Can Google Cloud Overtake Microsoft Aazure!

Microsoft Azure and Google Cloud are the top two cloud service providers, ranking second and third to Amazon Web Services, respectively (AWS). Despite its engineering prowess, Google Cloud, launched in 2008, trails AWS and Azure in market share.

Credit Suisse analyst Phil Winslow believes Azure will close the revenue gap with AWS while widening the gap with Google Cloud. He argues that Azure will benefit from significant changes in how businesses structure their IT infrastructure rather than simply shifting specific applications to the cloud.

According to a survey conducted earlier this year, Azure has surpassed AWS in popularity. Around 80% of respondents said they used Azure, while 77% said they used AWS.

Alphabet CEO Sundar Pichai, on the other hand, recently stated that cloud computing is one of Google’s fastest-growing businesses. Last month, Thomas Kurian, CEO of Google Cloud, noted that the company’s goal is to simplify all the technology that businesses require. Regarding market share, Google will have around 10% of the global market in the second quarter of 2022. According to Statista, Azure comes second with a market share of 21%.

Enterprise customers

One of the factors that favored Microsoft was its background in the enterprise business. This is something Google does not have. Microsoft sells a wide range of products, including Office, Windows, Dynamics, and Outlook, and it was easier for them to upsell cloud services to enterprise customers.

From the standpoint of these companies, it made more sense to go with Microsoft because they had previously used its products, which their employees were familiar with. Most of the Fortune 500 is on Azure as they want seamless security and APIs regardless of the environment.

Google’s strategy of convincing businesses to do things their way rather than paying attention to what the customer needs did not help their cause.

Furthermore, Microsoft has used vendor lock-in strategies, which are not new to the company. Microsoft has successfully leveraged its partner ecosystem to cross-sell its cloud solutions over the years, allowing Azure to become the world’s second-largest cloud service provider.

Data centers

In terms of infrastructure, Google Cloud lags behind Microsoft. Microsoft’s cloud infrastructure is massive, and Google must invest significantly more time and money to match Azure’s capabilities.

Microsoft Azure does not disclose the locations of its data centers; however, according to estimates, Microsoft operates over 200 physical data centers across 35 countries in 59 regions and 113 availability zones. In addition, 19 areas and 51 availability zones are being developed. Google Cloud, on the other hand, operates approximately 30 data centers in 35 regions and 106 availability zones spread across more than 200 countries and territories.

However, Google is adding nine more regions, bringing the total number of Google Cloud data centers to 44 by 2024. During Google Cloud Next 22, the company announced new Google Cloud regions for Austria, Greece, Norway, South Africa, and Sweden.

Although Google Cloud cannot compete with Azure in terms of infrastructure, it provides competitive pricing across all cloud services.

Services available

Google Cloud and Microsoft Azure provide their customers with a wide range of services, from storage and computing to networking. AWS and Azure provide over 100 different services; however, Google Cloud only provides about 60.

In terms of services, Azure again takes the lead, providing a well-rounded set of storage services; Google, on the other hand, has fewer options.

Google Cloud has the most competitive pricing for computing services. However, Azure provides a discount model that is appealing to existing Microsoft customers. Furthermore, Google Cloud’s salesforce is small compared to AWS and Google. In 2019, Google Cloud CEO Thomas Kurian acknowledged that their sales force is one-tenth to one-fifteenth the size of AWS and Microsoft Azure.

Kurian has extensively hired personnel over the years to bolster its workforce to remain competitive. The most notable addition in 2019 was SAP veteran Robert Enslin.

One advantage Google has is that Microsoft has a much more demanding learning curve. To overtake Azure, Google would need to do much more than offer lower prices and a smoother learning curve across all deployments.

What comes next?

The company announced a series of infrastructure and migration updates at this year’s Google Cloud Next 22 conference to help better organizations run on Google Cloud, at the edge, or in their data centers. Google announced Dual Run to assist businesses in migrating their decades-old mainframes to the cloud. It also revealed new developments in Google Workspace and its partner ecosystem.

“Google Cloud is what enables us to share innovation and investment across Google with companies, governments, and organizations around the world,” Pichai said during the Next ’22 opening session.

The tech titan also announced that beginning in 2023, customers will be able to pay for cloud services with cryptocurrencies. Google has partnered with Coinbase, a US-based cryptocurrency exchange, to facilitate crypto payments.

Bottom Line:

Google has built some of the best developer products in terms of automating microservices and container orchestration with Kubernetes and ASIC chips (TPUs) that compete with Nvidia. Cloud computing is capital-intensive, so if Google can’t find its footing, ad-driven margins may suffer in the short term.

It is impossible to predict who will lead software and AI applications (or when) because the main competitors will be hundreds (if not thousands) of startups. With that said, we at Linux 2Cloud believe healthcare is an example of a vertical where Google’s data experience can provide a significant competitive advantage. Alphabet may have a competitive advantage in AI/ML software, whereas this analysis focuses on infrastructure. A catalyst may emerge for Google Cloud to gain a larger share, but the strategy is not clear now.