Google's Billion-Dollar Cloud Business Takes On AWS, Azure With AI, Machine Learning

Google in February did something it's never done before: It told the world just how big its Google Cloud business really is. The search giant said its six-year-old cloud platform and its popular cloud-based collaboration portfolio, G-Suite, is now a $1 billion per quarter business.

To sustain that growth, Google is leaning more heavily on its capabilities in artificial intelligence (AI), and machine learning. To pull in bigger deals, Google needs solution providers to help them reach businesses where AI and machine learning will matter most.

Agosto, a Minneapolis-based Google partner, is seeing an increase in the number of Fortune 500 companies that are looking at Google as a feature-by-feature competitor of AWS and Microsoft. These companies are starting to see beyond Google's popular email platform and collaboration offerings, according to Aric Bandy, president of Agosto.

[Related: Google CEO: The Google Cloud Platform Is 'A Billion-Dollar Per Quarter Business']

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Google Cloud has become more popular with solution providers in the last two years. "Anytime any customer talks cloud, they talk AWS, Azure, and Google. It wasn't like before when it was only Amazon, or for a short while, it was just Amazon and Microsoft; now it's always all three. I would say that wasn't the case 18 months ago," said Paul Vallee, president, and CEO of Ottawa-based Pythian, a solution provider that partners with AWS, Azure, and Google.

More companies are running applications in Google Cloud than ever before, according to cloud management software provider RightScale's "2018 State Of The Cloud Report." The report, which surveyed 997 respondents across multiple industries and company sizes, said the percentage of respondents running applications on the Google Cloud platform rose 3 percent in 2018 (to 18 percent from 15 percent, in 2017). The survey indicated that 38 percent of respondents are experimenting or are planning to use Google this year.

Google has had feature parity for some time with competing cloud giants AWS and Microsoft, but end customers have only recently begun to notice. The company hasn't done a great job of telling its enterprise story, according to partners.

Now, it has something to talk about. Google's portfolio of artificial intelligence (AI) and machine learning technologies are standing out and giving the cloud provider a competitive advantage, according to partners. "When a company is focused on data-centric workloads that are intended to compete on the analytics side, that's where Google is distinguishing itself the most," Pythian's Vallee said.

Google, a self-proclaimed AI-first company, has custom-designed silicon chips within its data centers specifically to handle machine learning. During the company's latest earnings call, Google CEO Sundar Pichai said that Google had given Google Cloud customers access to AutoML in January, its suite of machine learning products. As of March, nearly 13,000 customers and partners had already signed up to give the tools a test run, Rajen Sheth, senior director of product management for Google and leader of the company's cloud AI and machine learning team told CRN.

But many users don't have the skillset to fully take advantage of AI and machine learning. Google recognizes that its partner base is well-equipped to use its capabilities to deliver tailored solutions to specific verticals, and Google plans on relying on these solution providers, Sheth said.

"Partners are absolutely crucial, probably more so here than for our other cloud technologies because partners have domain expertise that we don't have. Some partners can go right to the [machine learning] platform and build their own models, and this really opens the door for partners to do some really interesting things and solve particular business problems using machine learning for their customers," he said.

Google is substantially increasing its engineering and technical feet on the street, bringing on new hires that can work directly with solution providers on strategic accounts. Investing in a rich partner ecosystem will ultimately mean more cohesive cloud solutions for business customers that can better rival Amazon Web Services and Microsoft Azure, Vallee said.

"Google knows that customers need help building a solution and making it functional for their business, and they need our help," he said.

In addition to new resources for the channel, Google also wants to bring on more system integrator and solution provider partners, Sheth said.

"I think where the rubber meets the road is solving business problems with machine learning. In my mind, the only way we are going to scale our [AI and machine learning strategy] is through partners," he added.

However, Google also needs to better advocate for its strengths, Agosto's Bandy said. "The industry is used to big vendors laying a claim in the market," he said. "I'm starting to see that from [Google], and I'm curious to see over the course of the next six to nine months whether they are going to continue to talk more about big customers, use cases, and adoption."

Google’s ability to keep partners happy is more important than ever, and its continued investment in AI and machine learning will contribute to those long-term, big company wins.

"It's evidence that the cloud companies have realized that the lifetime value of a customer selecting their cloud is so large that any amount of money they can reasonably spend to win in that market pays them back," Vallee added.

Google's Pichai in February said that the strength of Google's products and the overall value of working with a company like Google for cloud services has become "increasingly clear" to both channel partners and end customers alike.

"Google Cloud Platform and G-Suite have reached meaningful scale … The number of [customer] deals worth over a million dollars across all cloud products have more than tripled from 2016 to 2017," Pichai said. "We believe that Google Cloud platform, based on publicly reported data for the twelve months ending December 2017, is the fastest growing major public cloud provider in the world."

Up until last quarter, Alphabet, Google's parent company, never broke out specific financial information around its cloud platform. However, the company has been reporting some cloud revenue in a roundabout way. For example, Google has been sharing numbers for its "other revenues" category, which includes cloud, Google Play, and hardware. In Q4 2017, this segment rose an impressive $4.69 billion, up from $3.40 billion during Q4 2016.

Divulging financial information regarding cloud during its latest earnings call is signaling to partners and customers that cloud is a significant part of the company's revenue, said Bandy, of Agosto.

"I think their strategy is really about playing for keeps," Bandy said. "For the company to talk about Google Cloud during earnings is really a tipping point. Google is stating to the market loud and clear that it is committing to becoming a significant competitor in this space."