Google CEO: AI And Machine Learning Will Be Google Cloud's Great Differentiators

CEO Sundar Pichai told investors Thursday that Google's enterprise cloud business is taking off under the guidance of new leader Diane Greene, and the company is now investing heavily in its go-to-market capabilities.

Google Cloud Platform is technologically unique, thanks to years of internal-use development, Pichai said during parent Alphabet's Q1 earnings call, and artificial intelligence and machine learning -- technologies now at a tipping point -- will be significant differentiators for Google in the cloud wars to come.

Google is adding engineering and support staff to better enable partners to migrate enterprise workloads to its cloud and deliver those transformative intelligent technologies to their customers, Pichai said.

[Related: Google Brings Alphabet Almost All Of Its Q4 Revenue]

Alphabet, the Mountain View, Calif.-based holding company created in August to impose order by separating Google's flagship Internet business from other disparate ventures, delivered first-quarter revenues of $20.3 billion -- up 17 percent year over year, but down 5 percent sequentially, said Ruth Porat, Alphabet's CFO.

Nearly all that revenue was attributable to the Google subsidiary, which took in just over $20 billion. Declines in advertising prices, however, contributed to profits that fell short of expectations at $5.3 billion.

Alphabet shares fell by roughly 6 percent in after-hours trading.

In November, Google unified its cloud business under the leadership of Greene, a co-founder of VMware, to speed the pace and quality of its innovation, Pichai said.

"This decision is already paying off," he told investors.

Growth of the platform's user base was already accelerating heading into last month's GCP Next conference, where executives from Spotify and Coca-Cola shared testimonials about Google's cloud technology.

But in the month since GCP Next, "the quantity and quality of our enterprise conversations has risen to a new level," Pichai said

Google is having more inbound, and much deeper, conversations with customers than ever before, the CEO said, crediting Greene as "a great leader who understands this space deeply."

"What Diane has brought to us is a deep understanding of how to think about what enterprises need, and adapt to it in a very detailed and nuanced way," Pichai told investors.

To meet that demand, Google is investing in its channel, hiring engineers and support teams to better enable service partners looking to onboard new customers and deliver them the benefits of the platform, he said.

The scale at which Google has long operated its computing infrastructure internally is the reason the company has so much competence in offering an enterprise-grade product to consumers, Pichai told investors.

"We've always been doing cloud. It's just that we were consuming it all internally at Google," Pichai said.

As the company grew and matured its process for investing in data centers at great scale, "we've definitely crossed over to the other side, where we can thoughtfully serve external customers."

And while Google's cloud is competent for a range of workflows, the rapidly evolving machine learning capabilities that carry the potential of "helping companies really understand their data," he said, are "going to be a huge source of differentiation for us."

Google has been investing in artificial intelligence and machine learning for many years, Pichai said, but those technologies are finally at a tipping point and taking off.

Porat told investors that Google's been adding to its head count, with the vast majority of new hires being engineers and product managers in areas the company considers priorities, particularly cloud and apps.

She reminded investors that it's still the early days for the cloud.

But the opportunity is immense, Porat said, and Google is "benefiting from our heritage," with investments made over many years in infrastructure, data center efficiency, robust security and unparalleled machine learning.

Pichai closed the call by saying he believes computing will evolve from the current mobile-first paradigm to an "AI-first world."