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    Home » Sections » Cloud services » Google can’t fix its cloud with acquisitions

    Google can’t fix its cloud with acquisitions

    By Shira Ovide6 June 2019
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    Google on Thursday made another acquisition for its cloud computing business that competes with Amazon.com. Each deal it does is a reminder of Google’s failures so far in this lucrative field and a potential warning sign to the software specialists that have thrived in the last decade.

    Alphabet, Google’s parent company, said on Thursday that it was spending US$2.6-billion to buy Looker, which sells software to help businesses wrangle their data, make charts or other visualisations out of it and glean insights that can improve their operations. This is not a new category of software, but the proliferation of cloud computing and simpler software accessed over the Web has given rise to a flood of data analysis software specialists including Tableau Software, Qlik Technologies and Domo.

    The acquisition is Alphabet’s largest since it announced a purchase of Internet-connected home device company Nest more than five years ago. Notably, it is also the first big deal since Thomas Kurian, a longtime Oracle executive, took over Google’s operation that sells technologies to corporations. Kurian oversees the versions of Gmail and Google Docs document software for corporate use, along with sophisticated technologies that let companies’ digital information ride on Google’s global network of computer centres and artificial intelligence technologies.

    The acquisition is Alphabet’s largest since it announced a purchase of Internet-connected home device company Nest more than five years ago

    Kurian’s predecessor also made multiple acquisitions to bolster Google’s offerings for corporations. It’s not clear from the outside how those acquired companies have fared, but it is clear that despite years of efforts, Google still hasn’t measured up to competitors including Amazon Web Services and Microsoft. All of Google’s resources and smarts have not been enough to find solid footing in the $2-trillion annual market for technologies purchased by companies.

    It’s not enough for Google to sell cloud computing to the likes of Snapchat and Spotify. Like just about every seller of IT, Google wants the big fish: banks, health-care companies, oil and gas titans, governments and large retailers. Those are the biggest spenders on IT, and Google isn’t quite in their top tier of technology vendors.

    Kurian has talked about his road map to improve Google’s success in corporate technology, and it sounds like a classic road map for corporate-focused technology sellers: train specialists to focus on the needs of particular industries such as retail or energy and build more alliances with the middlemen firms that help companies stitch together all their IT. Kurian’s predecessor more or less articulated the same strategy.

    A priority

    Despite Google’s inability to join Amazon and Microsoft in the IT sellers’ big leagues, executives have said that Kurian’s business software operation is one of the fastest growing parts of the company, and it is clearly a priority for a company with limitless resources and powerful technology. Alphabet executives continue to highlight the increased spending on engineers and other resources for Google’s cloud computing operation. Google isn’t likely to give up trying to crack the massive IT industry.

    And that should be worrying to the specialist firms that have thrived in the last decade as start-up financiers poured money into business software challengers and as corporations realised they needed to upgrade their technologies to stay ahead, pare costs and continue to grow.

    Relatively young companies that focus on software for businesses — think Workday, Atlassian, ServiceNow, Veeva and Slack — have been one of the most beloved investment categories. They have grown like weeds as they’ve capitalised on demand among corporations or their workers for better, easier-to-use technologies, and as changes in software have made it easier to create digital tools for just about every type of function inside a company.

    The big unknown is what happens to these software specialists in the future. When or if there is a broad economic downturn, will companies re-evaluate what might be dozens of cheques they write each month for specialist software? Will Slack or Domo or Box suddenly seem frivolous if budgets tighten?

    That is one advantage the corporate IT titans have over these relative upstarts: Microsoft, Oracle and AWS — and maybe even Google — are hard to ditch when times are tough. And they can effectively toss in a Slack-like or a Tableau-like product for free to customers that are wavering.

    The corporate software specialists have won the last decade. The next decade, however, might belong to the software supermarkets.  — (c) 2019 Bloomberg LP



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