Google, Second Fiddle in Cloud Computing, Needs a New Tune

(Bloomberg Opinion) -- Google’s new cloud boss is used to being the underdog, and that’s fitting for the role he’s stepping into at one of the world’s most powerful corporations.

The Alphabet Inc. unit has been trying for years — halfheartedly, at least until recently — to leverage its technical expertise in web search into areas such as renting computer power and data-crunching processing to businesses large and small. Amazon pioneered that area with its Amazon Web Services operation, which (no exaggeration) has upended the trajectory of technology and business. Google also sells a version of its email, spreadsheet and document software to companies — an area in which it plays second fiddle to Microsoft and its collection of Office software.

Second fiddle is exactly where Google has been in these and other areas broadly called cloud computing. That didn’t really change when respected technology executive Diane Greene assumed responsibility for Google’s business-focused software in 2015. Google said on Friday that Greene plans to leave and will be succeeded by Thomas Kurian, also a well-respected longtime technology executive, most recently with the database technology firm Oracle Corp. He will formally take over in 2019 after a transition period, Google said in confirmation of a CNBC article

The problem is that if Greene, who co-founded the revolutionary tech company VMware and sits on the Alphabet board, couldn’t make Google a resounding cloud success against AWS and Microsoft, then perhaps no one can. Greene’s corner of the company was focused on selling software to businesses, and it has been an odd fit within a company that devotes nearly 100 percent of its attention to consumer technology: web searches, smartphone apps, mapping, digital assistants that can predict people’s needs, and web video. 

Greene made Google more relevant in the cloud, and she gave the business discipline and credibility. She made some acquisitions to fill out Google’s cloud technology but missed out on others, notably GitHub, the popular software development startup that Microsoft bought earlier this year. Simply put, Greene couldn’t solve the fundamental discord of an operation focused on corporate software inside a machine that can’t be bothered to care about what a factory manager needs to improve inventory systems for steel bearings. 

KeyBanc Capital Markets thinks a portion of Google’s cloud-computing operation will generate $3.2 billion in revenue next year compared with $15.1 billion for Microsoft. AWS generated more than $23 billion of revenue in the 12 months ended Sept. 30. The three companies don’t offer exactly the same technology products to companies, but Google’s lagging sales are a sign of how far behind it is. Microsoft’s trajectory is a reminder of what Google could have been. When Satya Nadella took over as Microsoft’s CEO in 2014, it appeared his company was botching the cloud. Since then, it has been on a tear. 

Kurian will have his work cut out for him. He also recently left Oracle under odd circumstances. The company said in early September that he was taking some time off from his role as president of product development. Kurian, who worked at Oracle for more than 20 years, and founder Larry Ellison were responsible for Oracle’s projects in cloud computing, an area where the company has had less traction than Google. (To be fair, Google and Oracle are not directly competitive in most areas of cloud computing.) 

Bloomberg News reported that Kurian and Ellison had clashed over whether Oracle should make more of its software compatible with cloud-computing software from AWS and Microsoft. Ellison opposed such a move and Kurian supported it. Later in the month, Oracle disclosed that Kurian had resigned, and it didn’t elaborate. 

Kurian has decades of experience in the peculiar hand-to-hand combat of corporate technology — reaching out to corporate executives, listening to their specific business needs and selling software that will improve their operations. But Greene knew corporate technology, too, and her reputation and ability could only take Google’s cloud business so far. Greene’s struggles don’t bode well for Kurian’s future.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Shira Ovide is a Bloomberg Opinion columnist covering technology. She previously was a reporter for the Wall Street Journal.

©2018 Bloomberg L.P.