Google was an underdog when it launched its infrastructure cloud in 2013. Amazon had already made a name for itself as a disruptive technology provider, having launched Amazon Web Services (AWS) seven years prior. Microsoft, a household name in commercial software, launched Azure in 2010. What chance did Google, a company known primarily for its search engine, have competing with cloud leader AWS and enterprise behemoth Microsoft?

Initially, it was difficult to understand Google Cloud’s value proposition. Google was primarily a consumer business, with users expected to serve themselves through instruction manuals and support portals. In a business-to-business (B2B) engagement involving significant expenditure, most cloud buyers need more of a personalized and professional relationship — i.e., help and technical support accessible round the clock, coupled with regular review meetings and negotiations.


Although organizations like the idea of the newest and shiniest technologies, it is the reliability and consistency — not just of the product but also of its vendor — that drives day-to-day success. Buyers want relationships, commitments and financial sustainability from their suppliers. Google had the technology, but its reliability and consistency as an IT services partner were untested and unclear.

Google Cloud has, since then, become a more credible enterprise cloud provider. It has achieved this by developing its partnerships and enterprise credentials while harnessing its existing reputation for innovation and scale. But Google’s endeavor to build a competitive cloud business has never been straightforward: nor has it proved possible by mimicking its rivals.

Building differentiation

When it first launched, Google Cloud had yet to identify (or at least promote) its fundamental value proposition. As part of its reinvention, however, it is now promoting itself as specializing in Big Data. Google has a core web business (search and advertising) that effectively uses the entire web as its database. Google’s search engine exemplifies outstanding web-wide reliability and simplicity, and the company is known globally for innovation on a vast scale.

Google has doubled down on this message, promising users access to those innovations that have made Google so ubiquitous — such as machine learning and web-scale databases. The company doesn’t want users to choose Google Cloud because it has low-price virtual machines; rather, Google sees its role (and brand) as helping businesses scale their opportunities, using the newest technology.

In this vein, the company recently announced new capabilities for its BigQuery database, new machine learning translation tools, and other Big Data products and capabilities at the company’s developer conference, Google Cloud Next ‘22. But even infrastructure capabilities (such as new Intel and NVIDIA server chips) as well as the general availability of Google’s latest generation of AI-accelerators (tensor processors or TPUs) were presented in the context of making the most of data. In Google’s messaging, new infrastructure doesn’t just promise faster virtual machines — it delivers better processing capabilities to customers looking to develop new ways of extracting value from data.


Building credibility

Google might be relatively new to enterprise sales, but its partners are experienced players. Google has addressed its lack of enterprise experience by partnering with systems integrators such as Infosys, HCLTech, Tata Consultancy Services (TCS), Accenture, Capgemini and Atos. It has developed European “sovereign” clouds with T-Systems, Thales and Minsait. Google offers its Anthos Multi-Cloud platform through original equipment manufacturers (OEMs) including Cisco, Dell EMC, Hewlett Packard Enterprise (HPE), Intel, Lenovo, NetApp, Nutanix, NVIDIA, and VMware.

Google is historically popular with developers due to its open-source approach. But some recent successes may be the result of its repositioning to promote business value over technical ability. This approach is more likely to capture the ear of C-level executives (who make the big, transformational decisions), including appointing primary cloud providers. Google has built credibility by selling to brands such as Toyota, Wayfair, Snap, , PayPal and HSBC.

The company also demonstrates credibility through continued investment. At Google Cloud Next ‘22 the company announced new regions in Austria, Greece, Norway, South Africa, and Sweden, bringing the total number of regions to 48. Security and productivity, too, were high on the agenda at that event, again helping to build brand credibility.

Economics is still a challenge

Although Google’s cloud business has matured considerably in recent years, it still faces challenges. As previously discussed in Cloud price increases damage trust, Google Cloud prices saw some sharp increases in October 2022 – with multi-region nearline storage rates, for example, increasing by 50%, and some operations fees doubling. Load balancers will also be subject to an outbound bandwidth charge. Google Cloud has made considerable gains in convincing users that it is a relationship-led, enterprise-focused, innovative company and not just a consumer business. But such sweeping price increases would appear to damage its credibility as a reliable business partner in this regard. Google Cloud revenue increased by 35% year-on-year in Q2 2022, reaching $6.3 billion. Despite this growth, however, the division reported an operating loss of $858 million for the same period. Google Cloud’s revenue trails that of AWS and Microsoft Azure, by a wide margin. Google Cloud may well have implemented its recent price increases with the intention of building a more profitable and more sustainable business. Its recent price hikes are reasonable, considering, as outlined above, the importance customers attach to reliability and consistency. The question is, has Google yet convinced the market that it is worth its recent price hikes? While users should continue to consider Google Cloud as part of fuller vendor evaluations, they should perhaps bear in mind its history of raising prices.

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