Google and IBM still trying desperately to move cloud market share needle

When it comes to the cloud market, there are few known knows. For instance, we know that AWS is the market leader with around 32 percent of market share. We know Microsoft is far back in second place with around 14 percent, the only other company in double digits. We also know that IBM and […]

When it comes to the cloud market, there are few known knows. For instance, we know that AWS is the market leader with around 32 percent of market share. We know Microsoft is far back in second place with around 14 percent, the only other company in double digits. We also know that IBM and Google are wallowing in third or fourth place, depending on whose numbers you look at, stuck in single digits. The market keeps expanding, but these two major companies never seem to get a much bigger piece of the pie.

Neither company is satisfied with that, of course. Google so much so that it moved on from Diane Greene at the end of last year, bringing in Oracle veteran Thomas Kurian to lead the division out of the doldrums. Meanwhile, IBM made an even bigger splash, plucking Red Hat from the market for $34 billion in October.

This week, the two companies made some more noise, letting the cloud market know that they are not ceding the market to anyone. For IBM, which is holding its big IBM Think conference this week in Las Vegas, it involved opening up Watson to competitor clouds. For a company like IBM, this was a huge move, akin to when Microsoft started building apps for iOS. It was an acknowledgement that working across platforms matters, and that if you want to gain market share, you had better start thinking outside the box.

While becoming cross-platform compatible isn’t exactly a radical notion in general, it most certainly is for a company like IBM, which if it had its druthers and a bit more market share, would probably have been content to maintain the status quo. But if the majority of your customers are pursuing a multi-cloud strategy, it might be a good idea for you to jump on the bandwagon — and that’s precisely what IBM has done by opening up access to Watson across clouds in this fashion.

Clearly buying Red Hat was about a hybrid cloud play, and if IBM is serious about that approach, and for $34 billion, it had better be — it would have to walk the walk, not just talk the talk. As IBM Watson CTO and chief architect Ruchir Puri told my colleague Frederic Lardinois about the move, “It’s in these hybrid environments, they’ve got multiple cloud implementations, they have data in their private cloud as well. They have been struggling because the providers of AI have been trying to lock them into a particular implementation that is not suitable to this hybrid cloud environment.” This plays right into the Red Hat strategy, and I’m betting you’ll see more of this approach in other parts of the product line from IBM this year. (Google also acknowledged this when it announced a hybrid strategy of its own last year.)

Meanwhile, Thomas Kurian had his coming-out party at the Goldman Sachs Technology and Internet Conference in San Francisco earlier today. Bloomberg reports that he announced a plan to increase the number of salespeople and train them to understand specific verticals, ripping a page straight from the playbook of his former employer, Oracle.

He suggested that his company would be more aggressive in pursuing traditional enterprise customers, although I’m sure his predecessor, Diane Greene, wasn’t exactly sitting around counting on inbound marketing interest to grow sales. In fact, rumor had it that she wanted to pursue government contracts much more aggressively than the company was willing to do. Now it’s up to Kurian to grow sales. Of course, given that Google doesn’t report cloud revenue it’s hard to know what growth would look like, but perhaps if it has more success it will be more forthcoming.

As Bloomberg’s Shira Ovide tweeted today, it’s one thing to turn to the tried and true enterprise playbook, but that doesn’t mean that executing on that approach is going to be simple, or that Google will be successful in the end.

These two companies obviously desperately want to alter their cloud fortunes, which have been fairly dismal to this point. The moves announced today are clearly part of a broader strategy to move the market share needle, but whether they can or the market positions have long ago hardened remains to be seen.

Google’s still not sharing cloud revenue

Google has shared its cloud revenue exactly once over the last several years. Silence tends to lead to speculation to fill the information vacuum. Luckily there are some analyst firms who try to fill the void, and it looks like Google’s cloud business is actually trending in the right direction, even if they aren’t willing […]

Google has shared its cloud revenue exactly once over the last several years. Silence tends to lead to speculation to fill the information vacuum. Luckily there are some analyst firms who try to fill the void, and it looks like Google’s cloud business is actually trending in the right direction, even if they aren’t willing to tell us an exact number.

When Google last reported its cloud revenue, last year about this time, they indicated they had earned $1 billion in revenue for the quarter, which included Google Cloud Platform and G Suite combined. Diane Greene, who was head of Google Cloud at the time, called it an “elite business.” but in reality it was pretty small potatoes compared to Microsoft’s and Amazon’s cloud numbers, which were pulling in $4-$5 billion a quarter between them at the time. Google was looking at a $4 billion run rate for the entire year.

Google apparently didn’t like the reaction it got from that disclosure so it stopped talking about cloud revenue. Yesterday when Google’s parent company, Alphabet, issued its quarterly earnings report, to nobody’s surprise, it failed to report cloud revenue yet again, at least not directly.

Google CEO Sundar Pichai gave some hints, but never revealed an exact number. Instead he talked in vague terms calling Google Cloud “a fast-growing multibillion-dollar business.” The only time he came close to talking about actual revenue was when he said, “Last year, we more than doubled both the number of Google Cloud Platform deals over $1 million as well as the number of multiyear contracts signed. We also ended the year with another milestone, passing 5 million paying customers for our cloud collaboration and productivity solution, G Suite.”

OK, it’s not an actual dollar figure, but it’s a sense that the company is actually moving the needle in the cloud business. A bit later in the call, CFO Ruth Porat threw in this cloud revenue nugget. “We are also seeing a really nice uptick in the number of deals that are greater than $100 million and really pleased with the success and penetration there. At this point, not updating further.” She is not updating further. Got it.

That brings us to a company that guessed for us, Canalys. While the firm didn’t share its methodology, it did come up with a figure of $2.2 billion for the quarter. Given that the company is closing larger deals and was at a billion last year, this figure feels like it’s probably in the right ballpark, but of course it’s not from the horse’s mouth, so we can’t know for certain.

Frankly, I’m a little baffled why Alphabet’s shareholders actually let the company get away with this complete lack of transparency. It seems like people would want to know exactly what they are making on that crucial part of the business, wouldn’t you? As a cloud market watcher, I know I would. So we’re left to companies like Canalys to fill in the blanks, but it’s certainly not as satisfying as Google actually telling us. Maybe next quarter.

Google looks to former Oracle exec Thomas Kurian to move cloud business along

Diane Greene announced on Friday that she was stepping down after three years running Google’s cloud business. She will stay on until the first of the year to help her successor, Thomas Kurian in the transition. He left Oracle at the end of September after more than 20 years with the company, and is charged with making Google’s […]

Diane Greene announced on Friday that she was stepping down after three years running Google’s cloud business. She will stay on until the first of the year to help her successor, Thomas Kurian in the transition. He left Oracle at the end of September after more than 20 years with the company, and is charged with making Google’s cloud division more enterprise-friendly, a goal that has oddly eluded the company.

Greene was brought on board in 2015 to bring some order and enterprise savvy to the company’s cloud business. While she did help move them along that path, and grew the cloud business, it simply hasn’t been enough. There have been rumblings for months that Greene’s time was coming to an end.

So the torch is being passed to Kurian, a man who spent over two decades at a company that might be the exact opposite of Google. He ran product at Oracle, a traditional enterprise software company. Oracle itself has struggled to make the transition to a cloud company, but Bloomberg reported in September that one of the reasons Kurian was taking a leave of absence at the time was a difference of opinion with Chairman Larry Ellison over cloud strategy. According to the report, Kurian wanted to make Oracle’s software available on public clouds like AWS and Azure (and Google Cloud). Ellison apparently didn’t agree and a couple of weeks later Kurian announced he was moving on.

Even though Kurian’s background might not seem to be perfectly aligned with Google, it’s important to keep in mind that his thinking was evolving. He was also in charge of thousands of products and helped champion Oracle’s move to the cloud. He has experience successfully nurturing products enterprises have wanted, and perhaps that’s the kind of knowledge Google was looking for in its next cloud leader.

Ray Wang, founder and principal analyst at Constellation Research says Google still needs to learn to support the enterprise, and he believes Kurian is the right person to help the company get there. “Kurian knows what’s required to make a cloud company work for enterprise customers,” Wang said.

If he’s right, perhaps an old-school enterprise executive is just what Google requires to turn its Cloud division into an enterprise-friendly powerhouse. Greene has always maintained that it was still early days for the cloud and Google had plenty of time to capture part of the untapped market, a point she reiterated in her blog post on Friday. “The cloud space is early and there is an enormous opportunity ahead,” she wrote.

She may be right about that, but marketshare positions seem to be hardening. AWS, which was first to market, has an enormous marketshare lead with over 30 percent by most accounts. Microsoft is the only company with the market strength at the moment to give them a run for their money and the only other company with double digit market share numbers. In fact, Amazon has a larger marketshare than the next four companies combined, according to data from Synergy Research.

While Google is always mentioned in the Big 3 cloud companies with AWS and Microsoft, with around $4 billion revenue a year, it has a long way to go to get to the level of these other companies. Despite Greene’s assertions, time could be running out to make a run. Perhaps Kurian is the person to push the company to grab some of that untapped market as companies move more workloads to the cloud. At this point, Google is counting on him to do just that.

Former Oracle exec Thomas Kurian to replace Diane Greene as head of Google Cloud

Diane Greene announced in a blog post today that she would be stepping down as CEO of Google Cloud and will be helping transition former Oracle executive Thomas Kurian to take over early next year. Greene took over the position almost exactly three years ago when Google bought Bebop, the startup she was running. The […]

Diane Greene announced in a blog post today that she would be stepping down as CEO of Google Cloud and will be helping transition former Oracle executive Thomas Kurian to take over early next year.

Greene took over the position almost exactly three years ago when Google bought Bebop, the startup she was running. The thinking at the time was that the company needed someone with a strong enterprise background and Greene, who helped launch VMware, certainly had the enterprise credentials they were looking for.

In the blog post announcing the transition, she trumpeted her accomplishments. “The Google Cloud team has accomplished amazing things over the last three years, and I’m proud to have been a part of this transformative work. We have moved Google Cloud from having only two significant customers and a collection of startups to having major Fortune 1000 enterprises betting their future on Google Cloud, something we should accept as a great compliment as well as a huge responsibility,” she wrote.

The company had a disparate set of cloud services when she took over, and one of the first things Greene did was to put them all under a single Google Cloud umbrella. “We’ve built a strong business together — set up by integrating sales, marketing, Google Cloud Platform (GCP), and Google Apps/G Suite into what is now called Google Cloud,” she wrote in the blog post.

As for Kurian, he stepped down as president of product development at Oracle at the end of September. He had announced a leave of absence earlier in the month before making the exit permanent. Like Greene before him, he brings a level of enterprise street cred, which the company needs as it continues to try to grow its cloud business.

After three years with Greene at the helm, Google, which has tried to position itself as the more open cloud alternative to Microsoft and Amazon, has still struggled to gain market share against its competitors, remaining under 10 percent consistently throughout Greene’s tenure.

As Synergy’s John Dinsdale told TechCrunch in an article on Google Cloud’s strategy in 2017, the company had not been particularly strong in the enterprise to that point. “The issues of course are around it being late to market and the perception that Google isn’t strong in the enterprise. Until recently Google never gave the impression (through words or deeds) that cloud services were really important to it. It is now trying to make up for lost ground, but AWS and Microsoft are streets ahead,” Dinsdale explained at the time. Greene was trying hard to change that perception.

Google has not released many revenue numbers related to the cloud, but in February it indicated they were earning a billion dollars a quarter, a number that Greene felt put Google in elite company. Amazon and Google were reporting numbers like that for a quarter at the time. Google stopped reporting cloud revenue after that report.

Regardless, the company will turn to Kurian to continue growing those numbers now. “I will continue as CEO through January, working with Thomas to ensure a smooth transition. I will remain a Director on the Alphabet board,” Greene wrote in her blog post.

Interestingly enough, Oracle has struggled with its own transition to the cloud. Kurian gets a company that was born in the cloud, rather than one that has made a transition from on-prem software and hardware to one solely in the cloud. It will be up to him to steer Google Cloud moving forward.

Village Global’s accelerator introduces founders to Bill Gates, Reid Hoffman, Eric Schmidt and more

The VC fund backed by Bill Gates, Jeff Bezos and other tech luminaries is offering early-stage startups access to its killer network.

Village Global is leveraging its network of tech luminaries to support the next generation of entrepreneurs.

The $100 million early-stage venture capital firm, which counts Microsoft’s Bill Gates, Facebook’s Mark Zuckerberg, Alphabet’s Eric Schmidt, Amazon’s Jeff Bezos, LinkedIn’s Reid Hoffman and many other high-profile techies as limited partners (LPs), quietly announced on Friday that the accelerator it piloted earlier this year would become a permanent fixture.

Called Network Catalyst, Village provides formation-stage startups with $150,000 and three-months of programming in exchange for 7 percent equity. Its key offering, however, is access to its impressive roster of LPs.

To formally announce Network Catalyst, Village brought none other than Bill Gates to San Francisco for a fireside chat with Eventbrite CEO Julia Hartz . During the hour-long talk, Gates handed out candid advice on building a successful company, insights on philanthropy and predictions on the future of technology. He later met individually with the founders of Village’s portfolio companies.

“I have a fairly hardcore view that there should be a very large sacrifice made during those early years,” Gates said. “In those early years, you need to have a team that’s pretty maniacal about the company.”

During the Q&A session, Gates regurgitated one of his great anecdotes. In the early days of Microsoft, he would memorize his employee’s license plates so he knew when they were coming and going, quietly noting who was working the longest hours. He admitted, to no one’s surprise, that he struggled with work-life balance.

“I think you can over worship the idea of working extremely hard,” he said. “For my particular makeup, it’s really true I didn’t believe in weekends or vacations … Once I got in my 30s,’ I could hardly imagine how I’d done that because by then something natural thing inside of me kicked in and I loved weekends and my girlfriend liked vacations and that turned out to be a great thing.”

Gates has been an active investor in Village since it emerged one year ago. VMWare founder Diane Greene, Disney CEO Bob Iger and Spanx CEO Sara Blakely are also on the firm’s long list of LPs.

Village is led by four general partners: Erik Torenberg, Product Hunt’s first employee; LinkedIn’s former chief of staff Ben Casnocha; Chegg’s former chief business officer Anne Dwane; and former Canaan partner Ross Fubini. They initially filed to raise a $50 million fund in mid-2017 but ultimately closed on $100 million in March. The firm relies heavily on scouts — angel investors and others knowledgeable of the startup world — to source deals. The scouts, in return, earn a portion of the firm’s returns.

Former Alphabet chairman Eric Schmidt.

An accelerator program has been part of Village’s plan since the beginning.

Pinterest CEO Ben Silbermann, Fidelity CEO Abby Johnson, Hoffman, Iger, Blakely and Schmidt all worked with Network Catalyst’s debut cohort of founders. Village co-founder Anne Dwane said Hoffman and former Twitter CEO Ev Williams have signed on to work with the next cohort.

“It is about contacts, not content,” Dwane told TechCrunch. “The most important thing is who you can meet to help you take your business forward.”

San Francisco-based VeriSIM, a startup building AI-enabled biosimulation models, was among the debut class of companies that participated in Network Catalyst. Jo Varshney, the company’s founder and CEO, said the accelerator’s personalization and customization set it apart from competing options.

“It seemed like I had a team of people working alongside me even though I’m a solo founder,” Varshney told TechCrunch.

After completing the program, Schmidt introduced Varshney to a number of investors. She quickly closed a $1.5 million seed round.

“One year in and I already have a one-on-one meeting with Bill Gates,” she added.

Applications for the accelerator close on Dec. 7 with programming kicking off Jan. 14. Village plans to enroll at least 12 companies across industries.

Google Cloud CEO Diane Greene: “We’re playing the long game here”

Google is hosting its annual Cloud Next conference in San Francisco this week. With 20,000 developers in attendance, Cloud Next has become the cloud-centric counterpart to Google I/O. A few years ago, when the event only had about 2,000 attendees and Google still hosted it on a rickety pier, Diane Greene had just taken over […]

Google is hosting its annual Cloud Next conference in San Francisco this week. With 20,000 developers in attendance, Cloud Next has become the cloud-centric counterpart to Google I/O. A few years ago, when the event only had about 2,000 attendees and Google still hosted it on a rickety pier, Diane Greene had just taken over as the CEO of Google’s cloud businesses and Google had fallen a bit behind in this space, just as Amazon and Microsoft were charging forward. Since then, Google has squarely focused on bringing business users to its cloud, both to its cloud computing services and to G Suite.

Ahead of this year’s Cloud Next, I sat down with Diane Greene to talk about the current state of Google Cloud and what to expect in the near future. As Greene noted, a lot of businesses first approached cloud computing as an infrastructure play — as a way to get some cost savings and access to elastic resources. “Now, it’s just becoming so much more. People realize it’s a more secure place to be, but really, I feel like in its essence it’s all about super-charging your information to make your company much more successful.” It’s the cloud, after all, where enterprises get access to globally distributed databases like Cloud Spinner and machine learning tools like AutoML (and their equivalent tools from other vendors).

When she moved to Google Cloud, Greene argued, Google was missing many of the table stakes that large enterprises needed. “We didn’t have all the audit logs. We didn’t have all the fine-grained security controls. We didn’t have the peer-to-peer networking. We didn’t have all the compliance and certification,” she told me.

People told her it would take Google 10 years to be ready for enterprise customers. “That’s how long it took Microsoft. And I was like, no, it’s not 10 years.” The team took that as a challenge and now, two years later, Greene argues that Google Cloud is definitely ready for the enterprise (and she’s tired of people calling it a ‘distant third’ to AWS and Azure).

Today, when she thinks about her organization’s mission, she sees it as a variation on Google’s own motto. “Google’s mission is to organize the world’s information,” she said. “Google Cloud’s mission then is to supercharge our customers’ information.”

When it comes to convincing large enterprises to bet on a given vendor, though, technology is one thing, but a few years ago, Google also didn’t have the sales teams in place to sell to these companies. That had to change, too, and Greene argues that the company’s new approach is working as well. And Google needed the right partners, too, which it has now found with companies like SAP, which has certified Google’s Cloud for its Hana in-memory database, and the likes of Cisco.

A few months ago, Greene told CNBC she thought that people were underestimating the scale of Google’s cloud businesses. And she thinks that’s still the case today, too. “They definitely are underestimating us. And to some extent, maybe that hurt us. But we love our pipeline and all our engagements that we have going on,” she told me.

Getting large businesses on board is one thing, but Greene also argued that today is probably the best time ever to be an enterprise developer. “I’ve never seen companies so aggressively pursuing the latest technology and willing to adopt this disruptive technology because they see the advantage that can give them and they see that they won’t be competitive if the people they compete with adopt it first,” Greene told me. “And because of this, I think innovation in the enterprise is happening right now, even faster than it is in consumer, which is somewhat of a reversal.”

As for the companies that are choosing Google Cloud today, Greene sees three distinct categories. There are those that were born in the cloud. Think Twitter, Spotify and Snap, which are all placing significant bets on Google Cloud. Not shy to compare Google’s technology prowess to its competitors, Green noted that “they are with Google Cloud because they know that we’re the best cloud from a technology standpoint.”

But these days, a lot of large companies that preceded the internet but were still pretty data-centric are also moving to the cloud. Examples there, as far as Google Cloud customers go, include Schlumberger, HSBC and Disney. And it’s those companies that Google is really going after at this year’s Next with the launch of the Google Services Platform for businesses that want or need to take a hybrid approach to their cloud adoption plans. “They see that the future is in the cloud. They see that’s where the best technology is going to be. They see that through using the technology of the cloud they can redeploy their people to be more focused on their business needs,” Greene explained.

Throughout our conversation, Greene stressed that a lot of these companies are coming to Google because of its machine learning tools and its support for Kubernetes. “We’re bringing the cloud to them,” Greene said about these companies that want to go hybrid. “We are taking Kubernetes and Istio, the monitoring and securing of the container workflows and we’re making it work on-prem and within all the different clouds and supporting it across all that. And that way, you can stay in your data center and have this Kubernetes environment and then you can spill over into the cloud and there’s no lock-in.”

But there’s also a third category, the old brick-and-mortar businesses like Home Depot that often don’t have any existing large centralized systems but that now have to go through their own digital transformation, too, to remain competitive.

While it’s fun to talk about up-and-coming technologies like Kubernetes and containers, though, Greene noted the vast majority of users still come to Google Cloud because of its compute services and data management and analytics tools like BigQuery. Of course there’s lot of momentum behind the Google Kubernetes Engine, too, as well as the company’s machine learning tools, but enterprises are only now starting to think about these tools.

But Greene also stressed that a lot of customers are looking for security, not just in the cloud computing side of Google Cloud but also when it comes to choosing the G Suite set of productivity tools.

“Companies are getting hacked and Google, knock on wood, is not getting hacked,” she noted. “We are so much more secure than any company could ever contemplate.”

But while that’s definitely true, Google has also faced an interesting challenge here because of its consumer businesses. Greene noted that it sometimes takes people a while to understand that what Google does with consumer data is vastly different from what it does with data that sits in Google Cloud. Google, after all, does mine a good amount of its free users’ data to serve them more relevant ads.

“We’ve been keeping billions of people’s data private for almost 20 years and that’s a lot of hard work, but a cloud customer’s data is completely private to them and we do have to continually educate people about that.”

So while Google got a bit of a late start in getting enterprises to adopt its Cloud, Greene now believes that it’s on the right track. “And the other thing is, we’re playing the long game,” she noted. “This thing is early. Some people estimate that only 10 percent of workloads are in the big public clouds. And if it’s not in a public cloud, it is going to be in a public cloud.”