Author(s): Nicholas McQuire
Google Cloud Next '19 took place last week in San Francisco, barely eight months after the 2018 event — but a lot has changed in that time. The event marked the first major public appearance of new CEO Thomas Kurian, who took the reins of the company from predecessor Diane Greene earlier in 2019. It's a critical moment in Google Cloud's history: the company remains in third place in the hypercompetitive cloud wars against Amazon Web Services (AWS) and Microsoft. But Mr Kurian used the opportunity to share a glimpse of the new direction in which he's taking the company.
The event showed that a new Google Cloud is already emerging. But if Google really wants to put a meaningful dent in the businesses of AWS and Microsoft over the next 12 months, it must invest in sales, improve global marketing — especially to vertical markets and CEOs — and foster more integrations with the wider consumer Google and Alphabet businesses.
In this article I'll look at some of the leading themes and announcements and then go deeper into my assessment.
A New Vision: A Strategic Partner for Digital Transformation
Mr Kurian arrived at Google Cloud in January 2019 to an organization on strong foundations. Multiyear contracts and cloud deals valued at over $1 million have more than doubled over the past year, growth in total compute hours more than trebled, and the firm now counts nine of the 10 top media and entertainment firms, seven of the 10 largest retailers and half of the largest finance, energy and utilities organizations as customers.
This progress became evident early on at Cloud Next through the vast array of customer testimonials that came to dominate the keynote presentations this year. Procter & Gamble, JPMorgan Chase, McKesson and others shared story after story of how they're turning to Google Cloud to support their business and industry transformations. These case studies also provided Mr Kurian with his first opportunity to share his vision for the company as the leading strategic partner for digital transformation.
The new CEO is set to revamp his unit's entire go-to-market approach to support customers' digital transformation projects. This includes large investments in sales and in partners. Google is also aiming to capitalize on the growing number of enterprises looking beyond basic lift-and-shift considerations for cloud services and toward a longer-term strategic partner to help with their business innovation goals. In these areas, Google believes it has an edge, especially in deals where a CEO is involved as part of a company-wide transformation.
Google Goes Multicloud with Anthos
Google is also becoming more attentive to meeting customers where they are on their cloud migrations. The major announcement of the show was Anthos, Google's hybrid and multicloud platform, which provides more flexibility for customers that want to run applications on-premises, in the Google Cloud and, crucially, with other major public cloud providers such as Microsoft Azure and AWS.
According to our estimates, more than half of enterprises now use more than one public cloud provider. Developers today want to spin up infrastructure for new applications or lift-and-shift projects, while maintaining consistency and portability across their on-premises IT, the public cloud and at the network edge. IT departments also want to choose suppliers more flexibly, often one workload at time. As a result, demand for multi- and hybrid-cloud services, as well as open-source technologies such as Kubernetes containers, has increased rapidly over the past 12 months. As an indicator, Google said that it launches on average 4 billion containers each week.
Anthos is the first big push into multicloud services by a major cloud provider and a big change to how Google positions its cloud services. It will be fascinating to see how AWS and Microsoft respond in the coming months.
Progress in Artificial Intelligence and Machine Learning
Artificial intelligence (AI) was the source of many of the event's major announcements, but this was unsurprising as the area has become one of Google's most potent competitive advantages. Some of the highlights included:
- The release of several solutions for retail, including Contact Center AI, Document Understanding AI, Recommendations AI and Visual Product Search, services that are becoming spearheads in a new vertical strategy under Mr Kurian. The focus on retail also sets up a fascinating battle with AWS, which is also wooing retailers to its cloud with AI (see re:Invent Shows Amazon's Accelerating Efforts in AI).
- Further expansion of Cloud AutoML, Google's machine learning customization tool launched in January 2018. It released AutoML Tables, which focusses on the automation of training on structured data, AutoML Video for custom labelling and video classification, and AutoML Vision Edge for custom image models on edge devices. We estimate that AutoML now has more than 50,000 customers, up from the 30,000 reported at Cloud Next '18, making it one of the most successful machine learning products in the market.
- The launch of AI Platform, an end-to-end machine learning life-cycle platform that combines several Google products such as Cloud Machine Learning Engine, AutoML and AI Hub into a simplified environment.
Google is rapidly creating one of the best suites of machine learning products in the industry. But it needs to focus on several areas in the year ahead. Firstly, it must build more horizontal and vertical business solutions, an area it currently prioritizes, as does IBM. Secondly, it must recruit more systems integration partners that are focussed on helping customers implement AI. Examples here include companies like of SpringML, Pluto7 and Cognizant, which understand AI, industries and business processes.
Thirdly, and most importantly, Google needs to convey and broaden awareness about its strategy for responsible AI and governance. Firms operationalizing AI into business processes need instruments to monitor and improve security, bias, explainability, model performance and overall quality assurance. I highlighted this in 2018 in my assessment of Google's AI strategy (see Google Cloud Ups Its Enterprise Game).
I had the honour of speaking on a popular panel at the event this year about AI responsibility, just days after Google disbanded its AI ethics council. In the session, Google shared its experiences and recommendations on the topic (you can watch the video here). Along with the open-source release of several of its internal tools such as TensorFlow Extended and What-If Tool, Google is making some good initial steps. But establishing the right elements for AI governance will become critical to its strategy as the market and competition for AI in the enterprise heats up.
What's Next for Security, Privacy and Trust
Security continues to be one of Google's largest areas of investment and a vital source in helping it establish trust with enterprises. According to CCS Insight's 2018 survey, Google is now the second most trusted technology supplier when it comes to securing company data, behind Microsoft. At the event, Google revealed major announcements covering a host of areas including threat detection, health analytics, visibility and management, Android multifactor authentication, G Suite and user protection.
But customer perceptions of its security story can be mixed, and some still question the level of trust they should afford Google. Mr Kurian repeated Google Cloud's security policy in his keynote speech, reiterating that every customer owns their data, that Google Cloud doesn't sell customers' data to third parties, nor use it for advertising purposes. He also reinforced its approach that all data is encrypted by default and that it guards against insider or government access to that data.
In 2018 I argued that Google will be among the leading cybersecurity firms of the future, but this requires the company to think of itself more as a supplier of security services in addition to being a secure platform provider. Happily, Cloud Next revealed a change of thinking in this direction, which was reflected in the more than 30 security enhancements introduced across the portfolio. The company must continue to strengthen its security message as a priority in what has now become a competitive battle among cloud providers in security and trust.
G Suite Welcomes Google Assistant
Finally, Google showcased the ongoing progress of G Suite, saying it now has 5 million paying businesses, up 25% since January 2018, and over 90 million users in the education sector, up from 80 million in 2018.
AI is playing a central role in its competition against Office 365 and was the focus of this year's major announcement: the availability in beta of an integration between Google Calendar and Google Assistant, the company's natural language voice assistant. Google Assistant is also being embedded into its web meetings platform Hangouts Meet, allowing users to start a meeting using voice commands.
Although speech assistants have a long way to go in business, CCS Insight's survey research found that Google Assistant is employees' preferred voice assistant, and the one expected to deliver most value in a work context. It's up to Google to take advantage of this in a meaningful way.
A First Look at the New Google Cloud
The event gave us our first glimpse of the new Google Cloud emerging with Mr Kurian holding the reins, one with a more enterprise-orientated message and more focussed in its go-to-market strategy. With the arrival of Anthos, Google is also more attentive to market realities and meeting customers where they are on their cloud migrations.
Above all, Google is much clearer on its differentiators, namely open source, its distributed infrastructure, data analytics and AI, security, and a partnership model that engages its leading engineering expertise to support customers' co-creation, innovation and digital transformation needs.
But if it is to emerge a winner against its cloud competitors, it must also focus on three areas that seemed to be missing from major discussions at the conference. Firstly, it must improve its global marketing with stronger, clearer and bolder advertising to businesses and industries beyond its core IT engineering and developer communities. Secondly, it must pursue CEOs who want trusted partnerships with tech firms to support their business and digital transformation plans, an area where Google currently has an edge.
And thirdly, Google has made good steps in integrating Google Cloud with the wider consumer organization and bringing a "one Google" approach to the enterprise, but it needs to work harder to integrate the cloud unit further across Alphabet in areas such as Google Health, Google AI and DeepMind, the Chronicle cybersecurity business and the Internet of things, a topic that received little attention this year.
These endeavours are crucial as Google Cloud looks to achieve the vision that its new CEO spelled out.