Google cloud chief earns kudos from Wall Street

Diane
Greene, Google Cloud Platform CEO, speaks at the company’s Next
conference in 2018
Greg
Sandoval/Business Insider

• Several Wall Street analysts showed up to Google’s
  annual cloud computing conference going on now in San
  Francisco.
• And they like what they see, applauding the direction
  that cloud boss Diane Greene is taking.
• At least one of them thinks Google’s cloud platform can
  generate as much as $7 billion for Google this
  year. 

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Diane Greene is steering Google
Cloud Platform (GCP) in the right direction to grow the business
and someday possibly challenge Microsoft Azure, the widely
acknowledged No. 2 cloud provider, according to several Wall
Street analysts. 

Google is considered to be a
distant No. 3 in cloud, while Amazon is leading the pack.

S
ome of the financial analysts who attended
the first day of the Google Cloud Next conference in San
Francisco on Tuesday, issued mostly glowing reports about what
they saw.

“Google is now firmly the No.3
player and this year is embracing hybrid cloud, artificial
intelligence and security as key areas of differentiation,” wrote
Colin Sebastian of Baird Equity Research. “Based on conversations
with attendees, feedback on Google’s cloud platform is
positive, although still lags a bit on service and
breadth of infrastructure services.“

Analysts have their heads in the cloud

Many on Wall Street see a lot of
potential in a variety of Google’s side bets, the businesses
Google has entered beyond advertising. 
These include autonomous cars (Waymo),
 video-sharing (YouTube), hardware (Android, Google Home)
and cloud computing.

While nobody knows for sure how
big a market self-driving cars will be, cloud has already proven
itself a huge source of income. The only questions that matter
now are how big the market can eventually become and which cloud
providers will be the most successful.

Michael
McNamara, Target’s chief information officer, speaks at the
Google’s Next conference in 2018.
Greg
Sandoval/Business Insider

Some analysts say Greene, the
cloud boss who has become
one of Google’s star managers since taking over the unit in
2015, deserves positive marks for melding the cloud with
artificial intelligence, signing large new
customers 

such
as Target 

and
“embracing a hybrid-cloud strategy.”

Hybrid computing is a way to help
big companies use Google’s cloud in their own data centers for
tech they can’t (or won’t) move into the data centers owned by
Google.

Specifically, on Tuesday, Google
announced

a new product called GKE
On-Prem,

which will
run inside a customer’s private data center. This way, a company
can store some of its apps and data in Google’s cloud but can
also continue to store other materials on its own servers.

A $5 billion – $7 billion
business

Giving customers options was a recurrent theme at the conference.
Another example is the company’s decision to break out out a
standalone version of Google Drive. Businesses no longer have to
pay for all of G Suite to obtain Drive, the file storage system
popular with those who must collaborate on projects.

“Google’s commitment to cloud was evident,” Doug Anmuth of JP
Morgan wrote in a note. “We believe Google Cloud is focusing on
the right areas, such as expanding partnerships with
distributors, including Cisco, VMware, Salesforce, and SAP.”

Anmuth was particularly bullish on cloud’s potential revenues.
Google doesn’t reveal GCP’s financial performance but the analyst
suspects the unit generated $1 billion or more in revenue in the
fourth quarter last year and said its likely Google will hit
similar quarterly numbers in the future.

 “We believe Google Cloud revenue could be in the $5 billion
to $7 billion range in 2018,” he wrote.