Google is getting a new cloud boss, and he’s inheriting some problems in the cloud wars with Amazon and Microsoft — but also real opportunity (GOOG, GOOGL)

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  • Google Cloud is getting a new boss in the form of Thomas Kurian, formerly of Oracle
  • From his predecessor Diane Greene, Kurian will inherit a third-place position in the cloud wars with Amazon and Microsoft.
  • Google Cloud is doing well on its own terms, signing some big customers and building its technology.
  • But Google has big expectations for Google Cloud, and it’s nowhere near its biggest rivals.

When Thomas Kurian, formerly of Oracle, takes over as CEO of Google Cloud in January, he’s going to have his work cut out for him. 

Diane Greene, the outgoing CEO, was seen as the company’s trump card in the ongoing cloud computing platform wars between Microsoft, Google, and Amazon. Google Cloud encompasses G Suite, the company’s productivity suite, and a major rival to Microsoft’s Office 365, as well as the Google Cloud Platform, which lets customers rent supercomputing power from the Silicon Valley giant’s own data centers. 

As a seasoned veteran of the enterprise software space, and the cofounder of tech giant VMware, Greene was supposed to help Google Cloud reach new, lucrative big-business customers customers — and, in so doing, reach its pie-in-the-sky goal of supplanting advertising as Google’s biggest source of revenue by 2020.

That was the plan, anyway.

Google Cloud isn’t where it could be

A little under three years later, though, Google Cloud is still not living up to expectations. Make no mistake, Greene led Google Cloud to some key wins: Target, Apple, and other big customers all signed on under her watch. Wall Street has lauded her strategy, with one analyst expecting Google Cloud to do $8 billion in revenue this year. 

At the same time, Google Cloud is still a distant third place to the market-leading Amazon Web Services and its chief rival, Microsoft Azure. Those same Wall Street analysts who say that Google Cloud is on the right track acknowledge that there’s a tremendous gap between Google’s cloud business and Microsoft’s, let alone Amazon’s. 

Amazon Web Services launched years before either of its main competitors, and has aggressively gobbled up the lion’s share of the market since. Microsoft, for its part, has turned its existing relationships with enterprise customers into its greatest strength, as it slowly but surely transitions them to the cloud.

Diane Greene

While Google Cloud is often seen as the furthest ahead in terms of pure technology, it doesn’t have the business advantages of its rivals. This is where Greene was intended to help: Her pedigree in enterprise technology was intended to help Google Cloud close deals with deep-pocketed global-scale companies. 

That’s worked, to a large extent — but Google ultimately has to share some of its biggest wins with its competitors. Apple, for example, uses both Google Cloud and Amazon Web Services to power its iCloud service. It’s still a win for Google, to be sure, but it’s not the kind of clean victory that shows inarguable dominance.

At the same time, Google has tried to make this so-called “multi-cloud” approach a cornerstone of its strategy, and when Google Cloud pulled out of contention for the Pentagon’s $10 billion JEDI contract, it chided the Department of Defense for only wanting to bank on one cloud platform (which will probably be Amazon’s). 

See also: Meet the 22-year Oracle veteran executive who’s going to lead Google in the cloud wars against Amazon and Microsoft

And even years into the Greene years, Google Cloud had become known for poor customer service. Over the summer, Google Cloud infamously threatened to permanently and automatically shut down an energy management company’s critical app unless the right forms were filed. The company vowed reform, but some damage was done to its brand.

Cloud is unlikely to replace advertising as Google’s chief business any time soon, either.  Google generated some $22.6 billion in advertising revenue in the last quarter alone — almost four times what that analyst believes Google Cloud will bring in over the entire year. 

It won’t be easy

At the same time, Google Cloud has some real opportunity ahead of it. Backed by the engineering might of Google, its cloud platform is seen by many developers as the most future-looking option out there.

Technologies like Kubernetes and Tensorflow were invented by Google for its own use, but have since become smash hits with developers in Silicon Valley and beyond. While the other platforms generally support these and other Google-born tools, Google Cloud has a reputation as being the first and best place to run them. Over the years, Google has underlined these advantages by aggressively adding new technologies and capabilities to its cloud.

Kurian himself seems to have a good handle on what real users actually want, too, judging by the reported circumstances of his departure from Oracle. He is said to have pushed hard against Oracle founder Larry Ellison to have the database giant support Amazon’s and Microsoft’s clouds, rather than focus solely on its own.

This would indicate that Kurian is of a mind to focus on the customer experience — to “meet the customer where they are,” to borrow a Silicon Valley chestnut of wisdom. It’s a similar mindset as Microsoft CEO Satya Nadella, whose embrace of rival technology has only improved the positioning of its overall cloud business. 

Still, it won’t be easy for Kurian. 

“I’m not sure Thomas will be any better a fit than Diane was with the young, disruptive, and energized employees of Google,” says Dave Bartoletti, VP and principal analyst with research firm Gartner. 

Kurian has the potential to bring his Oracle chops to bear at Google — but remember that Oracle, one of the most established enterprise companies in the world, is very different than Google, which still makes its money from search advertising. 

“If he can bring sales and strategic rigor to the enterprise selling motion, it will help Google penetrate the enterprise cloud market further,” says Bartoletti. “But it’s going to be quite a culture clash from his days at Oracle.”

SEE ALSO: Google just named a former Oracle exec as the head of its giant cloud business

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