For years, Google's managers have been talking about growing the company's cloud services and trying to undermine the quality of their competitors' offerings.
Almost every time Diane Greene, CEO of Google Cloud Platform, speaks publicly, she talks about the clouds of Amazon and Microsoft. But on Monday, CEO Sundar Pichai sounded a very different note – albeit briefly.
Alphabet Inc., Google's parent company, released the company's earnings report on Monday and the following month. Pichai answered questions about a conference call with analysts.
Mark Mahaney, Managing Director of RBC Capital, noted that the Google Cloud Platform (GCP) appears to be growing, but also Amazon AWS and Microsoft Azure. He wanted to know how Pichai explained that.
The night before the launch of "Next 2018", GCP's annual showcase for cloud services and products, Pichai acknowledged that all players in the segment are doing well – not just Google.
"That's why it feels a long way from a zero-sum game," Pichai said. "All major players definitely see traction."
This is not Google's typical narrative on the subject, and the reason is obvious. The statement raises unpleasant questions. Are GCP companies benefiting from their superior know-how and technology, as managers have suggested, or are all stakeholders benefiting from a flood of money flowing into the sector as cloud adoption expands in the business world?
Cloud computing should be one of Google's next hot growth areas, and management continues to devote more resources to business development. The company does not break GCP's financial footing, but rolls it into the "Other" category, which generated $ 4.425 billion in the second quarter, slightly above analyst estimates of $ 4.4 billion. So, the stakes are high.
Back on the offensive
Perhaps it did not take long for Picahi to go on the offensive again. In his response to Mahaney, he warned that although much of the sector is growing, there is still a real threat to cloud customers "getting on the wrong platform". The CEO also said he believes more companies will begin to trust their information across multiple platforms.
According to Dan Ives, head of technology research at GBH Insights, all this could be a little selfish.
"For (Google), the best thing that could possibly happen is that more companies are adopting multiple clouds," said Ives, who expressed some skepticism that many companies would choose a two-platform approach to the cloud. "Amazon and Microsoft are not a duopoly, but they have a big edge."
Ives agreed that there is "a secular shift to cloud computing" in the business world and that "the rising tide lifts all boats".
But he doubts that the profits of GCP are all due to the expansion of the market. He attributed good execution to GCP. As for the future, he said that Google has a potential game changer: Artificial Intelligence. AI is already having an impact on Google in many other businesses, including retail, advertising, healthcare and autonomous cars.
"From an innovation perspective, it's hard to achieve (Google)," said Ives. "They're always looking for an advantage in the cloud arms race … of course, I do not see them shutting down Microsoft or Amazon, but that's still a growth opportunity for Google."