Google Restructures, Seeking Bigger Slice of Enterprise Cloud Pie
Google Cloud’s focus on larger enterprise customers has resulted in a restructuring that will cut jobs in its cloud operations as it seeks to attract more large corporate customers while differentiating its cloud services from market leaders Amazon Web Services and Microsoft Azure.
Google (NASDAQ: GOOGL) announced Feb. 14 it was eliminating positions for a “small” but unspecified number of cloud employees. The cloud unit said it would attempt to reassign them within the company.
The restructuring comes as Amazon (NASDAQ: AMZN) and Microsoft (NASDAQ: MSFT) continue to attract large enterprise customers steadily shifting IT operations to the cloud. Fourth quarter 2019 spending on cloud infrastructure services jumped $2.8 billion over the previous quarter, according to Synergy Research Group. The increase was “by far the biggest quarterly increment the market has seen,” the market tracker noted.
Market leader AWS, with and estimated $35 billion in cloud revenues booked last year, has maintained a its grip on the public cloud market, accounting for one-third of global cloud sales.
At the same time, Amazon’s dominance has prompted fears of vendor lock-in, fueling enterprise demand for multi-cloud deployments that have benefitted rivals Microsoft, Google and emerging Chinese competitors like Alibaba (NYSE: BABA).
Synergy reported in early February that Microsoft Azure has boosted its share of the cloud market by three percentage points over the last four quarters, reaching a new high of 18 percent. The company won a hotly contested Defense Department cloud contract last fall. AWS gained a court injunction on Feb. 13 pausing the DoD cloud rollout.
Meanwhile, Google, Alibaba and China’s Tencent (OTCMKTS: TCEHY) continue to benefit from the enterprise shift to the multi-cloud hedge. All three “are substantially outpacing overall market growth and are gaining market share,” Synergy Research said, with cloud revenues jumping by at least 50 percent year-on-year.
Combined, those gains resulted in a doubling of the global cloud market since 2017. “Given secular trends in the market we will continue to see strong growth,” said John Dinsdale, chief analyst at Synergy Research.
“We will also see a continuing battle for market position between the global giants and smaller cloud providers that have a more focused geographic or service footprint."
Google’s cloud realignment also reflects its overall push to bring AI technologies to large enterprises via a combination of its cloud platform and emerging automation tools. According to research data released this week, Google is the leader among tech giants in acquisitions of AI startups.
U.K.-based RS Components ranked Google first based on its deals for startups like Deep Mind and Kaggle. Microsoft and Amazon ranked fourth and fifth, respectively, in AI startup deals over the last decade.