Google’s big cloud move sharpens rivalry with Amazon, Microsoft – USA TODAY
SAN FRANCISCO âÂ In a major push to gain momentumÂ inÂ the boomingÂ cloud computing business,Â Google has named VMware co-founder and tech industry veteran Diane Greene as chief of that business.
Google Chief Executive Sundar Pichai made the announcement Thursday in a blog post.
“Only a tiny fraction of the worldâs data is currently in the cloud âÂ most businesses and applications arenât cloud-based yet,”Â Pichai said. âThis is an important and fast-growing area for Google and weâre investing in the future.”
Google is buying Greene’s start-up Bebop Technologies, whichÂ helps make it easier to build and maintain enterprise applications.Â Greene, the former VMware chief executive who sits on theÂ board of directors of Google parent company Alphabet, will bring her Bebop team to Google to join in the effort to take market share from cloud leader Amazon. Google isÂ consolidating its cloud businesses into a single group that Greene will lead.
“Cloud computing is revolutionizing the way people live and work, and there is no better person to lead this important area,” Pichai said.
Google isn’t just facing stiff competition fromÂ Amazon, which is the leader in cloud services. Microsoft is looking to ramp up its cloud computing business and IBM is also a formidable player.
Google goes after market leaders
“This is a salvo across the bow of every competitor that Google is serious as they move forward into this new frontier, focusing their resources on taking advantage of the huge market opportunity that cloud offers,” Forrester Research analyst Rob Stroud said.
“Right now Amazon is the clear leader. We have also seen Microsoft Azure in the last period start to do well and growing market share and of course you have IBM very engaged in the market as well and being successful,” Stroud said. “Google is after those three market leaders for sure right now. They have the cash to compete but more important…they have the household name.”
Google will have to differentiate itself from Amazon and other rivals, Stroud said, but will have an entree to major corporations through itsÂ apps business, which counts Fortune 500 companies as customers.
Urs HÃ¶lzle, Google’s senior vice president of infrastructure,Â said this weekÂ at a tech conference that the company’s cloud revenues could surpass advertising revenue in five years.
“The goal is for us to talk about Google as a cloud company by 2020,” HÃ¶lzle said on stage at the Structure conference in San Francisco.
Cloud services has become a gilded lining for Amazon. The Internet giant for yearsÂ has struggled with profitability as a retailer. But Amazon Web Services mints money.Â Amazon Web ServicesÂ division reported third-quarter revenue of $2.08Â billion and $521 million in profit. That was a 78% jump in revenue and a 432% jump in profit over the same quarter a year earlier.
Microsoft also got a big boost from booming demand for its cloud products in the third quarter. Chief Executive Satya Nadella has shifted Microsoft’s focus to software and cloud services as demand for the Windows operating system has slowed.
“Cloud continues to be theÂ Rock of Gibraltar for Microsoft,”Â Daniel Ives ofÂ FBR Capital Markets said after Microsoft reported third-quarter results.
Advertising generates nearlyÂ 90%Â of revenue for Alphabet. Cloud and other businesses are categorized as “other” revenue.
The appointment of Greene “certainly suggests Google is taking its cloud opportunity extremely seriously, and that it wants to create something thatâs truly enterprise-grade,” said Jan Dawson, chief analyst with Jackdaw Research. “The next big question is whether Google will start to report more detail about its cloud and enterprise businesses going forward âÂ both Amazon and Microsoft have provided a lot more transparency over their respective cloud businesses in the last few months, but Google has stayed more or less silent on the scale and performance of its cloud business.”
Follow USA TODAY senior technology writer Jessica GuynnÂ @jguynn