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3 things you should read today: Google cloud shines; Vicarious gets $50M; Qualcomm does AI

We learned yesterday afternoon that Google's cloud business is almost certainly bringing in billions
3 things you should read today: Google cloud shines; Vicarious gets $50M; Qualcomm does AI
By ARCHITECHT • Issue #118 • View online
We learned yesterday afternoon that Google’s cloud business is almost certainly bringing in billions of dollars in revenue per year, but exactly how much remains a mystery. Not that it matters much.
The exact details are that Google parent company Alphabet’s “Other” category brought in $3.1 billion during the second quarter of 2017. That’s a 42 percent increase over the nearly $2.2 billion over the same quarter last year. (And, for what it’s worth, Google’s second-quarter capex ticked up nearly 33 percent, to more than $2.8 billion.)
Google CEO Sundar Pichai said on the company’s earnings call that Google scored three times as many $500,000+ cloud computing deals during the second quarter than it did last year. According to a report on CRN, Google Cloud’s expanding customer base has also surprised him:
“GCP continues to experience impressive growth across products, sectors and geographies,” Pichai told investors. “Increasingly with large enterprise customers in regulated sectors.”
Google is winning big customers across diverse use cases, Pichai said in response to an investor asking if there were specific types of workloads gravitating to GCP.
“I would say the breadth of what we’ve seen has really surprised me,” Pichai said of the GCP customer base.
I think the observations about deal size and breadth of customers are much more telling than are the revenue numbers, at least for the moment. 
We spent years following Amazon’s “Other” category searching for clues on AWS revenue, only to realize when the company finally broke it out that while we were close on revenue, most people vastly underestimated the AWS profit margins. (AWS, for what it’s worth, brought in nearly $3.7 billion in revenue, and $890 million in profit, during the first quarter.) And when companies like Microsoft or IBM (or even Google, to a degree) report their cloud earnings, they cover such a broad range of products that it’s difficult to tell how much is from IaaS, SaaS, software, email, and anything else that falls under the cloud umbrella.
If Google Cloud, which spotted AWS and even Azure pretty big leads, is earning even half what they are, I’d say that’s pretty impressive. If it’s doing it at margins comparable with AWS—which for years probably had to invest next to nothing in competitive marketing—that would be even more remarkable. But we won’t really know any of this until Alphabet decides to share it publicly.
However, the biggest question about Google’s cloud computing platform has always been whether enterprises will trust it, not whether it can make money. If, as Pichai suggests, Google really is able to match its technological prowess with a desire, and capability, to win large contracts from large enterprises, that has to give its competitors a lot more to think about. All of a sudden, everyone’s favorite criticisms about Google not being serious about the cloud, or not being capable of working with enterprises, start ringing a little hollow.
There were two other stories that really caught my eye today. Here they are:
  • Qualcomm opens its mobile chip deep learning framework to all (TechCrunch): Qualcomm built a “Neural Processing Engine” for its Snapdragon mobile processor lineup, and today it opened up an SDK for developers to start taking advantage of the additional deep learning horsepower. You can get more details on the SDK here. I suspect we’re seeing the makings of something big happening in the smartphone (and general mobile) space, but I can’t say for sure what it is. However, with Intel, Qualcomm, Nvidia, ARM, Apple, Google, Microsoft and any number of other players all trying to optimize mobile hardware for AI workloads, something has to give.
  • Khosla Ventures leads $50 million investment in Vicarious’ AI tech (VentureBeat): Vicarious is a mysterious company. It first raised money back in 2012 and then in 2014, after deep learning brought AI into the fore, it raised a $40 million round that included a who’s who of tech leaders (including Elon Musk, Mark Zuckerberg and Vinod Khosla) and Ashton Kutcher. Vicarious has always been relatively tight-lipped about the company and its neuroscience-based approach to AI, and was flying under the radar for awhile until it reappeared with some new robotics research recently. Now it’s back in the spotlight with $50 million from Khosla and a focus on robotics.

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ARCHITECHT delivers the most interesting news and information about the business impacts of cloud computing, artificial intelligence, and other trends reshaping enterprise IT. Curated by Derrick Harris.

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