Monday, August 10, 2020
Home Lead Story Google With A New Cloud Computing System, Aims Winning Big-Spending Customers

Google With A New Cloud Computing System, Aims Winning Big-Spending Customers

Google, Microsoft and Amazon combined spent nearly $53 billion on capital expenses last year, driven by data center projects to house their clouds.

Google has a new cloud computing boss and big ambitions to someday produce more revenue from that business than from advertising. Now comes the hard part: winning over big-spending customers.

Alphabet Inc’s cloud computing division remains a distant third behind Amazon.com Inc and Microsoft Corp in terms of global revenue, according to analysts’ estimates. A few major companies manage their data on Google’s servers. But Google has nowhere near the vast customer base of Amazon, according to a new Reuters analysis of company regulatory filings.

Businesses generally are not required to disclose their cloud vendors. Reuters found 311 out of about 5,000 worldwide that did so in 2018. While not comprehensive, the data provide a window into Google’s challenge.

Thirty five of those companies named Google as a cloud provider. The largest by market capitalization were oil major Total SA and bank HSBC Holdings Plc.

Amazon Web Services led with 227 clients, including travel company Expedia Group Inc and industrials giant Siemens AG. Microsoft’s Azure cloud had 69 firms, among them weapons maker Axon Enterprise Inc and business data firm Dun & Bradstreet Co. Thirty four of the companies cited multiple clouds.

The previously untracked data show the work ahead for Thomas Kurian, who is weeks on the job as chief executive of Google Cloud. Kurian has vowed to double down where Google has seen promising results. Specifically, he plans to target governments and top companies in retail, manufacturing, healthcare, media and finance.

“A lot of our focus as we go forward is making sure that our sales organization has the background and the ability to sell to large, more traditional companies,” Kurian said at a Goldman Sachs investor conference last week. “There’s enormous appetite in those companies to consider Google.”

Google declined to comment or make Kurian available for an interview.

People familiar with his plans said he is looking to reshape his division’s culture. A key part is developing or acquiring easy-to-use, industry-specific corporate applications, an area that Amazon and Microsoft do not dominate.

google
Businesses generally are not required to disclose their cloud vendors. Reuters found 311 out of about 5,000 worldwide that did so in 2018. While not comprehensive, the data provide a window into Google’s challenge. Pixabay

“It’s about the on-ramp onto their cloud,” said Daniel Ives, a New York-based financial analyst following the cloud industry for Wedbush Securities. “The main way to get that is through applications.”

A 22-year veteran of Oracle Corp, Kurian gave the database company fresh life as the product leader behind its move to selling cloud services. His hire is already making potential customers reconsider Google, said Ray Wang, founder of Constellation Research, a Monta Vista, Calif.-based firm that helps businesses negotiate cloud deals.

“They’ve worked with him,” Wang said. “There’s a trust factor that wasn’t there before.”

Kurian also must reassure some investors bewildered by Google’s cloud ambitions: Diversifying revenue beyond advertising is a plus, but it is not coming cheap.

Google, Microsoft and Amazon combined spent nearly $53 billion on capital expenses last year, driven by data center projects to house their clouds.

With gross margins of 20 percent or less, selling cloud storage or tools for which customers need specialized staff is less lucrative for a small vendor, industry experts said. But margins on the type of software Kurian likely wants to offer can top even the 60 percent of Google’s ad business.

“The next wave of growth is going to have to come from the heavy hitting applications,” said Kerry Liu, chief executive at Rubikloud, which helps retailers with cloud projects.

‘Geeky, Techy platform’

Google got serious about the cloud around 2016, five years after Amazon Web Services had become a multibillion-dollar behemoth. But Google’s reputation for limited customer support has attracted mostly newer businesses or those with significant tech know-how.

Mike Fisher, Etsy Inc’s chief technology officer, said Google’s superior AI tools helped win over the New York-based crafts marketplace. Fisher expects data-crunching algorithms to account for 25 percent of its server use this year, up from 10 percent last year.

google
Google got serious about the cloud around 2016, five years after Amazon Web Services had become a multibillion-dollar behemoth. But Google’s reputation for limited customer support has attracted mostly newer businesses or those with significant tech know-how. Pixabay

“We’ve been more pleasantly surprised than we thought,” Fisher said of the cloud’s benefits.

Advertising software company OpenX recently agreed to spend at least $110 million on Google Cloud over five years. The Pasadena, Calif. firm bet its clients would benefit from transacting on the same infrastructure as Google’s ads system. “It’s a bit more of a geeky, techy platform, but we’re that kind of company,” said Chief Technology Officer Paul Ryan.

Kurian’s plan

To attract more traditional corporate clients, Google Cloud will need to do some handholding, executives at its partners and rivals said.

Kurian is well-suited to the role. Two of his former colleagues said his follow-up and candid disclosures about product limitations helped seal deals at Oracle. An early riser, Kurian impressed staff with his meticulous preparation for morning meetings as well as his recall of the tiniest details of clients’ systems from years before.

Kurian also managed billions of dollars in acquisitions at Oracle, including the purchases of software firms BEA Systems and Taleo.

Also Read: Pope Calls On Sex Abuse Prevention, Concrete Action To Respond To The Scandal

Google is testing product recommendation software for shopping apps, a person familiar with the project said, to add to its small set of specialized tools.

Kurian told the investor conference that “you will see us continue to expand our footprint there.” (VOA)

STAY CONNECTED

18,959FansLike
362FollowersFollow
1,780FollowersFollow

Most Popular

Kohli, Rohit, Dhoni Among Most Popular Cricketers Worldwide: Study

India skipper Virat Kohli's popularity knows no bounds and once again it has been re-affirmed by a study which has revealed that the 31-year-old...

I Have Always been a Hands-on Mom: Raveena Tandon

By Puja Gupta A hands-on mom, Raveena Tandon has not just portrayed impactful and memorable characters in her career spanning over two decades but has...

Know South Africa’s Indigenous Cuisine

By Puja Gupta Food is invariably a universal connector - however, experiencing and sharing-in the food of a different land is a very personal experience. As...

PETA Moves to Delhi HC to Seek Directions to Prohibit Animal Cruelty

People for the Ethical Treatment of Animals (PETA) on Monday moved the Delhi High Court to seek directions to the central government to prohibit...

The Impact of Stress on Skin, Hair and How to Overcome It

By Puja Gupta The lockdown has resulted in stress for a lot of people - stress of being cooped inside for weeks together; the uncertainty...

People Who Play VR Games Can Develop Higher Navigational Efficiency

Adding to the growing list of studies, a new study has said that individuals playing a virtual reality (VR)-based game can develop higher navigational...

75% of Plane Overruns Caused Due to Wet Runways

Runway overruns account for 16 per cent of fatal incidents involving airlines and in 75 per cent of overruns, the runways are either wet...

PM Modi Inaugurates Submarine OFC Connecting Chennai and Port Blair

Prime Minister Narendra Modi on Monday inaugurated a submarine Optical Fibre Cable (OFC) connecting Chennai and Port Blair, which will enable delivery of faster...

Recent Comments