Google always trumpets big wins for its enterprise business, but we seldom get a clear sense of how well that business is actually doing compared with big enterprise incumbents like Microsoft.
But Google's earnings today showed something interesting -- the company's revenue from non-advertising sources, which it counts as "Other revenue" came in at $829 million. That's more than double last year's figure of $410 million. Overall, Google's quarterly revenue was up 36% from the same time a year ago. In other words, its non-advertising business is growing faster than its advertising business.
That "Other" revenue category had grown incrementally for ages until Q3 of last year, when it suddenly started to spike. (See chart below.)
Google's "Other" revenue suddenly spiked in
of last year.
So does that mean that Google's enterprise business has suddenly caught fire? Not necessarily. As CFO Patrick Pichette shared on the earnings call this afternoon, Google also counts hardware (apart from Motorola, which is still counted separately) and online content sales in that bucket .So the spike probably has more to do with the consolidation of multiple stores into Google Play, which happened in March, and the launch of various Nexus tablets and phones in the second half of the year.
Still, Google eliminated its free Apps tier this year, and also introduced the Google Compute Engine, which offers on-demand compute power and takes Google into more direct competition with Amazon Web Services. So there's no question that Google is gradually getting more serious about its enterprise business.
More generally, Google is gradually diversifying beyond its core advertising business. But very gradually -- even with $829 million in "Other" revenue this quarter, advertising still made up 94% of the company's total.