I think derefr replied to your first two paragraphs nicely.
"We're not going anywhere. We're NOT relinquishing this market."
I think for a while some didn't believe how serious Google was about the whole selling cloud services thing. Now they do.
Regarding Google and Amazon's disparate profitability:
1) Cash is arguably more important than profitability from an investment financing perspective. Amazon and Google are in the same ball park regarding free cash flow (>1B, <10B) and while Google has an enormous cash pile Amazon certainly has the ability to spend several tens of billions investing in their clouds in the next few years, as does Google.
2) Secondly, for the sake of their stock price, Google would be very hesitant to have their high margin search/ads business become dominated by a low-margin commodity cloud business. Their scope to use all of the free cash generated from search/ads for their cloud business is limited. Stock analysts don't like declining profitability whereas Amazon already has basically zero profits and is basically priced at a Price/Sales ratio like a large retailer.
Amazon makes extensive use of capital leases support their expansion. In 2014 they were roughly on par with their other capex (in the $4B-5B range, don't remember exact number), except that their capital leases don't deduct from Amazon's free cash flow. If you subtract those out, the FCF situation ends up looking quite a bit worse.
They're sort of taking on a bunch of debt (or things that look like debt) and downplaying it with clever accounting. In the current market environment I don't know that it's really a problem (they just borrowed $6B via a bond issue, for example). Just an interesting reality for a company competing with two cash-rich rivals in a hugely capital-intensive space.
"We're not going anywhere. We're NOT relinquishing this market."
I think for a while some didn't believe how serious Google was about the whole selling cloud services thing. Now they do.
Regarding Google and Amazon's disparate profitability:
1) Cash is arguably more important than profitability from an investment financing perspective. Amazon and Google are in the same ball park regarding free cash flow (>1B, <10B) and while Google has an enormous cash pile Amazon certainly has the ability to spend several tens of billions investing in their clouds in the next few years, as does Google.
2) Secondly, for the sake of their stock price, Google would be very hesitant to have their high margin search/ads business become dominated by a low-margin commodity cloud business. Their scope to use all of the free cash generated from search/ads for their cloud business is limited. Stock analysts don't like declining profitability whereas Amazon already has basically zero profits and is basically priced at a Price/Sales ratio like a large retailer.