Microsoft’s Revenue Growth Has Google Beat
To onlookers, the contest between Google and Microsoft is as thrilling as the fabled tortoise and hare race. And turns out the results may be looking just as similar. While both Big Tech giants have done reasonably well for the quarter-ended March beating market expectations, Microsoft has reported a 7% higher revenue as growth in its cloud segment and commercial sales, as compared to Alphabet’s 3% growth from the last quarter. Alphabet first-quarter results for 2023 Cloud revenue improves This isn’t to say that there’s no reason to celebrate at Menlo Park. The company’s cloud business turned an operating profit of USD 191 million for the first time finally expelling the cloud of unprofitability away from Google Cloud. But the fact still remains that Google Cloud is comfortably behind its main rivals AWS and Azure. Microsoft first-quarter results for 2023 Microsoft Azure saw a 27% growth for its cloud business in the latest reported quarter beating analyst expectations. (Visible Alpha’s survey had expected a 26.6% growth for Microsoft Azure) With positive results for both cloud businesses, there’s hope that sales have recovered to a great extent. Fall in Google ad sales growth But worryingly, revenue growth for Google’s main money maker is slowing down. The Sundar Pichai-led company’s search revenue grew in the first quarter of 2023 but by a very small margin. Google reported its ‘search & other’ revenues were up by 1.87% on a year-on-year basis, increasing from USD 39.6 billion last year to USD 40.4 billion. In comparison, Google’s search revenue had jumped by 24.28% in the first-quarter of 2022 and 30.11% percent in the first-quarter of 2021. The search business has become competitive with Microsoft entering the fray with its AI-powered Bing chatbot that became more widely available last month. OpenAI’s popular chatbot, ChatGPT has also potentially led users away from Google search just as Google’s senior management had predicted during its release. The quick proliferation of ChatGPT had reportedly raised alarm bells triggering ‘Code Red’ in the company. So, while ChatGPT is hitting Google where it hurts, Bard still remains as good as an experiment. Google's Bard surprisingly disappointing so far. pic.twitter.com/fwCynnIBv9— Paul Novosad (@paulnovosad) March 21, 2023 Bard fails next to ChatGPT After an embarrassing demo launch, early testers of the chatbot had scant positive things to say about Bard. Ethan Mollick, associate professor at the Wharton School of the University of Pennsylvania, tweeted saying, “Google’s Bard does not seem as capable of a learning tool as Bing or GPT-4.” Another YouTuber Marques Brownlee tweeted saying, “I’ve been playing with Google Bard for a while today and I never thought I’d say this, but… Bing is way ahead of Google right now (at this specific chat feature).” Although Google is doing everything in its power to speed up AI development. Just last week, it merged its Brain and DeepMind entities in a bid to “significantly accelerate our progress in AI” as Pichai said. The company is also expected to make a string of AI-related announcements at the Google I/O conference to be held on May 10th. Meanwhile, the company is also keeping a close eye on costs in the face of an economic downturn. Google fired 12,000 employees in January while also looking to cut spending on employee perks. Ruth Porat, the company’s Chief Financial Officer spoke to investors over a conference call saying she expected capital spending for 2023 to be “modestly higher” in 2022. It is obvious that Google is gunning to pump more money into its AI and cloud computing businesses at the moment. ChatGPT in Microsoft enterprise applications, Source: Microsoft blog Microsoft’s higher enterprise sales On the other hand, most of Microsoft’s revenue comes in from sales of software and cloud computing services. Company CEO Satya Nadella told investors that the company had more than 2,500 Azure-OpenAI service customers currently. The company’s productivity segment which now includes its AI-integrated Office software and ad revenue from professional networking site LinkedIn also brought in a total revenue of USD 17.5 billion beating market estimates of USD 16.99 billion. The company ended up selling more operating system licenses than expected. Research firm Gartner had estimated the company’s PC shipments to fall by 30% but it managed to do better. Essentially, while AI isn’t still visibly on the surface determining the winner, its impact is more from the inside. It looks like whoever wins at the AI race, takes the cake.
Despite Google Cloud’s profitability, the fact is it still remains comfortably behind its main rivals AWS and Azure.
To onlookers, the contest between Google and Microsoft is as thrilling as the fabled tortoise and hare race.
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["Go", "ChatGPT", "OpenAI", "AI", "Google Bard", "cloud computing", "AWS", "R", "Ray", "Azure"]
["AI", "ChatGPT", "OpenAI", "Google Bard", "Ray", "cloud computing", "AWS", "Azure", "R", "Go"]
Poulomi is a Technology Journalist with Analytics India Magazine. Her fascination with tech and eagerness to dive into new areas led her to the dynamic world of AI and data analytics.