Thomas Kurian, CEO of Google Cloud, speaks at a cloud computing convention held by the company in 2019.
Michael Short | Bloomberg | Getty Images
Google’s cloud chief Thomas Kurian on Tuesday defined how the tech big is already monetizing its varied synthetic intelligence providers to generate income.
“We’ve made billions using AI already,” stated Kurian, talking on the Goldman Sachs Communacopia and Technology Conference in San Francisco.
Kurian stated that Google Cloud’s backlog of buyer demand is rising sooner than its income.
“Our backlog is now at $106 billion — it is growing faster than our revenue,” he stated. “More than 50% of it will convert to revenue over the next two years.”
During its most up-to-date second quarter, Google father or mother Alphabet in July reported income of $13.62 billion for its cloud computing enterprise, which was a 32% improve from the yr prior. Alphabet’s web revenue elevated to $28.20 billion, up practically 20% from the earlier yr. While Google’s cloud unit lags Microsoft and Amazon’s cloud models, it is rising sooner than them.
Here’s what Kurian stated about how Google Cloud is monetizing AI:
Consumption
Kurian stated some individuals pay Google by consumption, giving the instance of AI infrastructure bought by enterprise clients.
“Whether it’s a GPU, TPU or a model, you pay by token — meaning you pay by what you use,” he stated. Tokens characterize chunks of textual content {that a} AI fashions course of after they generate or interpret language.
Some individuals use customer support programs, paying for it by what Kurian known as “deflection rates.” Such charges are priced primarily based on the enterprise worth clients get — issues like uptime, scalability, AI options and safety.
Google Cloud additionally offers instruments like a “deflection dashboard,” that clients can use to trace and handle agent interactions.
Last month, Google gained a $10 billion cloud contract from Meta spanning six years. Meta had largely been reliant on Amazon Web Services for cloud infrastructure, although it additionally makes use of Microsoft Azure.
Subscriptions
Some clients pay for cloud providers by means of subscriptions.
“You pay per user per monthly fee — for example, agents or Workspace,” stated Kurian, referring to the company’s Gemini merchandise, which has its personal subscription tiers with varied storage choices, and the Google Workspace productiveness suite, which additionally has a number of subscription tiers,.
Google One, a well-liked private cloud storage subscription, gives a fundamental month-to-month service to customers for $1.99 a month. Earlier this yr, the company supplied a brand new subscription tier known as “Google AI Ultra,” which gives unique entry to the company’s most “cutting edge” AI merchandise with 30 terabytes of storage for $249.99 monthly.
Kurian gave an instance of Google Cloud’s cybersecurity subscription tiers, saying “we’ve seen huge growth in that.”
Upselling
Kurian stated that upselling is one other key facet of Google Cloud’s technique.
“We also upsell people as they use more of it from one version to another because we have higher quality models and higher-priced tiers,” Kurian stated.
He stated that when clients use Google’s AI providers, they wind up utilizing extra of the company’s merchandise.
“That leads customers who sign a commitment or contract to spend more than they contacted for, which drives more revenue growth,” he added.
Kurian says it is capturing new clients extra rapidly too.
“We’ve seen 28% sequential quarter-over-quarter growth in new customer wins in the first half of the year,” stated Kurian, including that almost two-thirds of consumers already use Google Cloud’s AI instruments in a significant approach.
“Selling to existing customers is always easier than selling to new customers, so it helps us improve the cost of sales,” Kurian stated.
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