Head of Google's Cloud-Computing Effort to Step Down -- WSJ
17 November 2018 - 7:02PM
Dow Jones News
By Douglas MacMillan and Jay Greene
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (November 17, 2018).
Google's top cloud-computing executive and one of tech's
highest-ranking women is departing the company after three years
and will be succeeded by a former executive of business-software
rival Oracle Corp.
Diane Greene will relinquish her role as CEO of Google Cloud in
January, she said in a blog post Friday. Thomas Kurian, a former
president of product development at Oracle, will then step in. Ms.
Greene will retain her seat on the board of Google parent Alphabet
Inc.
Ms. Greene, a Silicon Valley veteran who co-founded
corporate-software pioneer VMware Inc., joined Google in 2015 to
help it take on Amazon.com Inc. and Microsoft Corp. in the growing
market for cloud computing software and services. Ms. Greene
expanded Google's sales force and struck deals with corporate
clients such as Target Corp. and HSBC Holdings but failed to gain
market share at the same rate as Microsoft.
"They haven't performed as well as the expectation was when
Diane was brought on," said Holger Mueller, principal analyst at
Constellation Research, Inc.
Google remains a relatively tiny player in a market dominated by
Amazon, which generated 51.8% of revenue in the global
cloud-software market in 2017, according to Gartner. Microsoft
outpaced other players, increasing its share to 13.3% last year,
from 8.7% the year earlier. Google nudged its share up to 3.3%,
from 2.7% in 2016.
Inside Google, where the core business of online ads is showing
signs of slowing, cloud computing is seen as a key driver of
growth. Google said earlier this year cloud sales generated more
than $1 billion quarterly, but it hasn't disclosed any further
specifics. Analysts at Credit Suisse expect the division to
generate $6.9 billion, or about 6% of Alphabet's total revenue this
year -- up from an estimated 3% last year. In the third quarter
alone, Amazon's cloud division generated $6.68 billion.
Ms. Greene's investment in artificial intelligence tools has
given Google advantages over competitors but also put her at the
center of a debate about the ethical use of AI. Her team's work
helping the U.S. Defense Department with drone targeting, an effort
called Project Maven, sparked internal backlash from Google
employees earlier this year, ultimately leading the company to say
it would stop renewing the contract.
Mr. Kurian led Oracle's transformation from a vendor of legacy
software applications that companies run in their own data centers
to one that belatedly embraced cloud computing. His title was
president of product development, but he reported directly to
Chairman and Chief Technology Officer Larry Ellison, not the
company's co-chiefs, Safra Catz and Mark Hurd.
Mr. Ellison is driving Oracle's investment in developing a rival
cloud-infrastructure service that competes directly with Amazon,
Microsoft and Google, and has routinely criticized market leader
Amazon as having inferior technology. At Oracle's OpenWorld
conference two years ago, Mr. Ellison predicted "Amazon's lead is
over" -- but since then Amazon's cloud-infrastructure business has
grown faster than Oracle's much-smaller one.
As Oracle continued to lose ground in that market, Mr. Ellison
reorganized the engineering teams that develop the company's
cloud-computing services this summer, according to a person
familiar with the internal discussions. Those changes left Mr.
Kurian with a smaller remit, the person said. Oracle announced that
Mr. Kurian would take "extended time off" in early September, and
said later that month that he wouldn't return.
Mr. Kurian's focus on building Oracle's cloud business, as well
as working with its large, corporate customers, should help Google,
said Stifel Nicolaus & Co. analyst Brad Reback. The company has
been slow to develop the sales and support organization that big
corporate customers require.
"He understands the challenge," Mr. Reback said of Mr.
Kurian.
Google's hiring of Mr. Kurian could suggest the company will
consider making a bid for Red Hat Inc., the software-and-services
company that International Business Machines agreed to acquire last
month for $33 billion, Mr. Reback said. Red Hat would provide
Google with the sales and support muscle, as well as credibility
with corporate tech buyers, that it lacks, Mr. Reback said.
"Either you're playing to win or you're not," Mr. Reback
said.
Write to Douglas MacMillan at douglas.macmillan@wsj.com and Jay
Greene at Jay.Greene@wsj.com
(END) Dow Jones Newswires
November 17, 2018 02:47 ET (07:47 GMT)
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