Google Cloud is making 'significant gains' in market share, but proving its legitimacy to large customers is still its 'biggest struggle,' according to a recent Gartner report

Google Cloud is making 'significant gains' in market share, but proving its legitimacy to large customers is still its 'biggest struggle,' according to a recent Gartner report

September 11, 2020
  • Google Cloud ranked third behind Amazon Web Services and Microsoft on Gartner's Magic Quadrant, a report it publishes every year to evaluate various clouds. 
  • Google Cloud has made "significant gains" in market share and its capabilities, the report says, like with open source and hybrid cloud. 
  • However, large companies may still be cautious about Google Cloud's ability to serve them, Gartner says, particularly in light of several outages the firm had last year. 
  • Visit Business Insider's homepage for more stories.

In the past year, Google Cloud has made "significant gains" in market share and its capabilities, according to a recent report from Gartner, but it will have to do more to catch up to rivals Amazon and Microsoft.

Gartner recently published its annual "Magic Quadrant report that ranks cloud services like Amazon Web Services, Microsoft, and Google Cloud with categories like "ability to execute" and "completeness of vision." Currently, Google Cloud ranks third behind AWS and Microsoft Azure, respectively.

As it plays catch up, Google Cloud has been playing to its strengths, Gartner says. For one, Google Cloud has made some game-changing contributions in open source, including its widely used Kubernetes cloud computing project and its TensorFlow AI project. All this has helped Google Cloud win the hearts and minds of developers.

Still, some customers may be cautious about Google Cloud serving the needs of large business customers, says Raj Bala, research director at Gartner.

Microsoft has a long history of selling to huge enterprises, while Amazon has first-mover's advantage: It pioneered the cloud business and its cloud unit reeled in over $10 billion in revenue in the most recent quarter. Google Cloud, meanwhile, is on track to generate over $10 billion in revenue this year.

"Google does not have the enterprise pedigree that Microsoft has," Bala told Business Insider. "That remains their biggest struggle: Essentially, being able to convince enterprises they're a legitimate supplier of enterprise IT."

Winning small and large customers, alike

Beyond Google Cloud's open source strengths, many clients know Google Cloud for its capabilities in big data and data science, Gartner says. And with the launch of a product called Anthos, Google Cloud is focusing on building out its hybrid cloud, which allows customers to use their private data centers alongside Google Cloud, and even rival clouds like AWS and Microsoft. 

While Microsoft was the first major cloud to promote this hybrid strategy, Anthos could help Google win major customers in highly-regulared industries like finance and telecommunications, which may need to keep some data in private data centers.

"Google's strength is they really go for this vision for Anthos and Kubernetes on GCP that is quite distinct from everyone else," Bala says.

Read more: A Wall Street analyst says that Google's secret weapon in the cloud wars is right on target

Still, Bala says Google Cloud needs to be more clear about how solutions like Anthos can help large business customers. 

"The downside is they managed to really confuse the market as to what it is with too much hand waving," Bala said. The essense of Anthos may have been lost in the fanfare, Bala said: "That may have confused the market as opposed to saying, 'It's a succinct set of services to make enterprises more agile with how they build, operate and deploy applications.'"

Last year, Google Cloud also faced several outages, which Gartner describes as having a "devastating impact" on customers like Snapchat and Discord, as well Google's own apps, like G Suite and YouTube. 

"Reliability is our number one priority," a Google Cloud spokesperson said in a statement. "Service disruptions happen occasionally, as they do with all cloud providers, and we work to address them quickly and to be transparent with our customers about the nature and extent of those service disruptions. We also conduct and complete thorough post-mortems which are designed to systemically address risks across the platform, and prevent recurrence. We know events like these are disruptive for our customers, and acknowledge they do not meet our high internal standards for customer experience."

Still, if Google Cloud fixes these issues and ramps up its ability to work with large business customers, it has potential to win over customers worldwide as many businesses around the world have yet to move to the cloud, Bala said: "There are still parts of the world that are still up for grabs."

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