Specialist
Former Head, Channel Partners, Americas, Cloud Professional Services at Google LLC (Alphabet Inc)
Agenda
- Google Cloud (NASDAQ: GOOGL) and its offerings, focusing on Google Cloud Platform
- Competitive positioning vs leaders Amazon's AWS (NASDAQ: AMZN) and Microsoft Azure (NASDAQ: MSFT)
- Growth performance and prospects, highlighting key drivers and addressing management
- 1-3-year outlook
Questions
1.
It seems Google Cloud has gained a lot of traction over the last couple of years. Alphabet has been breaking out Google Cloud’s P&L specifics, particularly around revenues. What does Google Cloud consist of? I think it is about Google Cloud Platform and what is now known as Google Workspace, which used to be the G Suite. Could you outline those two businesses and anything else you think might be relevant to understanding Google Cloud?
2.
In its Q2 2021 reports, Alphabet calculated Google Cloud revenues at USD 4.6bn. What would you say is the historic revenue mix between Google Cloud Platform and Workspace? How have those trended?
3.
Based on revenue numbers from Q2 2021, it seems that Google Cloud Platform continues to gain market share from competitors such as Amazon and Microsoft. This is perhaps unsurprising, given that it is considered a distant third when it comes to this particular category. You highlighted increasing investment in, and focus on the enterprise segment. How is Google Cloud Platform winning more and more business? How does it differentiate in the marketplace, particularly as the number three provider?
4.
How far along do you think Google Cloud is to achieving growth through GSI [global systems integrator] contracts and verticalisation? How far along is it in building this out and deploying it? Is it further along in the GSI partnerships or are there more to be had? You referenced APAC. I’m assuming it would probably try to tap into some existing relationships as well as a lot of new ones as it expands there.
5.
You mentioned the notion of verticalisation, which should come after some of the product-specific solutions that Google Cloud is providing in conjunction with Anthos and Kubernetes. How far along do you think this is? It would seem it isn’t as progressed as it is on the GSI side. What are your thoughts on having these solutions and the need to regularly expand and update them?
6.
You mentioned verticalisation, products, AI and machine learning. I think a lot of people would also refer to big data, especially with BigQuery. It seems there’s a perception that Google Cloud Platform will often win when the focus is actually on the product, the solution, the innovation or the technology. Is that often how you think it wins in the marketplace? How does it compare vs AWS or Microsoft? AWS may have more scale and offerings and Microsoft might have a better-developed hybrid offering.
7.
Do you think Workspace is part of any conversations involving Google Cloud Platform? Unless you’re a big advertiser online, you may not have a lot of enterprise-level relationships with the company and you mentioned that was a big thrust of the management change in Google Cloud. Do you think there is an alignment between Google Cloud Platform and Workspace, in the context of introducing what they’re doing and then ultimately trying to sell them?
8.
AWS holds about a third of the market, Azure has about 20% and Google Cloud Platform was around 7% or 8%, last I saw. How can Google become a notably higher market share participant? Does it have the strategy in place and it’s just blocking and tackling at this point? Alternatively, does there need to be some kind of major development to elicit that kind of market share shift?
9.
You mentioned Google recognises the hyperscaler vendor lock-in and is pursuing multi-cloud opportunities. I have heard that it can be relatively easy to shift from one provider to another, potentially in a multi-cloud context. Do you think Google Cloud’s primary sales pitch is convincing customers they need multiple providers for a variety of reasons? Is it offering to be the number two provider before showing it can become the number one?
10.
How do you think the major hyperscalers typically win business in the marketplace? What do AWS and Azure lead and win with generally?
11.
Do competitors in this market approach and construct pricing in a similar way, or can Microsoft be much more aggressive and flexible given the nature of its offerings and potentially longer-term perspective?
12.
How might Google Cloud’s growth trend over the next 1-3 years? The company has been growing at an elevated level, especially vs competitors. That’s from a smaller base, but that base is getting bigger and the company is getting more and more penetrated. What has it been doing to build the foundation for sustaining and accelerating growth?
13.
It seems you expect more than 50% revenue growth for Google Cloud over the next 1-3 years. What might be Google’s opportunities vs where perhaps AWS and Azure aren’t as strong? You mentioned a big thrust in healthcare but Microsoft announced the acquisition of Nuance Communications which has probably helped it a lot in that segment. What are your expectations for growth in verticals and geographies?
14.
When the Pentagon made the announcement about essentially cancelling the JEDI contract, it indicated plans to do similar contracts in the near term, but that the only two vendors that qualified for its requirements were AWS and Azure. Google and Google Cloud Platform were notably omitted. Do you think the company can inject some regulatory rigour into its programme before a lot of these big deals are decided?
15.
What is your 1-3 year outlook for the Google Cloud business? You referenced revenue growth sustaining at 50% or above as well as the company identifying the need to make substantial investments across the business.
16.
Google Cloud’s revenue trajectory could be considered impressive, particularly when compared to Azure and Microsoft. When assessing operating income numbers for Google Cloud, however, it still lost USD 600m in Q2 2021. Now, it’s better than the USD 1.4bn in Q2 2020. How important is that? Is it really just continuing to invest long-term land grab and it’ll worry about profitability when it becomes more relevant?
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