Google to outline what’s next for its cloud biz

• Conference dedicated to cloud begins; what surprises in store?
• Can Google shed its geekiness and speak enterprise?

ONCE again, I find myself at another cloud conference, off the back of the last I covered in November 2016, courtesy of Amazon Web Services (AWS). This week, its Google’s second iteration of its cloud conference dubbed Google Cloud Next 17.

Cloud computing is the new normal these days and not surprisingly, both vendor camps – born-in-the cloud players such as AWS, Google Inc, Salesforce.com et al and old school players like Microsoft Corp, Oracle Corp and SAP SE – are vying for market share and column space in the media.

According to Synergy Research Group, public cloud computing as a whole is growing. The US-based research firm estimates that quarterly public cloud infrastructure service revenues have now reached well over US$7 billion and is expected to continue to grow at almost 50% per year.

Public cloud providers are defined as service providers who lease out their computing, networking and storage services over the Internet to customers who do not own or do not wish to operate their own data centres. These players are also known in industry parlance as public infrastructure-as-a-service (IaaS) providers.

Synergy Research Group chief analyst John Dinsdale said new data shows that of the major players in the market, AWS is maintaining its dominant share of the burgeoning public cloud services market at over 40%, while the three main chasing cloud providers – Microsoft, Google and IBM – are gaining ground but at the expense of smaller players in the market.

Dinsdale said AWS has no intention of letting its crown slip and added that there are good reasons why AWS is staying at the forefront of the market. Noting that achieving and maintaining a leadership position in this market takes a number of factors, he claimed that serious challengers need to follow the AWS example.

“It takes takes huge ongoing investments in infrastructure, a continued expansion in the range of cloud services offered, strong credibility with the large enterprise sector, consistently strong execution, and the wholehearted and long-term backing of senior management.

“AWS is checking all of those boxes and any serious challengers need to do likewise,” he argued.

Similar trends were observed by another analyst firm Gartner. Although the spotlight was on AWS’ leadership, what’s poignant to note was that Microsoft and Google are both catching up in the scale-out, public cloud IaaS game.

The Redmond, Washington software giant has been on a resurgence path. Driven primarily by the vision and execution of its chief executive officer (CEO) Satya Nadella, Microsoft has been putting considerable resources behind its cloud offering dubbed Microsoft Azure, and as a result has seen some significant growth recently.

It’s latest Q2 earnings report, Microsoft ‘Intelligent Cloud’ – comprising both Azure cloud platform and server software – business recorded US$6.9 billion and increased 8%. The company’s server products and cloud services revenue increased 12% driven by double-digit annuity revenue growth, while its Azure revenue increased 93% with Azure compute usage more than doubling year-over-year.

Meanwhile, Google, which doesn’t break out its cloud specific revenue, noted that it “is on a terrific upswing,” according to a report by GeekWire. “In 2016 we made huge strides building out our product offerings across all areas of Google Cloud Platform,” said its CEO Sundar Pichai on an earnings conference call with analysts.

“We routinely hear from customers that we have now moved well beyond table stakes, and we have truly differentiated offerings in four key areas: data analytics and machine learning, security and privacy, tools for application development and the ability to create connected business platforms, leveraging our recent acquisition of Apigee.”

Fortune reports that Google said that revenue from its non-advertising businesses – encompassing cloud services plus G Suite (formerly Google Apps) business application software, Pixel phones, and some other products — grew 62% to US$3.4 billion in sales on an annual basis.

Critics though have a more tepid outlook for these two players. The fact that the two companies do not break out actual revenue specifically from their respective cloud businesses might obfuscate how successful the claim their cloud businesses actually are, they argue.

However, it’s noteworthy to say that this is the same argument critics made against AWS until it broke out its cloud number in 2015. Still taken as a whole, there isn’t any doubt that both Microsoft’s and Google’s respective cloud businesses are growing. The question really is by how much.

Next page: What about Google?