Why Google hasn’t taken off in the cloud yet

(Image: Google)

15 January 2016

Start-up Gennion uses sensors to provide retailers with useful information on customer store traffic. The Spain-based Internet-of-Things company processes about 16,000 events per minute from its sensors and is hoping to scale up to thousands per second soon.

Like many young companies, Gennion launched in Amazon Web Services’ cloud. But Chief Architect Mariano Navas, a 15-year coding veteran who is on his third start-up and runs a blog called Coding in Flip Flops, was not impressed. He did not want to provision AWS virtual machines, storage and load balancers. He preferred to write code, so he tried Google’s cloud platform and hasn’t gone back.

“Google is committed to price-competitiveness with AWS and Azure”

Google would love to have more “frustrated AWS customer moves to Google” success stories like Gennion. But while Google’s cloud has been attracting developers in flip flops and start-ups in droves, it’s now time for the company to start looking for bigger wins.

Google Cloud Platform is in the unique position of being one of the Big Three Infrastructure-as-a-Service (IaaS) offerings. But at the same time, it is generally considered by cloud watchers as the third-best option behind AWS and Microsoft.

To help it break out of third place, Google acquired VMware Co-founder Diane Greene’s stealthy start-up, dubbed Bebop, for $380 million and put her in charge of its Google’s cloud efforts. But even though she took VMware from niche technology provider to enterprise staple, making Google cloud a must-have for big organisations will not be easy.

If AWS could do it …
The biggest criticism against AWS used to be its lack of adoption by enterprises. It took the business years to develop the sales and engineering staff, build relationships with systems integrators and convince wary enterprise customers that the cloud is safe.

Just last year AWS seemed to turn the corner by trotting out Capital One, General Electric and Accenture as case studies at its re:Invent conference.

Google now must follow similar process, and there’s reason to think the company can succeed given that it’s got the technology and talent.

“We’re investing to be a major player in the cloud.”

Google believes it has time, too. Brian Stevens, vice president of cloud platforms at Google (and former CTO of Red Hat), estimates that less than 5% of the apps that will live in the cloud have been moved or developed there yet. “We’re investing to be a major player in the cloud,” he says, adding that Google executives will always consider the company’s cloud unit “small” until it is the largest division within Google.

For context, in 2014 Google registered $59 billion in advertising revenue. Amazon will likely surpass $8 billion in IaaS sales this year.

Google has not failed in the cloud. Gartner vice president and distinguished analyst Lydia Leong, who sizes up the market each year in her Magic Quadrant report, says Google has had “qualified success” in IaaS. It has been much more successful than a whole host of others (VMware, Verizon, Hewlett Packard Enterprise, to name a few). But, Google is “not coming anywhere close to Azure. And Azure is nowhere close to touching Amazon,” Leong says. In her estimation, Google is orders of magnitude away from AWS. But, she says it is pointed in the right direction.

Google lists businesses like Sony Music and Coca-Cola as customers.

Synergy Research Group, which tracks cloud provider market share and revenue, estimates that in the third quarter of 2015, AWS had 39% market share in the IaaS industry, with Microsoft at 11% and Google at 6%.

Google obstacles
So, why has Google not taken off in the cloud? Let us start with one of the company’s main marketing messages, that it gives customers access to the same internal services Google uses to power its own massive applications. In other words, you too can “run like Google.”

Gartner’s Leong says there have been a couple of issues with that campaign. First, there aren’t many other companies that really do have the enormous data and infrastructure needs that Google does. Those that do, such as Facebook, Twitter and Yahoo, build their own clouds. So, Google could do more to convince organisations about the value of “running like Google.”

Second, Leong says Google’s internal platform was not designed to be a set of composable web services; it was built for Google. AWS, on the other hand, built its cloud from scratch to sell it as a service.

“Externalising it in a way customers can consume has been difficult,” Leong says of Google’s undoubtedly impressive infrastructure.

Google has also suffered from targeting bleeding-edge customers, yet having less in terms of breadth of IaaS services to offer, she says. “I’ve never felt that Google did not understand the enterprise,” Leong says. “But they’ve never seemed to have the institutional will to go after it in depth.”

Google officials acknowledge that AWS had a first-mover advantage in selling IaaS cloud services, but Google for Work Vice President Carl Schachter says his company has caught up. While Google does not release revenue figures, Cloud Platform is the fastest growing enterprise product in the company’s history, he claims.

The Google cloud plan
How will new cloud chief Greene accelerate that even further? For one, Google is increasing its sales force to sell to enterprises, Schachter says.

Merely bringing on Greene is powerful, too, even if she has not made any moves yet. John Treadway, senior vice president at Cloud Technology Partners, asserts: “She has enterprise DNA.”

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