NEW YORK (TheStreet) -- Google (GOOG) reiterated during its first-quarter earnings call last week a commitment to the fast-growing, yet still barely-penetrated cloud market.
During the call, the company said it's been investing "significantly" in the Google Cloud Platform and was spending heavily in data center construction, telling investors it's very serious about targeting the cloud for the enterprise and challenging Amazon (AMZN) and Microsoft Azure (MSFT) in the space. Google, like Amazon and Microsoft, is trying to go for the enterprise through on-demand Platform as a Service, cloud as a service, storage as a service, and server processing as a service.
Capital expenditures for the quarter were $2.3 billion. The company also took a hit to first-quarter earnings through its acquisition of cloud-enabled thermostat and smoke detector startup Nest Labs for more than $3 billion in cash, supporting its play into offering consumer cloud services to the home.
"They're basically willing to make the investment where they have overcapacity, rather than ever being caught not being able to meet surging demand," says Jagdish Rebello, senior director of cloud and compute electronics at IHS. "Google is essentially making a lot of capital investments so that it can never be caught napping as demand spikes." Rebello estimates that only 3% to 5% of the total U.S. cloud market has been penetrated, giving room for tremendous changes that Google is currently well-positioned to react to. "I do think that this will be a growth engine, a strong growth engine for them for the next few years" he added. "I think there's a chance for them to shape the market like Apple (AAPL) did with the touchscreen display in the iPhones."