Google spent $30 billion on its cloud and is making some undeniable progress


Diane Greene

Business Insider

Google Cloud chief Diane Greene

If there's one question that the top brass at Google are sick of being asked it's this: How are you going to catch up in the cloud market to Amazon and Microsoft?


Google's answer is pretty straightforward: the old-fashioned way. It plans to build out its tech, making it reliable, affordable, with just enough differentiation to attract customers.

And when it lands those big customers, it will show them off as references. If Google builds it, they will come.

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That's what Day 1 of Google's two-day conference for cloud customers this week was all about. Instead of announcing a whole bunch of new products (that will happen on Day 2) Cloud chief Diane Greene used the three-hour keynote to showcase marquee customers. Google CEO Sundar Pichai and chairman Eric Schmidt took the stage as well, in a show of support and commitment from the top of the company.

Proud $2 billion home of Snap

In fact, Schmidt's pitch to the 10,000-person crowd was pretty simple, "Just get to the cloud now. Just go there now. There's no time to waste anymore."


His rationale was equally simple: "We put $30 billion into this platform. I know this because I approved it," he only half joked. "Why replicate that?"

He even went so far as credit Google's cloud as one key ingredient in fast-growing mobile app Snapchat's success. Snapchat's parent company, Snap, just went public in a blockbuster IPO that valued the young company at $33 billion (though the stock has since sunk a bit, valuing it at a mere $24 billion on Wednesday).

How could Snap have made such an incredibly fast rise to the top "with so little capital? They used our infrastructure," Schmidt said.

Eric Schmidt

Business Insider

Eric Schmidt, executive chairman of Google's parent company Alphabet

Snap also just committed to spend $2 billion with Google over the next five years, "a deal hugely successful for both of us" because Snap won't own a $2 billion data center, nor have to pay "$3 billion and $4 billion" for data centers, he said. (However, there's some reason to believe that Snap is at least investigating building its own data centers, because there comes a point when it is cheaper to own than to rent.)

Big, respectable customers

Greene also showcased new cloud customers HSBC, Colgate, Verizon and eBay.


Better still, she announced Google's first all-in customer, Disney, which is doing "a full lift and shift to Google Cloud," meaning that it's moving all of its consumer products and interactive media to the cloud. Disney has "500 projects in the cloud" from consumer apps and games to back-office things like its development environment.

Google Cloud Diane Greene Disney

Business Insider

Google Cloud Diane Greene Disney

On top of these new customers, Google Cloud announced a new partnership with SAP that bring SAP's enterprise applications to Google's cloud, starting with its database HANA. SAP on Google could be a major carrot to convince other enterprises to move their SAP apps to Google's cloud.

Google is also targeting would-be Oracle customers more directly. Last week it released a new database called Cloud Spanner that Schmidt called "A work of art in computer science sense," adding "it's a way of doing SQL, a database, at a scale that's never been seen before. We use it, it's how Google works, and we released it a week ago for the cloud."

Google also announced new partners, Pivotal and Rackspace, to provide customer support and custom apps. Rackspace was a big one. It used to compete with Amazon in the cloud, and then became a support partner for Microsoft Azure and later offered support for Amazon, too.

In the long run, Google is setting itself up to be a good cloud platform choice for big data and machine learning apps, which is one of the big waves of the future.


Still, none of this will scare Amazon. Its execs continuously and rightfully point out that Amazon is years ahead of its competitors. Amazon Web Services has more features, more partners and claims millions of monthly customers, including dozens of "all-in" enterprises. At its customer conference last fall, half of its 600+ technical sessions were even taught by customers, reports Silicon Angel's John Furrier. Even Snap, Google's sexy cloud customer, has also recently signed a deal to use Amazon for some of its infrastructure.

Amazon is still setting the tone for the entire cloud computing infrastructure market and has already won today's enterprise.

But that doesn't mean that there's no place for Google especially if Google is playing the long game (which it claims it's doing). In the 16 months since Diane Greene joined Google, she's definitely showing progress.

Get the latest Google stock price here.

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