Analysts: Google cloud revenue hit $200M last quarter and will keep expanding

Google (s goog) has been hitting the right notes to entice more developers, companies and enterprises to move workloads onto the Google Cloud Platform and Google Apps. Those two programs generated $200 million in the second quarter of 2013, up 195 percent year over year, according to an estimate in a Thursday analyst note, and should hit $885 million this year.
That annual number is partly attributable to the Google Cloud Platform getting wider adoption, but a majority of it will come from Google Apps, and that will be the case through 2014, according to analysts Michael Barba and Jillian Mirandi of TBR.
Looking out on the rest of 2013, Barba and Mirandi believe Google Compute Engine, the company’s Infrastructure as a Service (IaaS), specifically stands to net still more adoption.
Even if the annual outlook is on point, Google cloud probably will still trail the biggest IaaS running today, Amazon (s amzn) Web Services, which is believed to be a $2 billion operation. But it should be said that Google is a fast-growing up-and-comer in the IaaS business.
We could get a better sense of Google’s progress when Barak Regev, head of the EMEA Cloud Platform at Google Enterprise, speaks at our Structure:Europe conference in London on Sept. 18.
It helps that Google has been taking steps to integrate Google Compute Engine with Google App Engine and other cloud services. The rise of technology and service partners and efforts on direct sales also make a difference. One initiative called out by name was the collaboration with Red Hat (s rht) to enable on-premise App Engine deployments. Indeed, private Platform as a Service (PaaS) is a compelling option for enterprises, as David Linthicum noted in a GigaOM Research report (subscription required).
If Google wants to grow its cloud revenue further, it will need to invest further for hybrid and private deployments, Barba and Mirandi wrote. On the strictly public side, it’s a good thing the company has been spending more and more on infrastructure.
These efforts and others are critical if Google wants to play hard in the competitive IaaS market. Microsoft (s msft) has been pushing forward with its IaaS, Windows Azure, although it’s difficult to pinpoint how much revenue it contributes to Microsoft’s top line. Executives neglected to call out an exact figure during the company’s Thursday earnings call, although Amy Hood, its newly installed chief financial officer, said more than half of the Fortune 500 use Azure.
Fortunately for Google and AWS, VMware (s vmw) has some challenges on its hands as it gets ready to roll out its IaaS option, the vCloud Hybrid Service.
Irrespective of how well Google can do in relation to its competitors, though, the use of shared infrastructure should keep growing — and expanding opportunities for commodity hardware makers and other products and services. Because Google is there and because it knows how to operate at scale, it should be able to ride the wave just fine.