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Google Gets Dead Serious About the Cloud and Amazon

Google Gets Dead Serious About the Cloud

Date Published: 2016-09-30

Preface
Alphabet Inc. (NASDAQ:GOOGL) gets serious about the cloud and competing directly with Microsoft Corporation (NASDAQ:MSFT) and Amazon.com Inc. (NASDAQ:AMZN).

STORY
We recently published an update to Alphabet Inc. surrounding new smartphones and a move into Virtual Reality as well as a broader expansion into the wonder that is India. We now have more news which may be the most exciting of them all -- Google is getting dead serious about getting into the Cloud and competing with Amazon.com Inc. (NASDAQ:AMZN) and Microsoft Corporation (NASDAQ:MSFT).

Here's the trend the companies are after:

Projections for cloud computing see the market growing from $80 billion last year, to half a trillion within a decade, according to a study by Wikibon. The first step for Alphabet Inc. was to break out a segment of the company that is dedicated to the growing needs of the cloud, and Google has just done that with a group called "The Google Cloud." Here's how the company described the new group:

"
Google Cloud spans every layer of the business, including all of Google Cloud Platform.

Moreover, Google Cloud has been engineered in an enterprise appropriate way, with integrated systems that ensure service levels - all components are integrated and meet customers' service and cost levels.

Google Cloud products are for customers of all sizes: from the self-employed or startups all the way to the world's largest enterprises, including Google itself.

Google Cloud is more than products - it is also how we work alongside companies in an engineering-centric way. [] Our approach and our commitment to Google Cloud customers is simple: we're in it together.

The cloud partner that customers choose really matters. It amounts to picking which technology curve to bet on, and it's a long-term bet.

Source: Google Official Blog

The language used in that description was carefully chosen. Amazon.com Inc. (NASDAQ:AMZN) become the giant that it is today by starting out as an attractively inexpensive place for developers of small companies to work through large scale computing needs. It was rather brilliant in that it was a sort of "throw away" for Wall Street at the beginning and of course has now turned into more than 50% of Amazon.com Inc.'s (NASDAQ:AMZN) operating income while comprising less than 10% of total revenue.

Alphabet Inc. (NASDAQ:GOOGL) is doing the same thing. Let's reprise a snippet: "Google Cloud products are for customers of all sizes." If Alphabet Inc. is going to do this and make a difference, it will have to start with that mindset. It seems trivial to most, but it's rather shrewd in reality.

Let us also remember that Google won Apple's (AAPL) $500 million of cloud business earlier this year and has some of the wildest patents for cloud computing platforms we have ever seen. Check this rendering out:

Alphabet Inc. may be taking the technology behind cloud computing to the absolute ends of human knowledge. This is very bullish news for a company that does need to diversify its revenue streams.

The author has no position in Alphabet Inc. (NASDAQ:GOOGL).

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