5 reasons why Google can catch Amazon in the cloud

Sharon Gaudin

3. Google needs to attack pricing
Armed with massive coffers, Google is pushing down the price of using a public cloud, forcing Amazon to follow its lead.

Google executives have said cloud pricing should follow a Moore's Law-like pattern, falling by a factor of two every year. That's aggressive and Google seems to be pushing that strategy forward.

For example, in March, Google slashed its pricing. Google Compute Engine now costs, on average, 32% less. Google Storage also has been cut, on average, 68%, while prices for Google BigQuery on-demand analysis services were cut by as much as 85%.

The day after Google's pricing announcement, Amazon Web Services followed with what was its 42nd price reduction since it started the business. For instance, the price of Amazon's Simple Storage Service was lowered by an average of 51%.

"If you think about one of the key drivers of enterprises moving to the cloud, it makes it possible for many small to medium enterprises to have an IT department with minimal upfront capital expenses," Rebello said. "Google is trying to attack the pricing equation. If they do that while also attacking security concerns, then they are attacking the barriers to adoption."

Google, he added, has the tenacity to aggressively drive down prices to lure in both businesses new to the cloud, as well as drawing in what had been AWS customers.

4. Google may be making big capital investments
Without offering specifics, Google executives said in an earnings call this month that it is focused on capacity and investing capital to make sure it has more than enough capacity to meet clients' needs.

"Google is making the capital investments it needs to alleviate some of the concerns an enterprise IT manager might have about going with their cloud services," Rebello said. "If your data is sitting in the cloud, enterprise IT is going to worry about security and having the processing power when you need it. Google wants to make sure you have the power when you need it." That, he added, will make Google a better choice when IT administrators go shopping for a cloud service.

5. Google's future strategy hinges on the cloud
Google is placing the cloud at the center of its strategy to enable the company to remain a major Internet player in the years to come.

Early this year, Google bought Nest Technologies, a company that makes a smart-home thermostat that can be programmed from users' mobile phones. Google spent $3.2 billion in cash for the company that will put Google squarely in the connected-home market.

Rebello pointed out that Nest is also a cloud-based player.

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