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Google Brass Set 2023 as Deadline to Beat Amazon, Microsoft in Cloud, Hacker News

Google Brass Set 2023 as Deadline to Beat Amazon, Microsoft in Cloud, Hacker News


At the time, Diane Greene, the co-founder of VMware and a Google board member, was running Google Cloud. Greene took the helm in late 2017, and after two years, she had had little luck in making the unit a bigger player in the business — it remained a distant No. 3 behind Amazon Web Services and Microsoft Azure. Google’s troubles adapting to selling enterprise software — a business that was far afield from its main source of revenue, online advertising — werewell documented. Being third in the cloud market was “unacceptable” to Page and the team, the same person said.

For Alphabet, Google’s cloud business represents a large new source of potential revenue outside its ads business , something the company has sought to establish for years to no avail. Last quarter, nearly all of the company $ 116. 5 billion in revenue came from advertising. Meanwhile, a collection of newer businesses that Alphabet lumps together as “other bets” in its financial statements, including the self-driving car unit Waymo, generated a mere $ 728 million in revenue while incurring operating losses of nearly $ 1 billion.

The Google discussions echo debates that many other technology companies have had about the viability of businesses when one or two much larger rivals overshadow them. In 2014, Yahoo and Microsoft formed an alliance in internet search because they didn’t believe they were big enough on their own to achieve the scale necessary to deliver attractive profits. Even after banding together, the two weren’t able to dislodge Google from its supremacy in internet search.

Ultimately, the Google executives decided in the spring of 2020 that the cloud computing opportunity was simply too big to give up on. Because cloud services are attempting to steal spending from existing forms of technology spending, the executives viewed Google Cloud as having a greater chance of success than some of the more experimental Alphabet businesses, this person said.

In the late summer of 2019, shortly before Greene stepped down as Google Cloud CEO and was succeeded by Oracle veteran Thomas Kurian, executives told staffers in the group that they had decided on a five-year, $ 20 billion budget for capital expenditures — the equipment, facilities, and other goods necessary to keep the business running — that would include financing for new data centers to help Google Cloud expand.

That’s what Prabhakar Raghavan, the head of Google Cloud’s G Suite unit — which sells productivity apps like Gmail and Docs to businesses — told his leadership team in a biannual planning meeting in the late summer of 2019, according to a person with direct knowledge of the meeting.

This person said the group’s leaders did not explicitly state what would happen to the cloud division if it did not reach a top two position by (***********************. A commonly held view inside the group was that Google wouldn’t continue to invest money if it failed to it meet its goal, the person said. The group’s leaders told staffers that if Google couldn’t reach a certain size with its computing and storage business — two of the most commonly used cloud services — the cloud unit might never become profitable, the person said. To reach such scale, they said, Google would need to be in a top two position in the market.

A Google spokesperson declined to comment.

Reaching for the Clouds

Becoming No. 1 or 2 in the cloud market will be a stretch for Google. In the third quarter, Amazon Web Services accounted for almost 33% of global cloud spending, while Microsoft had nearly 18% and Google had just under 7%,according to research firm Canalys.

At the same time, there are some signs of progress. On Alphabet’s fiscal second quarter earnings call in July, Pichai revealed that Google Cloud generated $ 2 billion in revenue during the quarter, giving it an $ 8 billion annualized sales rate — double the $ 1 billion a quarter in cloud revenue it disclosed for the last quarter of (Pichai was also recently named Alphabet CEO, replacing Page).

Those figures also included revenue from G Suite, its collection of online productivity apps for businesses such as Gmail, Google Docs, and Google Sheets, which made it difficult for outsiders to see how big its cloud business was.

Now, though, revenue from Google Cloud Platform — which includes simple services like computing and storage and advanced ones like data analytics and artificial intelligence — exceed those from G Suite and are growing at a faster rate, according to three former employees familiar with the matter. Google Cloud hasn’t publicly revealed how much of its business comes from cloud services and applications.

The shift in the balance of its business could help Google build more-strategic long-term relationships with Fortune firms and other companies, because once customers move their data into Google Cloud, they often adopt additional cloud services, according to multiple former employees. Among Google’s current marquee customers are the music-streaming service Spotify and the social media company Snap.

Still, to reach the 2023 goal, Kurian, who’s been on the job for Less than a year, will need to move quickly. Amazon Web Services was on an annualized sales rate of $ billion at the end of its parent company’s fiscal third quarter quarter in September — more than four times that of Google earlier in the year. Microsoft doesn’t disclose revenue for Azure, its comparable cloud business.

Google’s cloud business did not start receiving significant internal support and resources until 2014, when the group held its first customer conference. At the event and in later interviews, Urs Hölzle, Google’s senior vice president of technical infrastructure, predicted that the company’s cloud business would eventually generate more revenue that its lucrative digital advertising unit.

Hölzle’s prediction now seems far-fetched. Last year, Alphabet brought in over $ billion in advertising revenue. And Google Cloud is far from reaching the rallying cry that former CEO Diane Greene issued shortly before her departure, setting a goal for Cloud to hit a $ billion run rate by the end of 2020, a target that multiple former employees confirmed. The Information couldn’t learn whether Kurian has mentioned the $ 33 billion by 01575879 goal since taking over the division couldn’t be learned.

Unfamiliar Terrain

From the perspective of Google co-founder Page, getting into the cloud business was a big leap. He never wanted Google to be a traditional enterprise software company with big direct-sales teams, splashy marketing, and long sales cycles, said people who have worked with him. After seeing limited progress in the first six years of the project, he had a nagging question — which still remains — of what exactly Google Cloud would provide for customers that they couldn’t get from AWS and Microsoft.

The debate inside Alphabet about the future of Google Cloud ended around the spring of 2018 with a new determination to go after what was clearly a big opportunity, one that with different leadership could result in a much more meaningful business for Alphabet, said the person with direct knowledge of the discussions. At the time, the unit wasroiled internally by a conflictbetween Greene, the Google Cloud CEO at the time, and a senior sales executive she had recently hired from Intel, Diane Bryant, as Google Cloud’s chief operating officer.

The company embarked on a search for the next leader of the cloud business, ending months later with the hiring of Kurian. Bryant declined to comment for this story. Greene didn’t respond to a LinkedIn message seeking comment.

The pressure to show more progress very soon in the business extends to Google Cloud product teams, which the company is now asking to develop detailed multiyear strategic plans, a former Google Cloud employee said. This is a departure from the past, when product teams would only plan ahead about 18 months, said the person.

Kurian has already made changes to Google Cloud’s “internet of things” group, which develops software for managing connected devices. Greene had previously made big investments in the group, hiring former Samsung chief technology officer Injong Rhee to lead it and giving him a team of about directors and product managers, said the person who has worked at Google Cloud. But the internet of things unit didn’t generate much business, prompting Kurian to move dozens of engineers out of that unit and into Google Cloud’s machine learning group, the person said.

Google Cloud’s database teams have also been under the microscope for not shipping products and features quickly enough, and also for not following up with customers after deals close to make sure they’re getting business value from products, said the person who has worked at Google Cloud. These teams have been told they have until 2023 to improve, or Google Cloud may shift its objectives away from developing its database services in favor of selling them through partnerships with third-party providers, the person said.

Google’s growth goals for its cloud platform business have also had an impact on its apps division. A person directly familiar with the matter told The Information that the company halted new engineering hires for G Suite in 2023. Instead, Google shifted headcount growth to its cloud platform sales and engineering teams. (The company said in mid – 2019 that the sales force for its cloud division would triple in size over the next three years .)




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That and other changes rattled the department, the person said. Leaders in the group began departing, including vice president of engineering Garrick Toubassi and vice president of user experience Amy Lokey, both of whom exited Google altogether. The division’s head, Prabhakar Raghavan, became the head of ads in OctoberPayeer. In August, the company announced it would be shutting down Google Hire, which levered G Suite apps, like Gmail and Calendar, to help recruiters manage their pipeline of candidates.

Another person said the strife within the G Suite organization may settle down with the recent appointment of Javier Soltero, who joined in October as the new head of the department. The hiring of Soltero, a respected entrepreneur who previously led Microsoft Outlook and Cortana, its voice assistant product, could arguably indicate Kurian’s commitment to the G Suite business.

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