It may well have done more to push forward cloud-native computing techniques than any other company on the planet, but Google Cloud continues to struggle to turn that engineering prowess into an enterprise toolkit to rival Amazon Web Services (AWS) and Microsoft Azure.
The latest figures from Synergy Research Group, which tracks the cloud infrastructure market, shows AWS as the clear market leader with 33 per cent of global spend, Azure next at 20 per cent, and Google Cloud lagging behind at 10 per cent.
Why? “AWS had such a huge head start and Microsoft already has a large captive audience of customers that know and understand Microsoft; Google had neither of those things,” said Raj Bala, a senior analyst at Gartner.
Since being appointed Google Cloud’s CEO in November 2018, ex-Oracle executive Thomas Kurian has been tasked with running down AWS and Azure, initially by focusing on aggressively growing Google Cloud’s customer-facing functions, building out its partner ecosystem, and simplifying its enterprise products.
However, almost three years into the project, the market share numbers remain stubbornly locked in. Can Google Cloud close the gap?
Google Cloud is staying in the race
The good news for Google Cloud: There is still plenty of market share to go around. Google Cloud is an $18 billion-a-year business in its own right (a figure that includes Google’s collaboration tools, among other things), and it continues to grow its quarterly revenue at about 50 per cent year over year.
“I think they are on the right track and this will continue to be a three-horse race,” said IDC analyst Carla Arend. “Everyone realised during the pandemic that they have to go into the cloud -- even smaller organisations that are often Microsoft customers, so it is important to position against Microsoft there, because it is often the default."
Google’s cloud division also managed to cut its operating loss from $1.4 billion in Q2 2020 to $591 million in Q2 2021. But if it truly wants to shake its distant no.3 position, the gap is going to be hard, and expensive, to close.
Google intends to try. “We will continue to increase the pace of investment. And that’s true in headcount, it’s true with compute, sales and marketing, really across the board,” Alphabet CFO Ruth Porat told analysts during the company’s Q2 earnings call.
Where are the Google Cloud enterprise customers?
Google bundles its customer numbers and results for Google Cloud with other cloud services like Workspace, so it is difficult to ascertain the true scale of its enterprise footprint. What we do know is there is a lack of big-ticket, public examples of more traditional companies committing to shifting their business applications onto Google Cloud infrastructure wholesale, in the way many commit to AWS or Azure.
While companies like 20th Century Fox and American Eagle continue to turn to Google Cloud specifically for advanced AI and machine learning services, there are still very few companies that have gone all-in with the vendor in the way Morgan Stanley has with Microsoft or as McDonald’s did with AWS, for example.
The automaker Ford made a splashy six-year strategic partnership with Google Cloud in early 2021, but the deal focuses on use of the Android operating system in cars, cloud data storage, greenfield application development, artificial intelligence, and data analytics workloads, rather than major enterprise application migrations. Ford is also a customer of AWS and Azure.
Deutsche Bank notably committed to a 10-year deal with Google Cloud in 2020 as part of a multivendor cloud strategy, including migrating “applications at the heart of our IT,” Deutsche Bank’s chief technology, data, and innovation officer Bernd Leukert told Bloomberg at the time. And travel technology firm Sabre, which also committed to a 10-year preferred cloud partnership with Google Cloud in 2020.
These are known in the industry as lighthouse customers, and they are key to Google Cloud’s efforts to convince others to migrate onto their platform. But the few enterprise customers Google Cloud can shout about are reportedly not yet spending what they initially committed to, according to reports from The Information.
“It comes down to risk,” said Will Wigmore, former head of enterprise architecture at the logistics giant Maersk. “In terms of the overall profile of the risk, if I take a CIO’s point of view here, it’s not just about cost, you have to trade off cost, risk, and your in-house capability.” For many enterprises, AWS or Azure simply profile as a safer pair of hands, thanks to their extended track records and extensive partner and support networks.
Google Cloud was also notable by its absence from the competition for one of the biggest available cloud contracts of the past decade, the now-abandoned $10 billion US Defense Department’s Joint Enterprise Defense Infrastructure (JEDI) contract, which fiercely pitted AWS, Microsoft, and Oracle against one another.
Google dropped out of the running early on, after employees objected. “We are not bidding on the JEDI contract because, first, we couldn’t be assured that it would align with our AI principles,” a Google spokesperson told Bloomberg. “And second, we determined that there were portions of the contract that were out of scope with our current government certifications.”
However, Google Cloud did sign a smaller deal in 2020 with the Defense Deparment’s Defense Innovation Unit (DIU).
Google is struggling to become part of the multi-cloud puzzle
Without the benefit of a clean slate to start from, the reality for most enterprises is adoption of hybrid cloud and multi-cloud. But here too Google Cloud often appears on the margins of these strategies rather than as the centrepiece.
Take the oil and gas giant BP, which is pursuing an aggressive dual-cloud strategy with AWS and Azure. “We find having both really helps us, because we have choice. We think both keep each other honest and we keep seeing each leap over the other,” Stewart Fry, BP’s global vice president of enterprise IT services and digital platforms, told Computerworld UK in 2019.
The only vendor Fry wouldn’t allow engineers to adopt? Google Cloud.
British retail group Sainsbury’s is another multi-cloud organisation, using predominantly AWS infrastructure for its e-commerce platforms and Azure for its back-office functions. It has experimented with Google Cloud in the past, but primarily for data-intensive workloads only.
To date, group CIO Phil Jordan sees Azure and AWS as far more effective business-to-business vendors than Google Cloud, with a better understanding of enterprise challenges and an ability to engage with CIOs and equivalent decision makers. “[Google Cloud] needs to build rapport, relationships, and trust, and learn how to sell into the enterprise,” he told InfoWorld.
Google Cloud’s people problems
While its technology capabilities and pricing are largely on a par with its rivals, being late to market means Google has long had to play catchup in the cloud talent stakes, with Kurian committing early on to rapidly increasing the scale of the vendor’s sales and post-sales teams to help attract new enterprise customers.
Kurian told the Wall Street Journal in 2019 that Google’s cloud sales team is around one-tenth to one-fifteenth the size of the sales forces at AWS and Microsoft Azure.
“The two things customers tell us are: We love your technology. But we don’t have enough people from Google to assist us with your understanding of the technology and your understanding of our industry,” the CEO said during the Google Cloud Next conference that year.
This has since manifested at Google Cloud as a hiring spree and as more of an industry vertical focus, specifically targeting companies in retail, healthcare, financial services, manufacturing, and media and entertainment. It is also looking to better engage with the C-suite at these companies through the Office of the CTO, a group of former enterprise CTOs who can engage with industry to better translate Google Cloud services to their specific problems.
While those investments are clearly key for Google Cloud, they aren’t a panacea, with some customers complaining about the quality of their reps. “Some Gartner clients have a poor experience dealing with [Google Cloud] after committing to use the platform. Much of this stems from the rapid growth of [Google Cloud] and the organisational immaturity that results,” the analyst firm noted in its latest Magic Quadrant report.
“If you want to get these late majority adopters to embrace the cloud in general and win them over to your cloud, you have to speak their language,” IDC’s Arend said.
“It is about getting those late majority customers to choose Google, because the digital natives have already made their choice. Now we see a big wave of late adopters coming to market, which aren’t as clear on how to move forward. That is the next chapter of cloud adoption.” And where Google Cloud has a shot to gain customers.
Sainsbury’s Jordan is one such customer, and for him, “It comes down to us being willing and prepared to place bets on [Google Cloud] over others and, like anything with the enterprise, that comes down to a sales process and a high-context engagement that revolves around building trust and business problem solving.”
Still, Jordan is clear on the challenge Google Cloud faces on this front: “That is the next big race, and Amazon will come with a strong footprint and better intimacy with what business wants; Microsoft, the same. Google has neither the footprint nor that intimacy, and they need to build both.”
The ‘run like Google’ problem
For a long time, Google Cloud marketed itself as the cloud provider powering some of the biggest workloads on the internet: Google Search, Google Ads, and YouTube. “Google used to have the slogan ‘Run Like Google.’ But most organisations aren’t really much like Google, to be frank,” RedMonk analyst James Governor wrote in a 2018 blog post.
While that messaging resonated with key early customers like the streaming giant Spotify, which completed its all-in migration to Google Cloud in 2018, social networking company Snapchat, and online marketplace Etsy, the idea of Google scale can be more intimidating than enticing for many of those late majority companies with pesky technical debt to contend with.
“Not surprisingly, we’ve found success with customers that were similar to Google. When I first engaged with Snapchat, I believe they were fewer than 10 people, but the scale and automation they were looking for were not unlike what we knew in other parts of Google,” wrote Amir Hermelin, former product management lead for cloud at Google, in a 2018 Medium post. “This has long been Google Cloud’s unique selling point: that you too can run like Google. The problem is, most companies aren’t Google, and the vendor may have taken too long to realise that.”
The fact that game-changing open source technologies like the container orchestration tool Kubernetes, the machine learning framework TensorFlow, and the concept of zero trust security emerged out of Google, as well as Google’s proven track record of running services at the largest possible scale, means engineers often want to work with Google.
However, Google has so far failed to truly take advantage of this positioning, with its rivals also successfully monetising managed Kubernetes services, and TensorFlow continuing to rapidly fall behind Facebook’s more accessible PyTorch framework.
One feather in Google Cloud’s cap is that developers like using its platform, with 60 per cent of respondents to Stack Overflow’s 2021 developer survey saying they love the platform, which was on a par with Azure and trailed only AWS when it came to cloud platform satisfaction.
The problem? “Those people don’t tend to make enterprise buying decisions,” said former Maersk exec Wigmore.
Now, under CEO Kurian, Google Cloud has subtly shifted its message to one of “bringing the cloud to you,” instead of trying to make everyone run the Google way.
“This point may not sound that telling at first, but Google has historically had a reputation for being somewhat high-handed when dealing with customers,” RedMonk’s Governor wrote. “Google as the best listener? That’s a very different Google. That’s a Google that’s going to win a lot more enterprise deals.”
A more pragmatic Google Cloud?
This high-handed attitude has long filtered through to a lack of focus from Google Cloud on effective onramps for customers moving from more traditional setups, both in terms of soft consulting and hard migration solutions.
Announced in 2019, Anthos has emerged as a key cog in Google Cloud’s more pragmatic strategy, by promising customers the ability to run their workloads anywhere, be it on-premises, in the Google Cloud, and, crucially, in other major public clouds, including AWS and Azure.
Still, “Google essentially has very little when it comes to hybrid offerings,” Gartner’s Bala said, “AWS has Outposts and Azure has Stack. Google has Anthos, which is largely Kubernetes, so there is some work to do in the hybrid space.”
IDC’s Arend sees Anthos as part of a broader attempt by Google Cloud to meet tricky enterprise customers where they need to be. “Thomas Kurian has shifted Google Cloud from being a container-first company -- because that is how they run -- to being more focused on virtual machines,” she said.
“The technology areas that might not be at the cutting edge are the bread-and-butter ones for more enterprises. Google Cloud also has a great story around their networking capabilities, which is super critical for enterprise workloads where latency will be a key obstacle.”
Google Cloud’s SAP opening
One area where Kurian’s enterprise focus is starting to pay dividends is with SAP customers, especially since SAP stepped back from its Embrace preferred cloud partnership with Azure earlier in 2021, instead encouraging customers to host their next generation S/4HANA ERP platform wherever they prefer.
This created a huge opening for Google Cloud, which hired the ex-SAP cloud leader Robert Enslin -- who worked with Deutsche Bank’s chief technology, data, and innovation officer Bernd Leukert at SAP for his entire career between 2005 and 2019 -- to lead global sales in 2019.
Since then, PayPal, Johnson Controls, Whirlpool, and British automotive distributor Inchcape have decided to move their SAP workloads onto Google Cloud infrastructure. “The company is winning business for its core competencies, such as data and analytics, but [Google Cloud] is also gaining ground with traditional enterprise workloads such as SAP,” Gartner noted in its latest Magic Quadrant report.
Can Google Cloud close the gap?
The trillion-dollar question is if any of this can move the needle for Google Cloud in what is a viciously competitive market.
John Dinsdale, chief analyst at Synergy Research, likes what he is seeing in the numbers. “Google has built a multi-billion-dollar business that is growing by around 50 per cent a year and is operating in a market that will continue to grow strongly for many years to come. And it is increasing its market share. What is not to like with that picture?” he asked.
Others, as Platformonomics analyst Charles Fitzgerald wrote, are less sure. “Google Cloud is a hobby at a company that gets easily bored with noncore businesses, and they’re becoming very ‘we have that too,’ which is a poor strategy for a distant no.3. It is especially disappointing given their past distinctiveness. ‘Oracle but with more colours in the logo’ just isn’t very interesting.”
Many of Kurian’s moves in up-skilling the organisation, building bridges with partners and customers, and simplifying the company’s solutions are clearly starting to pay dividends. Credit Kurian for putting Google Cloud in a better position to compete for the next wave of cloud adopters. But the big-ticket deals have yet to filter through.
If they don’t, competing with the scale of AWS and entrenched market dominance of Microsoft is going to present an Everest-scale route to the cloud market summit for the no.3 cloud vendor.