Google Cloud Worth $225B, Deutsche Bank Says • Hacker News Board

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

#61

Post by superfrank » Fri, Oct 04, 2019, 5:05 PM UTC

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…

Obviously I have zero information about how they came to that conclusion, but it sounds to me like they looked too far into the future.

With basically every major tech company (Amazon, Google, Microsoft, IBM) now having some cloud offering and so many companies switching their on-site infrastructure for the cloud, it seems like it's only a matter of time until compute time becomes a commodity. Once that happens pricing becomes a race to the bottom and margins become much smaller.

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

#62

Post by jon-wood » Fri, Oct 04, 2019, 5:05 PM UTC

username90 wrote: post #28

resoluteteeth wrote: post #3

Incredible. They don't even mention Amazon.

AWS are just developer tools and hosting, right? Google Cloud includes both GCP and gsuite, so it is more like Microsoft office 365 combined with Microsoft Azure.

AWS are trying to get into that game. They now have hosted email, documents, file sharing, customer support, and corporate voip products. No doubt more are lined up.

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

#63

Post by IshKebab » Fri, Oct 04, 2019, 5:06 PM UTC

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'd say it was wrong. Amazon and Microsoft now make huge amounts of money from their clouds. It can't be that low margin!

But I feel like their real mistake was trying to do things right, rather than compatibly. I think Google Cloud Engine is undeniably a better system than ad-hoc Linux VMs. But nobody really wants to rewrite all their code to work with it.

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

#64

Post by IB885588 » Fri, Oct 04, 2019, 5:06 PM UTC

frostyj wrote: post #52

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

It is, but that wasn't anticipated at the time and Amazon didn't reveal its margins until much later.

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

#65

Post by ehsankia » Fri, Oct 04, 2019, 5:07 PM UTC

askytb wrote: post #31

fasteo wrote: post #22

Earlier quoted context omitted.

Not that I want to defend Google or anything, but there are some impressive customers here [1] [1] https://cloud.google.com/customers

That list is probably the exact list of google customers that get any real support from google

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/

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

#66

Post by dwoozle » Fri, Oct 04, 2019, 5:07 PM UTC

manishsharan wrote: post #14

I do not want to sound like a nay sayer but which responsible enterprise CIO would put their stack on Google Cloud. They have a well deserved reputation for being unresponsive and opaque and downright irresponsible with their customers' infrastructure.

Enterprise CIOs get an entirely different experience from Google than you or I do. It’s like the difference between flying Concorde and flying as a stowaway in the nose wheel landing gear.

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

#67

Post by beering » Fri, Oct 04, 2019, 5:07 PM UTC

olivermarks wrote: post #39

ztratar wrote: post #34

Earlier quoted context omitted.

Softbank != "the big banks" The public markets did what they were supposed to do to WeWork.

To be fair it was the weWork ipo roadshow banks that came up with that fantastic number

Matt Levine made the point that to get chosen as one of the IPO banks, you had to pitch to WeWork that you could get them a good-yet-plausible valuation. I.e., take what their last (private) valuation was, and bump it up by a decent amount. Once you're selected, of course, then reality can take over.

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

#68

Post by chillydawg » Fri, Oct 04, 2019, 5:08 PM UTC

frostyj wrote: post #52

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 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.

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

#69

Post by samsonradu » Fri, Oct 04, 2019, 5:08 PM UTC

swarnie_ wrote: post #53

beambot wrote: post #25

Google Cloud is worth $225B and Waymo is worth $100B [1], so the rest of Alphabet is worth less than $500B in market cap? The math doesn't add up. [1] https://www.cnbc.com/2019/09/27/waymo-valuation-cut-40percen...

It's DB, if they knew what they were talking about then maybe they could have predicted their own share price sliding 97% in a decade.

And even if they did know what they were talking about (read JP Morgan), that doesn’t mean their estimates are reliable. There are many forces/interests at play wrt these public statements, see the WeWork case.

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

#70

Post by thrower123 » Fri, Oct 04, 2019, 5:08 PM UTC

ztratar wrote: post #34

freejulian85 wrote: post #8

And WeWork is worth 40B according to the big banks.

Softbank != "the big banks" The public markets did what they were supposed to do to WeWork.

Softbank and WeWork reminds me painfully of the episode of Entourage I watched last night, where the boys are pitching their as-yet unseen prestige film at Cannes. Hyped to the extreme, on the verge of pulling a deal to make a boatload of money, but on closer inspection it's a huge stinker that falls apart disastrously.