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Google's new cloud boss has big task to catch rivals, Reuters data show

SAN FRANCISCO: Google has a new cloud computing boss and big ambitions to someday produce more revenue from that business than from advertising.

] Alphabet Inc's cloud computing division remains third behind Inc. and Microsoft Corp. in terms of global revenue, according to analysts' estimates. A few major companies manage their data on Google's servers. But Google has nowhere near the fixed customer base of Amazon, according to new Reuters analysis of company regulatory filings.

Reuters found 31[ads1]1 out of about 5,000 worldwide that did so in 2018. Thirty five of those companies named Google as a cloud provider. The largest by market capitalization was oil major Total and bank HSBC Holdings Plc

Graphic: Amazon's cloud dominance –

Amazon Web Services led with 227 clients, including travel company Expedia Group Inc and industrial giant Siemens AG. Microsoft's Azure cloud had 69 companies, among them weapons maker Axon Enterprise Inc. and business data firm Dun & Bradstreet Co.

Thirty four of the companies cited multiple clouds.

The previously untracked data show the work ahead for Thomas Kurian, who is weeks on the job as senior vice president or Google Cloud. Kurian has vowed to double down where Google has seen promising results. Specifically, he plans to target governments and top companies in retail, manufacturing, healthcare, media and finance.

"A lot of our focus as we go forward is making sure that our sales organization has the background and the ability to sell to. large, more traditional companies, "Kurian said at a Goldman Sachs investor conference last week. "There is enormous appetite in those companies to consider Google."

Google declined to comment Kurian available for an interview.

Graphic: Why cloud vendors get disclosed –

People familiar with his plans said he is looking to reshape his division's culture. A key part is developing or acquiring easy-to-use, industry-specific corporate applications, an area that does not dominate Amazon.

"It's about the on-ramp onto their cloud," said Daniel Ives, a New York-based financial analyst following the cloud industry for Wedbush Securities. "The main way to get that through applications." His hire is already making potential customers' reconsider Google, said Ray Wang, founder of Constellation Research, in Monta Vista, Calif.-based firm that helps businesses negotiate cloud deals.

"They've worked with him," Wang said. "There is a trust factor that wasn't there before."

Kurian also must reassure some investors affiliated with Google's cloud ambitions: Diversifying revenue beyond advertising is a plus, but it is not coming cheap.

Google, Microsoft and Amazon combined spent nearly US $ 53 billion on capital expenses last year, driven by data center projects to house their clouds

With gross margins of 20 percent or less, selling cloud storage or tools for which customers need specialized staff is less lucrative for a small vendor, industry experts said. But margins on the type of software Kurian likely wants to offer as much as 60 percent of Google's business.

"The next wave of growth is going to come from the heavy hitting applications," said Kerry Liu, chief Executive at Rubikloud, which helps retailers with cloud projects. "GEEKY, TECHY PLATFORM"

Google got serious about the cloud around 2016, five years after Amazon Web Services had become a multibillion-dollar behemoth. But Google's reputation for limited customer support has attracted mostly newer businesses or those with significant technical know-how.

Mike Fisher, Etsy Inc.'s chief technology officer, said Google's superior AI tools helped win over the New York-based crafts marketplace. Fisher expects data-crunching algorithms to account for 25 percent of its server use this year, up from 10 percent last year. "We've been more pleasantly surprised than we thought," Fisher said of the cloud's benefits. [19659002] Advertising software company OpenX recently agreed to spend at least US $ 110 million on Google Cloud over five years. The Pasadena, Calif.

"It's a bit more of a geeky, techy platform, but we're kind of a company," said Chief Technology Officer Paul Ryan. 19659002] Graphic: Battle for large cap customers –


To attract more traditional corporate clients, Google Cloud will need to do some handholding, executives at its partners and rivals said

Kurian is well-suited to the role. Two of his former colleagues said his follow-up and candid disclosures about product limitations helped seal deals at Oracle. An early riser, Kurian impressed staff with his meticulous preparation for morning meetings as well as his recall of the details of clients' systems from years before.

Kurian also managed billions of dollars in acquisitions at Oracle, including the purchases of software BEA Systems and Taleo.

Applications can come through similar deals and internally: Google is testing product recommendation software for shopping apps, a person familiar with the project said, to

add to its small set of specialized tools. 19659002]

(Reporting by Paresh Dave; Additional reporting by Arjun Panchadar in Bengaluru; Editing by Greg Mitchell and Marla Dickerson)

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