In the ultra-competitive cloud market, the battle for numbers is raging. In this little game, Google does not seem satisfied with the analysts’ calculations concerning one of its opponents. The search giant took out its calculator based on a presentation unveiled by Business Insiderwith extensive financial data regarding Azure, Microsoft’s cloud platform.
Based on its own calculations, Google concludes that it generated less than $29 billion in the last fiscal year (ended June 30), reveals CNBC. A figure well below Wall Street estimates. For example, Bank of America was counting on 37.5 billion dollars, when the investment bank Cowen anticipated 33.9 billion dollars in income, and UBS 32.5 billion.
Heavy operating losses in 2022, according to Google
In detail, Google’s estimate results in an operating loss of nearly $3 billion for Azure at the end of fiscal 2022, compared to more than $5 billion the previous year. The US giant also claims that Azure’s sales and marketing costs approached $10 billion, or 34% of its revenue. At the same time, Microsoft said that these costs only weighed 11% of its cloud platform revenue over the same period.
For Derrick Wood, analyst at Cowen, Google is far from the account. “There’s no way it’s such a big loss”he told CNBC. According to his research, Azure has an operating margin of over 30%, which is negative (-10%) according to Google. This estimate is not the result of chance since the operating margin of the cloud branch of the Alphabet subsidiary came out at a similar level at the end of the third quarter, when that of Amazon Web Services (AWS), the world leader, stands at 26%.
According to data from Gartner, AWS controls 39% of the global market, ahead of Microsoft (21%), Alibaba (9.5%) and Google (7.1%). But if the internal estimate of the Mountain View company proves to be correct, this means that it is not very far from the second place in the market, currently occupied by Microsoft. Difficult to disentangle the true from the false while the US giants do not give precise information on the performance of their cloud platform.