Alphabet Inc To Generate Majority Revenue From Cloud In Next 5 Years: Hölzle

Alphabet Inc To Generate Majority Revenue From Cloud In Next 5 Years: Hölzle

Google’s head of cloud services Urs Holzle expects the segment to become the primary source of the company’s revenue in the next few years

By Usman Farooq on Nov 19, 2015 at 2:08 pm EST

In recent years cloud computing has grown exponentially, with an increasing number of blue chip tech companies investing in the segment to capitalize on the growing market. According to an earlier report published on Forbes that cited a study by Bessemer Venture Partners the collective market capitalization of cloud providers is expected to be $500 billion in the next five years.

In spite of a growing number of competitors, Microsoft Corporation (NASDAQ:MSFT) Azure and Amazon Web Services still have the bulk of the market. A major reason is the extended scalability these two giants offer. While Alphabet Inc (NASDAQ:GOOGL) does have similar capacity and reach with data centers the same size if not more, its cloud platform has not been able to do as well.

So far the search giant isn’t seen as a significant competitive threat in the cloud landscape by investors and analysts and Google is still projected to generate the bulk of its revenue from its core advertising business.

However Google’s head of cloud Urs Hölzle who also happens to be the eighth person to be employed by the company disagrees. According to a report published on Business Insider Mr. Holzle said at the San Fransico Structure conference that he sees Google becoming a cloud company in the next five years with the segment becoming the primary source of revenue for the company.

This is quite a bold statement considering that Google is number one in search. Last year 89% of Google’s revenue came from advertising dollars from search. This seems to imply that Google could topple both Microsoft and (NASDAQ:AMZN) in terms of market share.

In his argument the executive alluded to the smartphone segment wherein the company’s Android operating system has become the most used software despite being a late entrant. He noted that smartphones were popularized by Apple Inc. (NASDAQ:AAPL) back in 2007 with the release of the iPhone however since then Android devices have come to dominate the global market. "I hope we're going to be the Android of that story," Hölzle said.

Additionally Mr. Hölzle highlighted that at present Google has the highest growth rate in the cloud space. With a vast computing infrastructure and access to huge amounts of data compiled over the course of nearly two decades Google has the ability to offer high performance enterprise solutions at more competitive rates.

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