Page 123 - Bloomberg Businessweek - November 19, 2018

Bloomberg Businessweek The Year Ahead 2019 Technology

Cloud

▷ With Microsoft becoming the anti-Amazon of choice,
Google should get used to bronze

In the cloud business, there’s Amazon Web
Services and there’s everybody else. But the
race for the silver medal is getting less com-
petitive, too. In 2019, Microsoft Corp.’s Azure
is expected to solidify its position enough that
Google Cloud Platform will have a tough time
catching up.
“Not Amazon” is a strong position when
pitching to retailers, grocers, and other cloud
customers that would prefer to avoid lining Jeff
Bezos’ pockets while he’s competing directly
against them. For years, Google looked like
the alternative. It had a two-year head start
on Microsoft and more experience selling
internet-based software. Yet by the end of 2014,
shortly after Satya Nadella took over as chief 31
executive officer, Microsoft had double Google’s
market share, according to analyst Synergy companies run by developers, such as Twitter ▲ A worker puts the
Research Group. Inc., also tend to opt for Google. finishing touches on a
pop-up space in Davos
Since then, Nadella’s team has poured money Microsoft, however, excels at retrofitting
into the cloud, catered to less tech- centric busi- older systems to work with its cloud prod-
nesses often wrestling with legacy systems, and ucts, says Ratan Tipirneni, president and CEO
leaned heavily on its decades of software sales of Tigera Inc., which provides cloud security
experience. Microsoft collected $9.5 billion in for Amazon, Microsoft, and Google. So while
Azure cloud revenue in 2018, vs. $1.6 billion for Google signed a deal with Target Corp. in the
the comparable Google business, according to second half of 2018, Microsoft got Walmart. And
investment bank KeyBanc Capital Markets Inc. Gap. And Volkswagen. And Royal Dutch Shell.
Next year, KeyBanc forecasts, it’ll be $15.1 billion In the companies’ latest quarterly earnings
FROM LEFT: PHOTOGRAPH BY PIPPA DRUMOND. PROP STYLIST: AJA COON; JASON ALDEN/BLOOMBERG
for Microsoft, $3.2 billion for Google. Julia reports, Microsoft Azure’s revenue increased
White, Microsoft’s vice president for cloud mar- 76 percent from a year earlier, compared with
keting, says her team rarely sees Google in the 29 percent for the Google division that includes
mix when it’s competing for customers. cloud, hardware, and app sales. (Google doesn’t
Google says it’s hiring rapidly for its cloud break out Cloud numbers separately.) In a
division, especially in sales and support roles, September KeyBanc survey of chief informa-
and has refashioned itself over the past several tion officers, 44 percent of respondents said
years to better serve industry-leading busi- they plan to increase their cloud spending with
nesses. “We feel very good about the traction Microsoft in the next six months, vs. 7 percent
we are seeing,” says Tariq Shaukat, who over- for Google.
sees Google Cloud partnerships. “We still think Of course, in a market expected to top $40 bil-
it’s relatively early days.” Google is often the lion next year, third place in the U.S. isn’t so bad.
provider of choice, even above Amazon.com Still, “Google is way back,” says Brent Bracelin, an
Inc., for artificial intelligence applications as analyst at KeyBanc who co-authored the report.
well as the data management and analysis tools “They don’t have enterprise sales distribution,”
it pioneered. EBay Inc. uses Google Cloud AI he says. “That’s their big Achilles’ heel. Microsoft
tools that organize products based on images; has a massive footprint there.” <BW> �Dina Bass