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Comment by discodave | Hacker News Reader

Most analysts seem to think that AWS is way bigger than Google's public cloud. That channel lead may well be right in terms of total number of servers or MW of datacenter capacity.

BUT scale is not the only thing that the cloud brings. AWS is not just S3 and EC2. I think it's pretty clear that Amazon is much further along the road of productizing their cloud. i.e. providing all the products that businesses and most notably enterprises need to move to the cloud. It will take a while for Google (and Microsoft) to catch up in this area.

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Published information I have dug up shows Google's cloud is larger, but only by 50% and the dates were in the 2012-2013 range. Regardless of whether the channel lead's motivations are to say one thing or another, he did say something that struck me with conviction: "We're not going anywhere. We're NOT relinquishing this market."

My experience with Kubernetes and Managed VMs and as an App Engine dev since 2009 compared to Amazon's latest offerings such as Glacier and RedShift shows Amazon is distinctly targeting the present with these legacy plays. Google is targeting the future.

Not much talked about: Google's profitability gives it a distinct advantage in its ability to wage a price war compared to Amazon should have anyone on Amazon's platform concerned.

I wouldn't so much phrase it as "Amazon is targeting the present"; they're executing a hybrid strategy of making future-stuff to entice you (Lambda, or DynamoDB way back when) and then also cutting away all the objections you (some enterprise CTO) could have to moving 100% to their cloud stack, by making it also capable of doing everything your current private LAN/VPS/colo stack already does—even if everything your current stack already does is brain-damaged legacy stuff.

In other words, Google is building a cloud that you can only really pick up for blue-ocean ventures. AWS gives you a bunch of the same tech, but also a clear transition path: you can first duplicate all your present-day infrastructure in their cloud with little-to-no service interruption, and then start replacing it, component-wise, with the future-tech.

I think derefr replied to your first two paragraphs nicely.

"We're not going anywhere. We're NOT relinquishing this market."

I think for a while some didn't believe how serious Google was about the whole selling cloud services thing. Now they do.

Regarding Google and Amazon's disparate profitability:

1) Cash is arguably more important than profitability from an investment financing perspective. Amazon and Google are in the same ball park regarding free cash flow (>1B, <10B) and while Google has an enormous cash pile Amazon certainly has the ability to spend several tens of billions investing in their clouds in the next few years, as does Google.

2) Secondly, for the sake of their stock price, Google would be very hesitant to have their high margin search/ads business become dominated by a low-margin commodity cloud business. Their scope to use all of the free cash generated from search/ads for their cloud business is limited. Stock analysts don't like declining profitability whereas Amazon already has basically zero profits and is basically priced at a Price/Sales ratio like a large retailer.

Amazon makes extensive use of capital leases support their expansion. In 2014 they were roughly on par with their other capex (in the $4B-5B range, don't remember exact number), except that their capital leases don't deduct from Amazon's free cash flow. If you subtract those out, the FCF situation ends up looking quite a bit worse.

http://seekingalpha.com/article/2743335-understanding-how-am... and http://www.fool.com/investing/general/2015/02/04/amazon-just... discuss the mechanics.

They're sort of taking on a bunch of debt (or things that look like debt) and downplaying it with clever accounting. In the current market environment I don't know that it's really a problem (they just borrowed $6B via a bond issue, for example). Just an interesting reality for a company competing with two cash-rich rivals in a hugely capital-intensive space.

Reminds me a bit of Google+ and all the effort they sank into that to compete with FB...

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