Google says the race is far from over. It believes its cloud business could one day eclipse its massive advertising business, which accounted for 88% of Alphabet’s $90 billion in sales last year. “It is so early,” Ms. Greene said. “Ninety-five percent of the world’s data is not in the cloud.”
Indeed, analysts and cloud executives, including Ms. Greene, predict the cloud and related corporate-tech spending could one day be a $1 trillion market.
Google, a Cloud Computing Upstart, Seeks Credibility
Search giant faces an uphill battle against incumbents Amazon and Microsoft
Urs Holzle, vice president of operations for Google, speaks during a Google Cloud event in San Francisco in 2014.PHOTO: DAVID PAUL MORRIS/BLOOMBERG NEWS
Google conquered internet search. It is having a tougher time winning the rapidly growing cloud-computing industry.
Google is pitching potential corporate customers on its vast network of computers and artificial-intelligence tools, and often undercutting the prices of the two incumbents that dwarf it, cloud-computing pioneer Amazon.com Inc. and corporate-tech veteran Microsoft Corp.
But to catch those rivals, analysts say Google must build more credibility among corporations wary of running their businesses on the servers of an internet-search company with little experience supporting the technology needs of big companies, other than its own.
In response, Google has been expanding its sales, marketing and customer-support staff in an effort to cater to traditional industries.
But Google Cloud chief Diane Greene says the company’s technology, and not its business fundamentals, will help it succeed. “The business-side stuff is not rocket science. It is blocking and tackling,” she said. “The part that is rocket science, that’s the part I like coming to the party with.”
Google, a unit of Alphabet Inc., plans to tout its progress at its cloud conference in San Francisco this week and announce new customers, including global bank HSBC Holdings PLC. HSBC, which also uses Amazon’s cloud service, said it is using Google’s technology to improve its money-laundering detection, run simulations and make complex calculations.
The shift to cloud computing threatens to displace billions of dollars of tech spending as companies from corporate giants to hot startups store their data and run their digital businesses on other companies’ computer servers.
Google faces an uphill battle against Amazon and Microsoft. The industry juggernaut, Amazon Web Services, earned $12.22 billion in cloud revenues last year, while Deutsche Bank estimates $2.42 billion for Microsoft’s Azure cloud service and $900 million for Google. Those numbers don’t include sales of cloud-based productivity tools, such as Microsoft’s Office 365 and Google’s Gmail and Google Docs.
While both Microsoft and Google are expected to more than double their cloud sales over the next two years, Microsoft will grow faster than Google, despite its bigger size, Deutsche Bank forecasts.
Ms. Greene said Google is gaining traction, winning most of the time when competing with Amazon or Microsoft for new companies moving to the cloud.
Amazon and Microsoft rebuff that suggestion. “We rarely see (Google) among the last two finalists for big deals—especially when it comes to larger customers or enterprises,” said Ariel Kelman, vice president of marketing for AWS.
Google is only included in about one in 20 of Microsoft’s sales engagements, said Judson Althoff, Microsoft’s executive vice president of world-wide commercial business. “And when they do, most customers chose Microsoft.”
Google says the race is far from over. It believes its cloud business could one day eclipse its massive advertising business, which accounted for 88% of Alphabet’s $90 billion in sales last year. “It is so early,” Ms. Greene said. “Ninety-five percent of the world’s data is not in the cloud.”
Indeed, analysts and cloud executives, including Ms. Greene, predict the cloud and related corporate-tech spending could one day be a $1 trillion market.
Google hired Ms. Greene, a co-founder of enterprise-tech firm VMware Inc., in late 2015 to show it is serious about the cloud. The company’s cloud business had been geared toward app developers and tech firms, and some of its biggest clients are still Snap Inc. and Spotify AB.
Amazon and Microsoft boast deep relationships with large corporate customers, as well as vast ecosystems of partners that sell and support their technology. Google needs to convince corporate customers, app developers and cloud consultants that it will develop a similar foundation for its cloud business, said Matt McIlwain, managing director of Madrona Venture Group LLC, a venture firm that invests in cloud startups.
Mr. McIlwain believes Google trails its rivals in that area, in part because it hasn’t built the same sort of longstanding relationships with major consulting firms required to land large corporate customers.
Google is now bolstering its services for traditional companies by hiring workers specialized in industries such as health care, finance and retail, to help make Google’s cloud products work for those sectors. Google said it added more cloud employees than any other division last year, and is in the process of hiring 1,000 employees focused on cloud customers.
Google is also adding partnerships with enterprise-software firms that have strong toeholds with big corporations so their software works on Google Cloud, such as SAP SE, which is announcing its compatibility this week. SAP already works with Amazon’s and Microsoft’s cloud offerings.
Ms. Greene said now that Google can handle big companies’ needs, it aims to win customers with its artificial-intelligence and data-analytics tools.
Analysts say Google’s AI tools are top-of-class. For instance, Airbus SE’s satellite-imaging group uses Google’s image-recognition tool to spot and remove clouds from its satellite images. Ocado Group PLC, a British online grocery firm, uses Google’s voice-recognition and language-processing tools to let software monitor its customer-service calls to measure customer sentiment.
But analysts say competing on product isn’t enough. “They win quite often when they get invited to the party but they’re not invited to the party enough,” said Dave Bartoletti, principal analyst at Forrester Research.
My name is Samual Lau. I am a long-term value investor and a zealous disciple of Ben Graham. And I am a MBA graduated in May 2010 from Carnegie Mellon University. My concentrations are Finance, Strategy and Marketing.
TimelessInvestor
Cloud business of industry and Google – WSJ
Cloud business of industry and Google – WSJ
https://www.wsj.com/articles/google-a-cloud-computing-upstart-seeks-credibility-1488985202
Google says the race is far from over. It believes its cloud business could one day eclipse its massive advertising business, which accounted for 88% of Alphabet’s $90 billion in sales last year. “It is so early,” Ms. Greene said. “Ninety-five percent of the world’s data is not in the cloud.”
Indeed, analysts and cloud executives, including Ms. Greene, predict the cloud and related corporate-tech spending could one day be a $1 trillion market.
Google, a Cloud Computing Upstart, Seeks Credibility
Search giant faces an uphill battle against incumbents Amazon and Microsoft
Google conquered internet search. It is having a tougher time winning the rapidly growing cloud-computing industry.
Google is pitching potential corporate customers on its vast network of computers and artificial-intelligence tools, and often undercutting the prices of the two incumbents that dwarf it, cloud-computing pioneer Amazon.com Inc. and corporate-tech veteran Microsoft Corp.
But to catch those rivals, analysts say Google must build more credibility among corporations wary of running their businesses on the servers of an internet-search company with little experience supporting the technology needs of big companies, other than its own.
In response, Google has been expanding its sales, marketing and customer-support staff in an effort to cater to traditional industries.
But Google Cloud chief Diane Greene says the company’s technology, and not its business fundamentals, will help it succeed. “The business-side stuff is not rocket science. It is blocking and tackling,” she said. “The part that is rocket science, that’s the part I like coming to the party with.”
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Google, a unit of Alphabet Inc., plans to tout its progress at its cloud conference in San Francisco this week and announce new customers, including global bank HSBC Holdings PLC. HSBC, which also uses Amazon’s cloud service, said it is using Google’s technology to improve its money-laundering detection, run simulations and make complex calculations.
The shift to cloud computing threatens to displace billions of dollars of tech spending as companies from corporate giants to hot startups store their data and run their digital businesses on other companies’ computer servers.
Google faces an uphill battle against Amazon and Microsoft. The industry juggernaut, Amazon Web Services, earned $12.22 billion in cloud revenues last year, while Deutsche Bank estimates $2.42 billion for Microsoft’s Azure cloud service and $900 million for Google. Those numbers don’t include sales of cloud-based productivity tools, such as Microsoft’s Office 365 and Google’s Gmail and Google Docs.
While both Microsoft and Google are expected to more than double their cloud sales over the next two years, Microsoft will grow faster than Google, despite its bigger size, Deutsche Bank forecasts.
Ms. Greene said Google is gaining traction, winning most of the time when competing with Amazon or Microsoft for new companies moving to the cloud.
Amazon and Microsoft rebuff that suggestion. “We rarely see (Google) among the last two finalists for big deals—especially when it comes to larger customers or enterprises,” said Ariel Kelman, vice president of marketing for AWS.
Google is only included in about one in 20 of Microsoft’s sales engagements, said Judson Althoff, Microsoft’s executive vice president of world-wide commercial business. “And when they do, most customers chose Microsoft.”
Google says the race is far from over. It believes its cloud business could one day eclipse its massive advertising business, which accounted for 88% of Alphabet’s $90 billion in sales last year. “It is so early,” Ms. Greene said. “Ninety-five percent of the world’s data is not in the cloud.”
Indeed, analysts and cloud executives, including Ms. Greene, predict the cloud and related corporate-tech spending could one day be a $1 trillion market.
Google hired Ms. Greene, a co-founder of enterprise-tech firm VMware Inc., in late 2015 to show it is serious about the cloud. The company’s cloud business had been geared toward app developers and tech firms, and some of its biggest clients are still Snap Inc. and Spotify AB.
Amazon and Microsoft boast deep relationships with large corporate customers, as well as vast ecosystems of partners that sell and support their technology. Google needs to convince corporate customers, app developers and cloud consultants that it will develop a similar foundation for its cloud business, said Matt McIlwain, managing director of Madrona Venture Group LLC, a venture firm that invests in cloud startups.
Mr. McIlwain believes Google trails its rivals in that area, in part because it hasn’t built the same sort of longstanding relationships with major consulting firms required to land large corporate customers.
Google is now bolstering its services for traditional companies by hiring workers specialized in industries such as health care, finance and retail, to help make Google’s cloud products work for those sectors. Google said it added more cloud employees than any other division last year, and is in the process of hiring 1,000 employees focused on cloud customers.
Google is also adding partnerships with enterprise-software firms that have strong toeholds with big corporations so their software works on Google Cloud, such as SAP SE, which is announcing its compatibility this week. SAP already works with Amazon’s and Microsoft’s cloud offerings.
Ms. Greene said now that Google can handle big companies’ needs, it aims to win customers with its artificial-intelligence and data-analytics tools.
Analysts say Google’s AI tools are top-of-class. For instance, Airbus SE’s satellite-imaging group uses Google’s image-recognition tool to spot and remove clouds from its satellite images. Ocado Group PLC, a British online grocery firm, uses Google’s voice-recognition and language-processing tools to let software monitor its customer-service calls to measure customer sentiment.
But analysts say competing on product isn’t enough. “They win quite often when they get invited to the party but they’re not invited to the party enough,” said Dave Bartoletti, principal analyst at Forrester Research.
—Rachael King contributed to this article.
Write to Jack Nicas at jack.nicas@wsj.com and Jay Greene at Jay.Greene@wsj.com
About Timeless Investor
My name is Samual Lau. I am a long-term value investor and a zealous disciple of Ben Graham. And I am a MBA graduated in May 2010 from Carnegie Mellon University. My concentrations are Finance, Strategy and Marketing.