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SAN FRANCISCO: Google has a new responsible for cloud computing and great ambitions: generate a day more revenue from this activity than advertising.
Now comes the difficult part: conquering very spendthrift customers.
According to analysts' estimates, Alphabet's cloud computing division remains far behind Amazon.com Inc. and Microsoft Corp in terms of global revenues. Some big companies manage their data on Google's servers. However, according to a new Reuters analysis of regulatory filings with businesses, Google has virtually no access to Amazon's large customer base.
Companies are generally not required to disclose their cloud providers. Reuters found that 311 out of 5,000 worldwide had done so in 2018. Although not complete, the data provides a window to Google's challenge.
Thirty-five of these companies have designated Google as a cloud provider. The most important in terms of market capitalization were the large oil company Total SA and the bank HSBC Holdings Plc.
Graphic: dominance of the cloud of Amazon – https://tmsnrt.rs/2BMpryP
Amazon Web Services managed 227 customers, including Expedia Group Inc. and the industrial giant Siemens AG. Microsoft's Azure cloud included 69 companies, including weapons manufacturer Axon Enterprise Inc and commercial data company Dun & Bradstreet Co.
Thirty-four of the companies cited several clouds.
The unseen data shows the work that remains to be done for Thomas Kurian, who has been a senior vice president of Google Cloud for several weeks. Kurian has promised to double his stake when Google has achieved promising results. More specifically, it plans to target governments and large companies in the retail, manufacturing, health, media and financial sectors.
"Our main goal in the future is to ensure that our sales organization has the experience and the ability to sell to larger, more traditional businesses," Kurian told an investor conference at Goldman Sachs last week. "There is a huge appetite among these companies to consider Google."
Google declined to comment or make Kurian available for an interview.
Chart: Why Cloud Service Providers Are Disclosed – https://tmsnrt.rs/2BKFoFP
People familiar with his projects said he wanted to reshape the culture of his division. A key element is developing or acquiring simple to use, industry-specific business applications in which Amazon and Microsoft do not dominate.
"It's about ramping up their cloud," said Daniel Ives, a New York-based financial analyst who tracks the cloud industry for Wedbush Securities. "The main way to get it is to use apps."
Kurian, who has more than 22 years of experience in Oracle Corp, has given the database company a new lease on life as a product leader behind its decision to sell cloud services. His company is already hiring potential customers to reconsider Google, said Ray Wang, founder of Constellation Research, a company based in Monta Vista, California that helps companies negotiate contracts in the cloud.
"They worked with him," said Wang. "There is a trust factor that did not exist before."
Kurian must also reassure some investors disoriented by Google's ambitions in the cloud: the diversification of revenues beyond advertising is an advantage, but it is not cheap.
Last year, Google, Microsoft and Amazon spent nearly US $ 53 billion on capital expenditures, thanks to data center projects to host their clouds.
With gross margins of 20% or less, the sale of cloud storage tools or tools for which customers require specialized staff is less lucrative for a small supplier, industry experts said . But the margins on the kind of software that Kurian will probably want to offer can exceed even 60% of Google's advertising market.
"The next wave of growth will have to come from heavy applications," said Kerry Liu, managing director of Rubikloud, which helps retailers realize their cloud projects.
& # 39; GEEKY, THE TECHNICAL PLATFORM & # 39;
Google began to take a serious interest in the cloud around 2016, five years after Amazon Web Services became a multi-billion dollar monster. But Google's reputation for limited customer support has attracted mostly newer companies or those with significant technological know-how.
Mike Fisher, chief technology officer at Etsy Inc., said that Google's tools for high quality AI have helped win the New York-based craft market. Fisher expects data processing algorithms to account for 25% of its server usage this year, up from 10% last year.
"We were more pleasantly surprised than expected," Fisher said of the benefits of the cloud.
The OpenX adware company recently agreed to spend at least US $ 110 million on Google Cloud over five years. Pasadena, California, has bet that its customers would be better off trading on the same infrastructure as the Google advertising system.
"It's a bit more a geek, techy platform, but we're that kind of company," said Chief Technology Officer Paul Ryan.
Chart: Battle for large cap customers – https://tmsnrt.rs/2BMyzTY
KURIAN PLAN
To attract more traditional businesses, Google Cloud will have to hold hands, said the leaders of its partners and competitors.
Kurian is well suited to the role. Two of his former colleagues said his follow-up and frank disclosure of product limitations had helped to make deals with Oracle. An early riser, Kurian impressed the staff with his meticulous preparation for the morning meetings and his reminder of the finer details of the customers' systems from previous years.
Kurian has also managed multi-billion dollar acquisitions at Oracle, including software companies BEA Systems and Taleo.
Applications could go through similar offers and internally: Google is testing product recommendation software for shopping apps, said one familiar with the project,
add to his little set of specialized tools.
Kurian told the investor conference that "you will see us continue to expand our footprint there."
(Paresh Dave reportage, additional report by Arjun Panchadar in Bengaluru, edited by Greg Mitchell and Marla Dickerson)
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