DUBLIN — One of the most profitable niches of the new internet economy is the business of cloud computing. Pioneered by Amazon, cloud computing involves tech giants essentially renting out space on their enormous fleet of servers to companies that want online processing power or storage but don’t want to invest in maintaining the hardware involved in serious server capacity. Cloud computing providers also offer on-demand software applications, database management, and other associated services. The margins in the cloud business are extremely juicy and the sector is growing fast. The space was long dominated by Amazon Web Services, which accounts for more than half of Amazon’s operating income, but Microsoft has since claimed the top spot with its enterprise cloud solutions business (depending on the metrics used to assess dominance). Google Cloud has been a laggard, with only a fraction of the revenues of the bigger players. But changes are afoot at Google, and its new boss has a battle plan in place to take the fight to Microsoft and Amazon. Even if Google Cloud only grows its market share slightly, it could have a big impact on parent company Alphabet’s bottom line. – Felicity Duncan
Google Cloud Chief’s Plan to Catch Amazon and Microsoft: Sales Reps
By Jay Greene
The new leader of Google’s cloud-computing business plans to dramatically expand its sales team, addressing one of the biggest challenges he faces as rivals Amazon.com Inc. and Microsoft Corp. race ahead in the market.
___STEADY_PAYWALL___
In his first public comments since becoming head of Google Cloud in November, Thomas Kurian said the Alphabet Inc. business had already been ramping up spending on sales and distribution before his arrival. He plans to move faster.
“You will see us further accelerate the growth, even faster than we had to date,” said Mr. Kurian, who left Oracle Corp. as president of product development in September. He was speaking Tuesday at Goldman Sachs & Co.’s technology conference in San Francisco.
While Google has long offered cloud technology, it has seen Amazon and Microsoft surge ahead to become the leaders in providing computing power and storage services for rent over the web. Those companies have robust sales and service staffs that large corporate customers demand to support their technology needs, an area where Google has trailed, analysts have said.
Alphabet doesn’t break out financial information on Google Cloud. In its most recent quarter, it said other revenues, which include the cloud business, grew 31% to $6.49bn. Sundar Pichai, chief executive of Alphabet’s Google unit, told analysts the cloud unit more than doubled its number of deals valued at more than $1 million and its number of multiyear contracts signed.
Even so, Google Cloud is losing ground to Microsoft as the companies chase Amazon in a market that research firm Gartner Inc. estimates hit $32.5bn last year. Google Cloud’s share of the world-wide cloud-infrastructure market grew from 2.7% to 3.3% in 2017, the most recent period Gartner has tallied. At the same time, Microsoft’s share grew from 8.7% to 13.3%. Amazon lost share, but still dominated with 51.8% of the market in 2017, down from 53.7% a year earlier.
Google needs a team that understands how to engage with large corporate customers, Gartner analyst Lydia Leong said.
To catch up, Mr. Kurian is emulating a piece of his former employer’s strategy. Oracle built a massive sales staff over decades that holds specific expertise in various industries. At Google, Mr. Kurian said he plans to boost market specialisation as well, so sales reps who talk to financial institutions “can talk the language of banking,” he said.
“We are hiring some of the best talent from around the industry to grow our sales organisation, and you will see us competing much more aggressively as we go forward,” he said.
Google’s success has largely come from serving “digital-native” companies—businesses that were born in the internet era and never built their own data centres. Mr. Kurian said he wants to improve Google’s ability to address the needs of companies with legacy systems.
“A lot of our focus as we go forward is making sure that our sales organisation has the background and the ability to sell to large, more traditional companies,” Mr. Kurian said.
Write to Jay Greene at [email protected]
