Google Set To Up Ante In Amazon, Microsoft Cloud Services Price War


Google is stepping up its investment in cloud computing infrastructure in a bid to drive down the costs further for enterprise customers in the midst of a price war with cloud services rivals Amazon and Microsoft.

Google Senior Vice President and Chief Business Officer Nikesh Arora said the search engine giant intends to pass savings from lower digital storage costs to bring more customers to Google's infrastructure as a  service offerings.

Arora made the comments Wednesday during a conference call to discuss the company's first-quarter financial results, even as Google posted lower-than-expected earnings for its first quarter.

[Related: Amazon Launches Memory-Packed Cloud Servers That Leave Microsoft's And Google's In The Dust]

Google reported a three percent increase in net income of $3.65 billion on a 19 percent increase in sales to $15.4 billion. Earnings per share after stock based compensation charges were $6.27, down  from the $6.41 Wall Street consensus estimate.

That did not deter Google from upping its cloud services investment in the midst of a price war with Amazon and Microsoft. “We believe we have an absolute unique position from a cost structure perspective,” Chief Financial Officer Patrick Pichette said during the call.

Constructing and expanding data centers is currently Google’s top capital expenditure, according to Pichette. The company is not willing to risk insufficient capacity as it grows the business, he said.

But Arora also cautioned shareholders and partners against placing too much emphasis in the gritty details that differentiate Google’s cloud business from that of its competitors.

“These are very, very, very early days if you think of the potential scope and scale of what this opportunity is,” Arora said.

NEXT: Amazon Price Cuts Feed The Fire


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