Remember when many people — including some near and dear to Gigaom — just didn’t believe that Google was serious about offering cloud services? The thinking was that it was a sideline and Google was all about search and ads — it could and would shut services down as fast as it spun them up.
Well, most of the skeptics have piped down.
Over the past few months, a steady drumbeat of new products, features and pricing — not of Amazonian proportions but still impressive — has shut up the naysayers. And Google’s investment in its infrastructure s impressive too — it spent $2.67 billion in the last quarter alone on data center goodies. IBM’s much-hyped commitment to fork over $1.2 billion in data center spending pales in comparison.
Now, a new report by Technology Business Research analyst Jillian Mirandi projects Google’s overall cloud business — Google Cloud Platform, Google App Engine, Google Compute Engine, etc. — will grow a whopping 84 percent this year to hit $1.6 billion in revenue. Google has the resources (thanks to the aforementioned search and advertising businesses) to contend with Amazon Web Services (AWS) both on price and “data center efficiencies.”
Mirandi wrote that Google:
“also has the ability to quickly innovate given the nature of its scalable technology, its world class team of developers, and its seemingly wild and crazy ideas (like floating data centers) that enable the company to leapfrog competitors if it should so choose. The ability to continuously innovate, launch and improve products has been a key differentiator for AWS thus far, and will be a differentiator for Google too, launching both companies ahead of the market, but in greater competition with each other.”
Gigaom Research’s David Linthicum agreed that Google will suck up a growing piece of a growing market — he estimates that the overall public IaaS sector will grow from about $23 billion today to $34 billion by the end of 2015. He noted that:
“AWS will continue to dominate the public IaaS space at least to 2016, and show very strong growth. However, the public IaaS space will equalize around AWS, Microsoft, and Google, with an increasing percentage of share moving to both Microsoft and Google from this year to at least 2016.”
TBR expects Google to attack the enterprise via a series of SaaS partnerships with third-party software vendors (ISVs) and managed service providers (MSPs). If it can get those players to put their applications on Google infrastructure and make it easy to try before buying, that would be an easy on-ramp. I would bet Google is working on something very similar to AWS Test Drive to facilitate this effort.
Google has some catching-up to do here: In the past 2 years, Amazon has done a good job getting enterprise software vendors like Oracle and Red Hat — many of which it competes with now — to offer their products on AWS, while working directly with enterprise customers and big systems integrators as well. And a big part of Microsoft’s Azure push aims at hundreds of thousands of existing Windows shops that might be looking to unload more of their hardware and management headaches.
To date, it’s unclear to me just how hard Google is pushing its cloud to enterprise accounts. It seems to be focusing on building out infrastructure. Still, since enterprise is where a lot of the opportunity is, it would be silly to discount Google’s intentions there. The problem is that the enterprise cloud market is a hornet’s nest of competition. Microsoft, Red Hat, HP, IBM and increasingly Amazon all have their sights set on enterprise sales. So let the games begin.
If you want to hear more about Google Cloud, check out the video of SVP Urs Hölzle’s chat at Structure 2014 last month.