Google in 2016 will invest heavily in its cloud services unit as it plans to close a feature gap with the likes of Amazon Web Services and Microsoft's Azure, but the big question will be whether it can effectively court enterprises.
Alphabet, Google's parent company, didn't break out a run rate for its corporate cloud business, even as it outlined "other bets," which are pre-revenue efforts such as autonomous vehicles that are designed to be moonshots.
Sundar Pichai, CEO of Google, noted that the company's Cloud and Apps group, led by former VMware CEO Diane Greene, has gained enough scale to encourage enterprises to use it. Gmail now has more than 1 billion users a month and the Google cloud platform is used by more than 4 million applications.
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For now that 4 million application statistic will have to substitute for a revenue run rate. It's also unclear whether 4 million applications use Google Cloud exclusively or call on the service in addition to others.
Perhaps Pichai's biggest message was that Google is serious about its cloud service efforts. That message is critical since business technology executives don't question whether AWS, Microsoft or IBM are serious about the market. Google's history of betas and move to only recently talk up the enterprise cloud have worked against it.
Pichai and Greene are working to counter that perception that Google isn't serious about the enterprise cloud. Pichai also said that Google will continue to invest and is ready to scale its cloud services. He said:
We are already getting significant traction. It's a strongly growing business for us and we plan to invest significantly in 2016. It will be one of our major investment areas. In terms of talking to customers, first of all, as I said earlier, the cloud platform is now already used and trusted by over 4 million applications. And a lot of it is about making sure we are very seriously committed to this space, which we are, and in terms of wanting -- there's a breadth of feature requirements, and so we've been carefully taking customer feedback and addressing all those needs. And as time goes by, I think we are getting very competitive.
We have natural advantages in doing this, but we also need to make sure we address all the feature needs and that's what we've been focused on. I think we are at a point now where the product is ready to be used at scale, and so I expect to get significant traction in 2016.
The key phrases in Pichai's riff is that Google Cloud is ready to scale and "feature needs." AWS has been leading the pack with additional features and Google will have to catch up. The problem is that AWS and Microsoft Azure aren't exactly stopping for a breather.
Macquarie analyst Ben Schachter said in a research report that "Google boasted its internal data center capabilities and is clearly looking to become more competitive against AWS and Azure."
The next stop for Google's cloud pitch will be at its user conference March 23 -24 in San Francisco.