Diane Greene is steering Google Cloud Platform (GCP) in the right direction to grow the business and someday possibly challenge Microsoft Azure, the widely acknowledged No. 2 cloud provider, according to several Wall Street analysts.
Google is considered to be a distant No. 3 in cloud, while Amazon is leading the pack.
Some of the financial analysts who attended the first day of the Google Cloud Next conference in San Francisco on Tuesday, issued mostly glowing reports about what they saw.
“Google is now firmly the No.3 player and this year is embracing hybrid cloud, artificial intelligence and security as key areas of differentiation,” wrote Colin Sebastian of Baird Equity Research. “Based on conversations with attendees, feedback on Google’s cloud platform is positive, although still lags a bit on service and breadth of infrastructure services.”
Analysts have their heads in the cloud
Many on Wall Street see a lot of potential in a variety of Google’s side bets, the businesses Google has entered beyond advertising. These include autonomous cars (Waymo), video-sharing (YouTube), hardware (Android, Google Home) and cloud computing.
While nobody knows for sure how big a market self-driving cars will be, cloud has already proven itself a huge source of income. The only questions that matter now are how big the market can eventually become and which cloud providers will be the most successful.
Some analysts say Greene, the cloud boss who has become one of Google’s star managers since taking over the unit in 2015, deserves positive marks for melding the cloud with artificial intelligence , signing large new customers such as Target and “embracing a hybrid-cloud strategy.”
Hybrid computing is a way to help big companies use Google’s cloud in their own data centers for tech they can’t (or won’t) move into the data centers owned by Google.
Specifically, on Tuesday, Google announced a new product called GKE On-Prem, which will run inside a customer’s private data center. This way, a company can store some of its apps and data in Google’s cloud but can also continue to store other materials on its own servers.
A $5 billion – $7 billion business
Giving customers options was a recurrent theme at the conference. Another example is the company’s decision to break out out a standalone version of Google Drive. Businesses no longer have to pay for all of G Suite to obtain Drive, the file storage system popular with those who must collaborate on projects.
“Google’s commitment to cloud was evident,” Doug Anmuth of JP Morgan wrote in a note. “We believe Google Cloud is focusing on the right areas, such as expanding partnerships with distributors, including Cisco, VMware, Salesforce, and SAP.”
Anmuth was particularly bullish on cloud’s potential revenues. Google doesn’t reveal GCP’s financial performance but the analyst suspects the unit generated $1 billion or more in revenue in the fourth quarter last year and said its likely Google will hit similar quarterly numbers in the future.
“We believe Google Cloud revenue could be in the $5 billion to $7 billion range in 2018,” he wrote.