5 reasons why Google can catch Amazon in the cloud

Amazon dominates the cloud but analysts say don't count out Google

Amazon has such a huge share of the global cloud market it would appear none of its competitors, including Internet behemoth Google, could ever catch up.

That may not be the case.

Google, according to industry analysts, is positioning itself to take on Amazon's dominance. Despite how far back it's lagging today, Google could catch Amazon and some day supplant its top position in the cloud.

"Amazon essentially has more than 80% to 85% of cloud market share in terms of providing platform as a service," said Jagdish Rebello, a research director with IHS iSuppli. "The market is in its infancy, and Amazon sort of created the market so it's got an early lead. It's not a player to be sneezed at. But somebody like a Google could catch up with them."

Amazon's cloud computing platform, Amazon Web Services (AWS), launched in 2006 and immediately drove hard into a market it was basically creating on the fly.

Aside from holding as much as 85% of the market today, AWS has more than five times the compute capacity in use than its next 14 competitors combined, according to a 2013 Gartner report.

Business isn't slowing for AWS either.

Amazon reported last week that in the first quarter ending March 31, sales for Amazon's "other" category, which includes AWS, grew by about 60% year-over-year. That put sales around $1.2 billion for the quarter, compared to $750 million for the same period in 2013.

The company, which originally made its name as an online bookseller, also has a rich ecosystem that competitors like Google can't touch at this point.

"Where Amazon steps ahead is in its ecosystem," said Lauren Nelson, an analyst with Forrester Research. "It has the largest ecosystem out there. You can use their long list of offerings and it's ready to deploy super quickly and it's very automated and scalable. There are thousands of companies that all the work they do is on top of AWS. Some do security. Some handle compliance issues. There are a lot there."

Can Amazon hold that position in the long term, especially in the face of increasing competition? Google is considered to be in the forefront of that challenge, but it's not alone. After essentially having the public cloud market to itself for years, Amazon is watching warily as companies like Microsoft, IBM, Hewlett-Packard and Verizon make their own push.

There's even talk that Facebook is positioning itself to join the fray and build its own public cloud service.

With those challenges ahead, Amazon's continued growth and dominance may come a lot harder.

Google, meanwhile, has the best chance of succeeding in its advances on Amazon. According to analysts, Google, the company that dominates online search, stormed the mobile world with Android and eclipsed free email offerings with Gmail, is primed to take on Amazon. Neither Google nor Amazon would offer comment for this story, but here are five reasons that Google can catch up to Amazon.

1. The market is young and prone to change

AWS has been around for eight years and other companies have dived into the cloud business, but enterprises and smaller companies are still getting comfortable with storing their data on remote servers on the Internet. The cloud computing is still relatively small but it's quickly ramping up.

Forrester last week released a report showing that the public cloud market is set for what it calls "hypergrowth." Forrester said the market is expected to reach $191 billion by 2020, a 20% increase over Forrester's last forecast, in April 2011.

"Today, the cloud is small but exploding," said Jeff Kagan, an independent industry analyst. "We're still in the first inning in the game ... Remember how big Blackberry was? Then Apple came out with the iPhone and changed everything. It happens."

Kagan said the cloud computing industry will grow and change -- a lot -- over the next five to 10 years, and the companies in that space will have to grow and change too.

"Typically, the first companies that lead are not leading five or 10 years from now," he said.

2. Google has the name and deep pockets

Amazon has strong brand recognition, but when people think of the company, many still think about going to Amazon.com to buy a book or a pair of running sneakers. Google, meanwhile, is a name that enterprises well recognize.

"When people think about Amazon, they think about the Kindle and the retail angle," Rebello said' "A lot of enterprises are using Google Docs and they're using Gmail. People also are familiar with the Android OS. When you look at it from an enterprise IT perspective, you see that Google is offering services, so you figure you can't go wrong with bringing Google into the equation."

Along with that name recognition come some deep pockets.

Amazon surely isn't searching the couch cushions for change, but Rob Enderle, an analyst with the Enderle Group, said the company doesn't have the deep pockets that Google does.

"Amazon spends pretty much what they pull in," he added. "Google is loaded. If Google decides this is really strategic, they could really surprise Amazon. Google could outspend Amazon any day of the week."

Several analysts noted that most companies moving into the cloud are using multiple services. It's a new area and these companies want to compare services and find out which one works better and which one is more reliable.

That means a lot of new users may give Google, a name they know, a try. If Google throws a lot of its financial muscle behind its cloud effort, that will open up the possibility that Google can win over those users.

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.

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