Google has a new cloud computing boss and big ambitions to someday produce more revenue from that business than from advertising.
Now comes the hard part: winning over big-spending customers.
Alphabet Inc's cloud computing division remains a distant third behind Amazon and Microsoft 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 vast customer base of Amazon, according to a new Reuters analysis of company regulatory filings.
Shares of Google parent company Alphabet were down about 1.7 percent Thursday morning after Reuters released the report.
Businesses generally are not required to disclose their cloud vendors. Reuters found 311 out of about 5,000 worldwide that did so in 2018. While not comprehensive, the data provide a window into Google's challenge.
Amazon Web Services led with 227 clients, including travel company Expedia and industrials giant Siemens AG. Microsoft's Azure cloud had 69 firms, among them weapons maker Axon Enterprise and business data firm Dun & Bradstreet.
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 of 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's enormous appetite in those companies to consider Google."
Google declined to comment or make Kurian available for an interview.
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 Amazon and Microsoft do not dominate.
"Its 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 is through applications."
A 22-year veteran of Oracle, Kurian gave the database company fresh life as the product leader behind its move to selling cloud services. His hire is already making potential customers reconsider Google, said Ray Wang, founder of Constellation Research, a Monta Vista, Calif.-based firm that helps businesses negotiate cloud deals.
"They've worked with him," Wang said. "There's a trust factor that wasn't there before."
Kurian also must reassure some investors bewildered by Google's cloud ambitions: Diversifying revenue beyond advertising is a plus, but it is not coming cheap.
Google, Microsoft and Amazon combined spent nearly $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 can top even the 60 percent of Google's ad business.
"The next wave of growth is going to have to come from the heavy hitting applications," said Kerry Liu, chief executive at Rubikloud, which helps retailers with cloud projects.