Alphabet Inc. unveiled new customers and partners for its cloud storage service in an attempt to boost the standing of Google’s business sales unit, which lags behind Amazon.com Inc. and Microsoft Corp.
Diane Greene, Google’s cloud chief, named several recent clients at the company’s event Wednesday in San Francisco, including Colgate-Palmolive Co., HSBC Holdings Plc and EBay Inc. Google also scored a big win from a rival: Verizon Communications Inc. announced that it has moved more than 150,000 employees to Google’s productivity apps, called G Suite. Previously, Verizon used the Office app suite from Microsoft, according a person familiar with the arrangement.
“Cloud is just a transformational technology,” Greene said on stage. “It’s increasingly what is giving our customers their competitive advantage.”
Microsoft didn’t have an immediate comment on the Verizon contract.
Google’s largest focus at its event was on the search engine’s broad product portfolio and computing assets, including its security architecture—a key pitch for its third-place cloud division.
Last year, Google combined the sales teams of its cloud service, which sells companies storage space over the internet, and its apps. On Wednesday, Google executives also touted the company’s mapping software, mobile devices and machine intelligence tools.
Selling a package of products is Google’s attempt to lure customers from its larger cloud competitors. Amazon Web Services is the market leader, netting over $12 billion in revenue in 2016, but doesn’t have business app offerings. Both AWS and Microsoft, however, are investing deeply in artificial intelligence.
Greene said she just learned Tuesday that Google cloud was recognized as having the “highest availability” of any cloud provider in 2016, meaning less chance for system crashing. Amazon acknowledged last week that a human error at AWS caused sweeping outages across the internet for several hours.
“I think 2017 will be a good year, too,” she said, laughing.
Google also announced a partnership with SAP SE’s Hana database to open up more programming tools for developers.
“Above all, we are excited to see what you all create with our product and services,” Google CEO Sundar Pichai told the audience at the event.
Google generates close to 90 percent of sales from online advertising and doesn’t disclose its cloud revenue. But the item where the unit’s sales sit, Google’s “other revenues” line, rose 62 percent in the fourth quarter to $3.4 billion.
Microsoft’s moves in cloud tech
Microsoft, meanwhile, said this week it was taking steps to stay more competitive in the cloud services business—a move that could have rippling effects in the production of computer chips used in running cloud services.
Microsoft is committing to use chips based on ARM Holdings Plc technology in the machines that run its cloud services, potentially imperiling Intel Corp.’s longtime dominance in the profitable market for data-center processors. Microsoft has developed a version of its Windows operating system for servers using ARM processors, working with Qualcomm Inc. and Cavium Inc. The software maker is now testing these chips for tasks like search, storage, machine learning and big data, said Jason Zander, vice president of Microsoft’s Azure cloud division. The company isn’t yet running the processors—known for being more power-efficient and offering more choice in vendors—in any customer-facing networks, and wouldn’t specify how widespread they eventually will be.
“It’s not deployed into production yet, but that is the next logical step,” Zander said in an interview. “This is a significant commitment on behalf of Microsoft. We wouldn’t even bring something to a conference if we didn’t think this was a committed project and something that’s part of our road map.”
Microsoft is planning to incorporate the ARM chips as it develops a new cloud server design, which it will discuss Wednesday at the Open Compute Project Summit in Santa Clara, California. The company is announcing new partners and components for the design, first unveiled last year, as it moves closer to putting the machines into its own data centers later this year. Because the design is open-source, meaning it’s freely available to be used and customized, other companies are also likely to use variations.
Both the server design, called Project Olympus, and Microsoft’s work with ARM-based processors reflect the software maker’s push to use hardware innovations to cut costs, boost flexibility and stay competitive with Amazon and Google. While large cloud companies have moved toward greater use of unbranded servers, storage and networking gear, Intel chips have remained one of the sole big-name products widely in use. Microsoft’s work with ARM, in progress for several years, could pave the way for a real challenge to Intel, which controls more than 99% of the market for server chips.
While Intel is among companies making components to work with the Project Olympus design, ARM-chip makers such as Qualcomm and Cavium are also in the running, increasing the chance that other server customers will begin to use these processors. ARM, which licenses its chip designs to manufacturers, is owned by Japan’s Softbank Group Corp.
Any challenge to Intel’s dominance in server chips is a threat to its most profitable business and main revenue driver as demand for PC processors continues to shrink. The company’s Data Center Group turned $17.2 billion of sales into $7.5 billion of operating profit in 2016, and Intel has been running ads that say,”98% of the cloud runs on Intel.”
Microsoft’s server spending decisions have the potential to impact suppliers’ bottom lines—its Azure service is No. 2 in cloud infrastructure behind Amazon, and it’s one of the biggest server buyers. Last month, computer maker Hewlett Packard Enterprise Co. reported disappointing quarterly revenue, citing “significantly lower demand” from a major customer. That client was Microsoft, people familiar with the matter said.Favorite