Sundar Pichai talks up the growth of Google Cloud

Google CEO Sundar Pichai.Greg Sandoval/Business Insider

• Google has touted the growth of Google Cloud Platform for years, but on Monday CEO Sundar Pichai acknowledged that rivals are also faring well.
• That didn’t stop him from taking a veiled shot at competitors by saying that companies considering cloud adoption face a real danger of getting “on the wrong platform.”
• Analyst Dan Ives said Google has little chance of “knocking off” Amazon or Microsoft but the cloud represents a growth area for the company.

For years, Google managers have talked up the growth of the company’s cloud services and tried to undermine the quality level of their rivals’ offerings.

Nearly every time Diane Greene, Google Cloud Platform’s CEO, speaks publicly she trash talks Amazon and Microsoft’s clouds. But on Monday, CEO Sundar Pichai sounded a very different note — if only briefly.

Alphabet Inc., Google’s parent company, issued the company’s second-quarter earnings report on Monday and afterwards, Pichai took questions on a conference call with analysts.

Mark Mahaney, managing director at RBC Capital noted that while Google Cloud Platform (GCP) appears to be growing, so does Amazon’s AWS and Microsoft’s Azure. He wanted to know how Pichai explained that.

Google Cloud boss Diane Greene.Fortune Brainstorm Tech

Speaking on the night before the start of “Next 2018,” GCP’s annual showcase for cloud services and products, Pichai conceded that all the players in the segment are faring well — not just Google.

“That’s why it feels far from a zero-sum game,” Pichai said. “All the major players are definitely seeing traction.”

That’s not Google’s typical narrative on the subject and the reason is obvious. The statement raises awkward questions. Are GCP’s business gains the result of its superior expertise and technology as managers have suggested, or are all the players benefitting from a deluge of money flowing into the sector as cloud adoption in the business world expands?

Cloud computing is supposed to be one of the next hot growth areas for Google and management continues to devote more resource to developing the business. The company doesn’t break out GCP’s financial numbers but rolls them into its “other” category, which generated $4.425 billion in the second quarter, slightly above analyst expectations of $4.4 billion. So, the stakes are high.

Back on the offensive

Maybe that’s why it didn’t take long for Picahi to go back on the offensive. In his response to Mahaney, he cautioned that though much of the sector is growing, there’s still a real danger for cloud customers to get “on the wrong platform.” The CEO also said he believes more businesses will begin to trust their information to multiple platforms.

All that might be a tad self-serving, according to Dan Ives, head of technology research for GBH Insights.

“For (Google) the best thing that could possibly happen is that more companies adopt multiple clouds,” said Ives, who expressed some skepticism that many companies would take a two-platform approach to the cloud. “Amazon and Microsoft are not a duopoly but they do have a big lead.”

Ives agreed that there’s “a secular shift to cloud computing” occurring in the business world, and that “the rising tide is lifting all boats.”

But he doubts that GCP’s gains are all due to the expansion of the market. He credited GCP with executing well. As for the future, he said Google has one potential game changer: Artificial intelligence. AI is already making an impact for Google in numerous other businesses, including retail, advertising, healthcare and autonomous cars.

“From an innovation perspective, it’s hard to match (Google),” Ives said. “They’re always looking for an edge in the cloud arms race…clearly I don’t see them knocking off Microsoft or Amazon but this still a growth opportunity for Google.”

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