to download a .pem file and ssh.

In conclusion, I guess both ways aren't bad. I just seem to prefer AWS here because for me it was a bit easier than GCP because I ran into several problems when sshing to GCP initially.

Re: Google Cloud Worth $225B, Deutsche Bank Says

#143

Post by partiallypro »

chillydawg wrote: post #68
frostyj wrote: post #52

Earlier quoted context omitted.

I thought margin on the cloud business is pretty high...

It is today, but it won't last. As automation tooling gets better the barriers to entry drop and competition kicks in and lowers prices. You can see it already: Aws are constantly lowering their prices. It's not just to be nice, they're competing hard.

> the barriers to entry drop

The barriers for entry on the Cloud will never drop. The Cloud grows more and complex and regional data centers across the globe are impossible for any company without gobs of money to compete with. The margins will drop, but only because the competition between the big 3 has barely even started; even that I believe is a decade away.

Re: Google Cloud Worth $225B, Deutsche Bank Says

#144

Post by np_tedious »

exacube wrote: post #76
lacker wrote: post #43

I was working at Google when AWS launched in 2006. The internal message was, we don't want to build a competitor. We have the technology to compete in this area, but it is fundamentally a low-margin business, whereas reinvesting in our core business is high-margin, so we should keep our infrastructure to ourselves. I wouldn't say the Google strategy was wrong per se - their stock has about 10x'd since then. But it's…

I feel they entered the business because they AWS showed the industry that it actually has pretty good margins. However, I think the sentiment is probably true that selling VPS is low-margin over the long-term, but i think the margins come from the other bits: global economies of scale, good infrastructure management & practices, and providing their proven internal technologies (ML/AI, managed distributed services).…

I think you hit the nail on the head with managed services. In 2006 Google probably wasn't thinking much further than EC2 and S3

Re: Google Cloud Worth $225B, Deutsche Bank Says

#145

Post by erikig »

bryanlarsen wrote: post #82
lacker wrote: post #43

I was working at Google when AWS launched in 2006. The internal message was, we don't want to build a competitor. We have the technology to compete in this area, but it is fundamentally a low-margin business, whereas reinvesting in our core business is high-margin, so we should keep our infrastructure to ourselves. I wouldn't say the Google strategy was wrong per se - their stock has about 10x'd since then. But it's…

The ad business is almost completely margin, almost any other business is going to be lower margin.

Yep, it reminds me of Dutch Disease [1] in economics where countries that happen upon an enormously profitable natural resource see a decline or an inability to compete internationally in other sectors of their economy.

[1] - https://en.wikipedia.org/wiki/Dutch_disease

Re: Google Cloud Worth $225B, Deutsche Bank Says

#146

Post by ehsankia »

mattlondon wrote: post #83
ehsankia wrote: post #75

Earlier quoted context omitted.

How is it in Microsoft's DNA? They've always run the software, not the hardware. And for Azure, they just took all their Office customers and rebranded them as "Azure" customers, pumping their cloud numbers.

I think the point was that Microsoft has typically been very present in "enterprise" - lots of sales people in lots of industries with lots of connections and lots of experience making the sales and doing the deals. Google less so. The hardware is just the hidden infrastructure that businesses don't really care about as long as it meets the SLAs, like I don't care about what the physical building materials are when I…

That's fair. Their sales team and the relationships they had made over the years is definitely a huge part of their success transitioning.

Re: Google Cloud Worth $225B, Deutsche Bank Says

#147

Post by nv-vn »

helpPeople wrote: post #90
leoh wrote: post #37

Earlier quoted context omitted.

It's actually consistent. The point here is that Google Cloud is undervalued, hence the high buy rating with a target of $1.6k. That would imply a market cap of $~1.1 trillion, meaning that the worth of the rest of Alphabet (sans Cloud/Waymo valued @ $335B) would be $775B.

When we say "undervalued", you mean compared to competitors? When the tech bubble bursts, either everyone gets bailed out, and it does become worth 200B. Or we are going to find out much of this tech money was speculation. What's hard about running a server farm? Does it lend to this valuation?

No, undervalued means the market valuation of the company is less than what it should be. I.e. Deutsche Bank believes that Google's profits summed up for the future (and discounted to account for inflation/risk) will exceed what people are buying it for. As an example, if a share is $10 and it pays $5 per year then it's undervalued because it's value ≈ $5 + .9($5) + .9²($5) + .9³($5) + .... This is essentially how Deutsche Bank is setting their price target. Since their target exceeds the equilibrium price of Google, they have decided it's undervalued.

Re: Google Cloud Worth $225B, Deutsche Bank Says

#148

Post by ehsankia »

dnautics wrote: post #91
ehsankia wrote: post #65

Earlier quoted context omitted.

Anyone can get Google support with Google One [0] for as low as 2$ a month (along side 100GB of storage). The issue is people expect free products they haven't paid a penny for to have live customer support, which doesn't make much sense at the billion user scale. [0] https://one.google.com/

Have you ever interacted with Google support as a paying customer? It's miserable in my experience.

I have as a Fi and as a One customer, and both services had very good customer support. In the half a dozen time I've contacted them, I got someone helping me within a minute and my issue resolved in under 15. That's a normal Google customer though, I can't speak about Cloud, which is an entirely different beast.

Re: Google Cloud Worth $225B, Deutsche Bank Says

#149

Post by atwebb »

mrfredward wrote: post #92
ifthenelseend wrote: post #33

Earlier quoted context omitted.

UI is not that bad, but the product is very complicated for startups. For example, I can create a website on Azure with just a few clicks as a single item in my account. On AWS, (even if I use Beanstalk) I have to create VPC, load balancer, security groups, S3 bucket for code and a lot of other things... not easy to manage and takes a lot of time!

Setting things up in AWS is time consuming, but not as time consuming as debugging.The AWS documentation is huge and seems thorough, and yet never actually helps me solve any problems. There is always some obscure bit of configuration not covered in the tutorials and buried too deep in the docs to find that is needed to get anything past a hello world to work. Meanwhile, the errors in the log are too vague to make th…

When was the last time you tried Azure?

Re: Google Cloud Worth $225B, Deutsche Bank Says

#150

Post by milesward »

np_tedious wrote: post #144
exacube wrote: post #76

Earlier quoted context omitted.

I feel they entered the business because they AWS showed the industry that it actually has pretty good margins. However, I think the sentiment is probably true that selling VPS is low-margin over the long-term, but i think the margins come from the other bits: global economies of scale, good infrastructure management & practices, and providing their proven internal technologies (ML/AI, managed distributed services).…

I think you hit the nail on the head with managed services. In 2006 Google probably wasn't thinking much further than EC2 and S3

From early convos, I'd say they saw quite a bit further than that...
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