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Google’s new cloud-boss has a big task to catch rivals, Reuters data show

SAN FRANCISCO (Reuters) – Google has a new cloud-computing boss and big ambitions to someday make more sales of that company than of the advertising.

A Google logo is seen at headquarters in Mountain View, California, V. S., November 1, 2018. REUTERS/ Stephen Lam

Now comes the hard part: winning over big-spending customers.

Alphabet, Inc. ‘s cloud computing division remains a distant third behind Amazon.com Inc Microsoft Corp in terms of global revenue, according to analysts’ estimates. A few large companies manage their data on Google’s servers. But Google has nowhere near the large customer base of Amazon, according to a new Reuters analysis of the company, statutory registrations.

Companies are not required to make their cloud suppliers. Reuters found 311 from approximately 5,000 worldwide that did this in 2018. While not complete, the data give a picture of Google’s challenge.

And thirty-five of these companies with the name Google as a cloud provider. The largest market capitalization were oil large Total SA, and the bank is HSBC Holdings Plc.

Image: Amazon’s cloud dominance – tmsnrt.rs/2BMpryP

Amazon Web Services led with 227 clients, including travel agency Expedia Group Inc and industrials giant Siemens AG. Microsoft’s Azure cloud had 69 companies, among them weapons maker Axon Enterprise Inc and business information firm of Dun & Bradstreet Co.

Thirty four of the above companies have multiple clouds.

The previously untracked data show of the work of Thomas Kurian, who weeks on the job as a senior vice president of Google Cloud. Kurian has vowed to double down, where Google has seen promising results. Specifically, he plans to target governments and top companies in the retail, manufacturing, healthcare, media and finance.

“Much of our focus as we go forward is to ensure that our sales organization is the background, and the ability to sell to large, more traditional companies,” Kurian said at a Goldman Sachs investor conference last week. “There is a huge hunger in those companies to consider Google.”

Google declined to comment or Kurian available for interview.

Image: Why cloud vendors revealed – tmsnrt.rs/2BKFoFP

People familiar with his plans, said he was looking to reform his division culture. An important part is to develop or acquire, easy-to-use, industry-specific business applications, an area that Amazon and Microsoft does not dominate.

“It’s about the on-ramp to their cloud,” said Daniel Ives, a New York-based financial analyst following the cloud industry for Wedbush Securities. “The most important way to get that is by means of applications.”

A 22-year veteran of Oracle Corp., Kurian gave the database company new life as the product leader behind the movement to sell cloud services. His reward is all the make potential customers reconsider of Google, said Ray Wang, founder of Constellation Research, Monte Vista, Calif.-based company that helps companies negotiating cloud deals.

“They have worked with him,” Wang said. “There is a trust factor that was not there before.”

Kurian also should reassure some investors are misled by Google’s cloud ambitions: Diversification of income outside advertising is a plus, but is not cheap.

Google, Microsoft and Amazon combined nearly $53 billion in capital expenditure last year, driven by data center projects to the house of their clouds.

With a gross margin of 20 percent or less, the selling of cloud storage or tool for which customers need specialized staff is less interesting for a small supplier, industry experts said. But the margins on the type of software Kurian chance to offer even the 60 percent of Google’s ad business.

“The next wave of growth will have to come from the heavy hitting applications,” said Kerry Liu, chief executive of Rubikloud, which helps retailers with cloud projects.

‘GEEKY, AND TECHNICAL PLATFORM’

Google was serious about the cloud around 2016, five years after Amazon Web Services has grown to become a multibillion-dollar behemoth. But Google’s reputation for a limited customer service has attracted usually newer companies or those with significant technical know-how.

Mike Fisher, Etsy, Inc. ‘s chief technology officer, said Google’s superior AI tools to help win over the New York-based crafts market. Fisher expects to data-crunching algorithms to account for 25 percent of the server to use this year, an increase of 10 percent last year.

“We have more surprises than we thought,” Fisher said of the cloud benefits.

Advertising software firm OpenX has recently agreed to at least $110 million on Google Cloud about five years. The Pasadena, Calif. firm commitment of its customers to take advantage of the trading on the same infrastructure as Google’s ads system.

“It’s a bit more of a geeky, and technical platform, but we are that kind of company,” said Chief Technology Officer Paul Ryan.

Image: Battle for large-cap clients – tmsnrt.rs/2BMyzTY

KURIAN PLAN

To attract more traditional corporate clients, Google Cloud need to have a number of duties of assistance, and leadership to its partners and rivals said.

Kurian is suitable for the role. Two of his former colleagues said that his follow-up, and candid disclosures about the product limitations helped seal deals in Oracle. An early bird, Kurian impressed the staff with his meticulous preparation for the morning meetings as well as his recall of the smallest details of clients ‘ systems of the previous years.

Kurian also managed billions of dollars in acquisitions at Oracle, including the acquisitions of software companies BEA Systems and Taleo.

Applications could come through similar deals and internal: Google is testing the product recommendation software for shopping apps, a person familiar with the project said,

to add to the set of specialized tools.

Kurian told the investor conference that “you will see us continue to expand our footprint.”

Reporting by Paresh Dave; Additional reporting by Arjuna Panchadar in Bengaluru; Editing by Greg Mitchell and Marla Dickerson

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