Google Cloud Industry and Company Analysis Table of Contents Executive Summary 3 I. Introduction 4 II. Industry 5 III. Competition 10 IV. Company Value Chain/ Analysis Resource Based view 14 SWOT Analysis 15 Company Strategy 16 Implications V. Recommendations Works Cited 2 Executive Summary The three key components of Google Cloud are: infrastructure as a service, digital transformation platform, and industry solutions. 3 I. Introduction Google Cloud is a mixture of both Google Cloud Platform and G suite. It is essentially a public cloud-based machine whose services are delivered to customers on an as-you-go basis, by way of service components. Google Cloud was launched on April 7, 2008 by Google. As mentioned by Thomas Kurian, the CEO of Google Cloud, “we give you this platform to paint a new vision for your company…and to transform the way you serve customers in every industry” (CRN). Google Cloud’s mission is “to enable organizations around the world to transform their business using digital technology and to do so by offering the best infrastructure, a digital transformation platform and industry-specific solutions to help you transform your organization as well as to infuse you with our expertise and our culture to help you create the magic” (CRN). Google’s vision is “to organize the world’s information and make it universally accessible and useful” (Google). 4 II. Industry Industry and Market Participants Traditionally, people will use their computer and then use either a physical hard drive or USB or servers to store information. There are many problems that can go wrong with these physical storage systems as it could be easily stolen or destroyed. Result of these incidents can lead to losing important documentations forever. Due to the advancement of technology, Cloud Computing is the alternative for hard drives. Cloud computing is a virtual system that is made by programs and software engineers specialized in informational technology. In order to do so, these programs need computers to produce these codes and the internet as the location to which documents and files will be stored. Nearly every device that we use everyday such as smartphones and computers, have access to cloud computing. This convenience has made the industry’s target market directly focusing on people of all age groups and demographics who use a smartphone or computer. For regular consumers, they can store their personal documents or photos and as for companies, they are able to upload and safely keep their private information. The risk of this industry is the involvement of hackers who can tamper with the coding and get private information. Currently, the United States has no laws or regulations regarding internet privacy nevertheless, federal law such as Electronic Communications Privacy Act can relate towards online issues (“Internet Privacy Laws”). The cloud computing industry is an industry that many would presume started in the mid 2000s as that was when the large companies such as Google and Amazon started mentioning the idea, however, it has shown that the concept was first initiated back in 1997 by a now defunct company, NetCentric (Regalado 2020). Since the increase in traction of the industry by major competitors, it is said to be valued at $10.9 million dollars in the United States in 2017 (“MarketLine Industry Profile: Cloud Computing in the United States.”, 9). The industry is divided up into 3 segments with Platform as a service (Paas) having 22.8% of the market, Software as a service (Saas) having 57.1% of the market, and Infrastructure as a service (Iaas) taking up the remaining 20.1% (10). The major competitors within the industry include Amazon Web Services (AWS), Microsoft Azure, Google Cloud, Salesforce, and IBM 5 Cloud. The top 3 companies in 2019 were AWS dominated the market with 39% followed by Microsoft Azure at 19% and Google Cloud at 9% of the market ("Top 6 cloud service providers who'll dominate the cloud war in 2020"). The Five-Forces Model In this sections, we will analyse the Cloud Computing industry according to the lens of: Threat of new entrants The cloud computing industry is a new industry that has attracted many because of its large range of target markets. This industry is prone to attracting more startups as it requires very little capital to start. The main components of a cloud computing provider is the product which does not require physical production. Therefore, there is not much capital expenditure involved except for the internet, the right programer, and a computer. There are multiple startups and small companies that offer different and refreshing innovations in cloud computing. This could be an appealing factor for many companies and potential users as new features will be a better fit for those users. New entrants that are smaller in scale have a disadvantage because users are more attracted towards large companies such as Google, Amazon or Microsoft. Large scale existing companies have an advantage of a good reputation among existing users. As the industry is divided into IaaS, PaaS, and SaaS, the larger companies in the industry often have a presence in IaaS, resulting in less competition in the IaaS portion of the market (“MarketLine Industry Profile: Cloud Computing in the United States.”, 17). Often when a company is set to use a cloud computing service, the switching cost is quite low due to regular subscriptions. The industry does not have many laws or regulations that limit the creativity of the product, however, it is expected to change in the future as many companies are facing more and more privacy issues. To summarize, the threat of new entrants is moderat because although users tend to gravitate towards large companies, it is not difficult to obtain the minimum required capital to start in the industry and as long as there is a groundbreaking appeal towards new entrants, the switching cost is fairly low. Bargaining Power of Suppliers 6 Although there is an abundance of recruiters for cloud computing architects and technology development, there is a shortage of qualified applicants for these high demands. In 2019, the United States alone has 918,000 information technology job openings that were unfilled (Liu). In cloud computing, there are many layers and complications in forming the working and efficient system. The search for talent for this industry is scarce and once qualified applicants are available, the larger companies are bound to poach talent from unknown smaller start ups. Therefore, there are very few suppliers in the industry and the majority of the IaaS users remain loyal to their suppliers as the prices are relatively low. Additionally, as technology is advancing at a very quick rate, the suppliers will be able to forward integrate more by providing softwares that can link powerful computers with cloud services. This will result in better services and analytic techniques. An example of such development is Microsoft Azure’s new development of predictive analytics services called, “Azure Machine Learning” that was released in 2015 (Casalboni). Thus, the bargaining power of suppliers is relatively high. Bargaining Power of Buyers Due to the trend of switching to cloud computing, there are a large variety of customers ranging from regular people who need space to store their documents to large companies that require more storage. The majority of the industry has adapted to a subscription based pricing according to the data storage used. Therefore, there is a very low switching cost for customers that only require a small amount of storage needed. There are rising new innovations within the industry, however, nearly every supplier provides the same quality and options of services. This lets the customers have a higher influence on the demand in pricing. Buyers do need a sense of security therefore, they are more likely to choose large companies. Full backwards integration is a possibility as there is a high chance of security compromises where in-house data and storage can solve. Overall, the buyer’s power is high. Threat of Substitute product or services Cloud computing industry’s main competitor is the traditional IT system. As mentioned above, these systems provide customers with more security compared to cloud computing. The cloud computing companies will not have access to their data and the likelihood of hackers are lower in the traditional 7 system. Cloud computing is at an advantage on the premise that it does not require companies to update their hardwares or servers, cooling equipment which is considerably costly (“MarketLine Industry Profile: Cloud Computing in the United States.”, 19). The subscription basis allows companies to quickly expand their storage without having to invest in too much capital. Currently, there is no news of any new breakthroughs that can pose a threat to cloud computing yet. In conclusion, the threat of substitutes is low. Rivalry among existing competitors As mentioned above, the industry is largely dominated by large companies. AWS has taken the majority of the market with 39% market share ("Top 6 cloud service providers who'll dominate the cloud war in 2020"). “[...] limiting e-commerce pioneers to selling books [...] AWS blossomed into an industryshifting technology that lets companies rent computer power and offers tools to businesses and other organizations over the internet”(Swartz). Although AWS was the first mover, other companies such as Google Cloud, and IBM are quickly following with competitive prices and relatively the same services. Technology advancements have made data storage an important factor for users therefore, the perishability of the product and service is very low. Often small companies go unnoticed by customers because of the questionable reputations. To sum up, rivalry among existing competitors is strong. Driving Forces The cloud computing industry has a bright future. Threat of new entrants is quite low as the majority of the population from any demographic or psychographic tends to gravitate towards large companies with good reputations. Currently, the industry does not have laws that are bound to limit a company's creativity and because of the risk of technological advancements from hacking privacy data, the company will likely face more rules and regulations. In doing so, there are lower new entrants as it will be hard to comply with new regulations but larger companies have the capital to adapt to these 8 changes. Bargaining Power of Suppliers can continue to grow as they can offer new features to the buyers and therefore obtain loyalty by the majority of the population. As the industry appeals to every age group and is slowly becoming part of their lifestyle in the social environment, suppliers have more powers over buyers. Bargaining Power of Buyers is moderate because the likelihood of better offers from different countries in the globe with lower prices due to exchange rates can force suppliers to meet buyer demands. However, possible new regulatory laws surrounding the industry might pose a threat to users in the United States to go to providers abroad. Users can also use the traditional alternatives instead of cloud computing such as servers and harddrives as well. Threat of Substitute products or services is quite high as new technology develops at such a fast rate, the potential of new ways to storing data can replace cloud computing all together. Not to mention the likelihood of new policies or agreements which poses a threat for users to stop using cloud computing due to privacy risks. Rivalry among existing competitors will continue to become a huge part of the industry as larger companies such as Microsoft Azure are playing catch up with amazon by lowering their prices to compete with such a huge competitor such as AWS (“Cost Saving - SQL Savers and Window Saver: Microsoft Azure”). Implications After analyzing the industry using the five-forces model and the driving forces, it is clear that the industry is still attracting a lot of companies because it does not cost much to start however, there is a large new entrant barrier as customers tend to rely on famous companies more. Technology is ever advancing and every company is doing very well in keeping up with new advancements with lower costs to attract customers. Due to its main purpose of storing data there is a limitless target market that the industry can tap into. The future of the cloud computing industry continues to go strong as replacements for it is costly and being able to access data anywhere is the trend. 9 III. Competition Amazon AWS Amazon AWS is Google Cloud's biggest competitor. Amazon is one of the largest companies today and offers an assortment of products and services like AWS, which is a cloud-focused service provider. Amazon's web services, AWS, was the first to the cloud IaaS market in 2006 and the market leader who is "the world's most comprehensive and broadly adopted cloud platform, offering over 175 fully-featured services from data centers globally" (Vlautin). Compared to Google Cloud which didn't enter the market with an aPaaS until 2008 and IaaS until 2012 with general availability in December of 2013, AWS has the most reliable track record of customer success and the most valuable partner ecosystem, resulting in a broader range of customer profiles because of its advantage of being the fist in the market. With AWS's 39% of the market share, it offers the widest variety of services like compute, storage, and databases, to emerging technologies like machine learning and artificial intelligence, data lakes and analytics, and the Internet of Things. AWS accounts are integrated IaaS+PaaS and include the use of Amazon EC2 (compute), Amazon S3 (storage), and Amazon DynamoDB (databases) with 12 months of free tier access (Vlautin). This provider is most commonly chosen for strategic, organizationwide adoption, which results in enterprises making more substantial annual financial commitments and deploying more mission-critical workloads on AWS than with any other hyper-scale provider (Bala). However, Google Cloud appeals to buyers associated with big data and other analytics applications, machine learning projects, cloud-native applications, or other applications optimized for cloud-native operations. After the trial, AWS offers users a pay-as-you-go approach where the user pays only for the individual services they need and only pay as long as they use them, without requiring long-term contracts or complicated licensing. In contrast, GCP only has $300 of free credit that can only be used within the 12 first months of signing up and then uses pay-as-you-go. Due to the maturity of the platform and the quality of services, AWS has the largest and most dynamic community, with millions of active users and tens of thousands of partners globally. They have 70 available zones within 22 geographic 10 regions around the world, with an announcement of 16 more available zones and five more AWS regions. Google Cloud has 22 available cloud regions and 67 zones, so they are right behind AMS's current availability. Microsoft Azure Microsoft is the second most significant competitor of Google Cloud, right under Amazon AWS. Microsoft is a substantial and diversified technology vendor that is increasingly focused on delivering its software capabilities via cloud service through Azure Virtual Machines, which launched in 2012 with general availability in April 2013 (7 months before Google Cloud Platform). Just like Amazon and Google, Microsoft provides a platform integrated into IaaS and PaaS for building, testing, deploying, and managing applications and services, but through Microsoft-managed data centers. Azure appeals to customers who “extend their infrastructure-oriented Microsoft relationship and investment in Microsoft technologies and to integrate with Microsoft’s application development tools and technologies, or are interested in integrated specialized PaaS capabilities, such as the Azure Data Lake, Azure Machine Learning or the Azure IoT solution accelerators” (Bala). With 19% of the market share, Azure attracts enterprises that are strategically committed to Microsoft technology. Azure prides themself on low prices and also provides 12 months of popular free services, $200 of free credit for the first month, and 25+ services that are always free, more free trials to help build customers enterprises than AWS and GCP. They provide pay-as-you-go pricing once the tests have ended like AWS, but tend to be five times cheaper than ASW and if not, they will match the price; products like Windows virtual machines are up to 71% less expensive than AWS EC2 (Msmimart). Google Cloud only tends to be 21% cheaper in storage than AWS (GCP Pricing). Lastly, Azure covers 52 regions worldwide with a plan to add five more with the availability of 3 zones, so microsoft has more regions than both AWS and GCP put together, but has dramatically less zones. Other Companies AWS, Azure, and GCP are the leaders of Cloud Computing, but there is also (1)Alibaba Cloud, (2)Oracle, and (3)IBM that are in the industry. (1)Alibaba Cloud, also known as Aliyun in Chinese, is a 11 cloud-focused service provider with headquarters in China, founded in 2009, to provide platform services to Alibaba Group’s e-commerce businesses. It is dominating in China and is the current market share leader for cloud IaaS (42%) and performs particularly well with Chinese digital businesses and Chinese public-sector entities (Bala). In China, Alibaba offers private cloud infrastructure options for Chinese companies that want a hybrid cloud model. On the other hand, (2)Oracle is a large, diversified technology company with a range of cloud-related products and services. In November 2016, it launched Oracle Cloud Infrastructure (OCI, formerly Oracle Bare Metal Cloud Services). OCI will appeal to customers with mainly Oracle workloads and, especially, those with performance needs that are well suited to baremetal servers, and those that do not need more than very basic cloud IaaS capabilities (Bala). (3)IBM is also a large, diversified technology company with a range of cloud-related products and services. The IBM Cloud offering has been built on IBM’s July 2013 acquisition of SoftLayer and its previous Bluemix offering. IBM appeals to its large base, existing customers who have a strong preference to purchase most of their technology from IBM (Bala). These companies fall behind GCP in relations to market share, but they seem to find their range of costumes based on dominated regions or customer loyalty to their brand and products. 12 Implications After analysing Google Cloud’s top two competitors, there are some improvements that GCP can implement in their database. GCP’s prices may be lower than AWS, but they can still improve their prices and promotions compared to Azure prices. Most customers of Cloud Computing tend to be loyal customers that are already using the company’s technology products like Microsoft, Oracle and IBM. The fact AWS was the first to penetrate the Cloud Computing industry and Amazon’s overall great customer service has given them a huge head start to gaining and keeping their customers. As a result of AWS dominating the market, and Microsoft Azure following right behind, it comes down to GCP creating a more loyalty based program with the best prices in the market to attract more customers. IIII. Company Value Analysis/Resource-Based 13 Cloud computing remains one of the most competitive areas of investment for leading tech companies. Google Cloud has been one of the leading cloud computing infrastructures running different artificial intelligence. The success of the Google Cloud in the cloud computing field has involved the management at Google Cloud to identify the primary and support activities that would contribute to the value addition of the cloud services. At Google Cloud, the company has had an interest in creating value, reducing the costs of value addition, and increasing the differentiation of its cloud services to other competing players. The value addition strategy that has been adopted by Google Cloud is the product differentiation approach. The product differentiation approach has been applied at Google Cloud through the identification of the value-creating activities that target the consumers, and secondly, evaluation of the selected differentiation strategies aimed at improving customer value. Google Cloud has differentiated itself from other players regarding the availability of its services aimed at improving web services (Blokdyk, 2010). Through Google Cloud, consumers are able to use the rich data made available to advanced power analytics. It is one of the services that is made available and easily accessible through the tools that could be used to manage the web pages. Google Cloud has released rich data to advanced power analytics. Google Cloud Company has further invested in improving machine learning, predictive analytics, and big data from being services that could be accessed by corporates to one that could be obtained by ordinary consumers. Google Cloud has come up with various tools and applications that make the lives of consumers better. For instance, the Google Assistant, an AI application, has been adopted by millions of consumers across the globe. Besides the real-life applications, other Google Cloud tools such as the BigQuery is unparalleled in regards to its capacity for data analysis where one can use it to analyze complex data pipelines using the Dataflow system. Google Cloud differentiation strategy is the main approach to its value chain and is demonstrated through the different competitive advantages of the service (Weinman, 2012). These advantages include easy integration of Google cloud platforms with on-site databases and tools. In addition, Google Cloud offers the best optimizing web services and data storage to its consumers. SWOT Analysis 14 Google Cloud infrastructure and services could be analyzed in the perspective of its strengths, weaknesses, opportunities, and threats. The strengths of Google Cloud Company include heavy investment in data centre investments. This is a significant advantage considering their high connectivity to the private network. Secondly, the company has functional AI applications that are easy to use, e.g. Google Assistant. Third, the company has been well-positioned to offer the best in class security. On the other side, the weaknesses include the fact that Google Cloud has not gained widespread enterprise traction (Kassner, 2016). The company also has weaknesses in terms of the popularity of the services as compared to other players. The opportunities include its huge infrastructure market that can help them gain a larger portion of the remaining cloud market. The company has the chance to take on its huge infrastructure to tap more into the existing market gaps in cloud computing. Secondly, as a result of the success of Tensorflow in the community, the company has the potential to attract a larger pool of consumers with higher Machine Learning workloads. They also have an opportunity of using their widespread infrastructure to reach more enterprise customers (Kassner, 2016). Lastly, the threats of the company are the go-to-market strategy that remains as one of the ineffective strategies to reach and attract enterprise customers. Secondly, some of the support requirements for enterprise customers could lead to dissatisfaction among these customers in the long-run. This trend is one of the areas that would need to be checked. Company Strategy and Implications Google Cloud has taken on strategic decisions and approaches to boost the use of its cloud computing infrastructure and services. The strategies adopted by Google Cloud include; the simplification and clarification of the customer touch points. This has been done through the introduction of enterprisefriendly subscription models, simplification of contract terms, and the creation of friendly pricing models. The second strategy has been the enhanced definition of IP Ownership related to Google AI services. The new approach defines each of the four different levels of IP ownership (Bolton, 2019). The third strategy of Google Cloud has been that of simplifying multi-cloud. The latter is important, considering the fact that Google, like other cloud service providers, uses more than one cloud infrastructure source. 15 This definition is helping enterprises to segment workloads to specific clouds, a move that improves the operational effectiveness of Google Cloud. The fourth strategy has been the move by Google Cloud to offer more robust sales and partner strategy. Google Cloud has done this through the expansion of its sales and go-to-market model of marketing. Google Cloud firm has also been involved in offering more enhanced cloud solutions through working with its channel partners in the process of cocreating. Lastly, the company has developed innovations and improvements on its cloud platforms, e.g. Improvements in the speed of its learning machine applications (Blokdyk, 2010). Implications V. Recommendations -Competitors: need more customer loyalty, more promotion- maybe 4 months of free trial + their $300 free credit, more security... -Google demonstrates an immaturity of process and procedures when dealing with enterprise accounts, which can make the company difficult to transact with at times. This can be attributed to its nascent focus on the enterprise market. The immaturity of process is most pronounced in areas such as contract negotiation, discounting, independent software vendor (ISV) licensing, integration with enterprise systems and support. Google is aggressively targeting these shortcomings. Google has a much smaller pool of experienced MSP and infrastructure-centric professional services partners than other vendors in this Magic Quadrant. Its own professional services are still gaining traction in driving customer implementations. Some prospective customers find that these ecosystem limitations heighten migration risk. Google’s overall enterprise coverage from a field sales and solutions perspective is behind its 16 competitors. Further, enterprises often lament about Google’s inability to craft appropriate solutions for enterprise requirements when engaging with solution architects. Work Cited 17 Regalado, Antonio. “Who Coined 'Cloud Computing'?” MIT Technology Review, MIT Technology Review, 11 Feb. 2020, www.technologyreview.com/2011/10/31/257406/who-coined-cloudcomputing/. “MarketLine Industry Profile: Cloud Computing in the United States.” Cloud Computing Industry Profile: United States, Dec. 2017, pp. 1–40. EBSCOhost, search.ebscohost.com/login.aspx?direct=true&db=bth&AN=127463756&site=edslive&scope=site. “Top 6 Cloud Service Providers Who'll Dominate the Cloud War in 2020.” TechAhead, www.techaheadcorp.com/blog/top-cloud-service-providers/. “Internet Privacy Laws Revealed - How Your Personal Information Is Protected Online.” Internet Privacy Laws Revealed - How Your Personal Information Is Protected Online | Thomson Reuters Legal, legal.thomsonreuters.com/en/insights/articles/how-your-personal-information-is-protected-online. Liu, Jennifer. “The US Has Nearly 1 Million Open IT Jobs-Here's How Much It Can Pay off to Switch Industries into Tech.” CNBC, CNBC, 6 Nov. 2019, www.cnbc.com/2019/11/06/how-switchingcareers-to-tech-could-solve-the-us-talent-shortage.html. Casalboni, Alex. “Azure Machine Learning: Simplified Predictive Analytics.” Cloud Academy, Cloud Academy, 22 Mar. 2019, cloudacademy.com/blog/azure-machine-learning/. Swartz, Jon. “How Amazon Created AWS and Changed Technology Forever.” MarketWatch, MarketWatch, 7 Dec. 2019, www.marketwatch.com/story/how-amazon-created-aws-andchanged-technology-forever-2019-12-03. “Cost Savings - SQL Server & Windows Server: Microsoft Azure.” Cost Savings - SQL Server & Windows Server | Microsoft Azure, azure.microsoft.com/en-us/overview/azure-vs-aws/cost-savings/. 18 Vlautin, Willy. “The Free.” Amazon, Faber and Faber, 2015, aws.amazon.com/free/?all-free-tier.sort-by=item.additionalFields.SortRank&all-free-tier.sort-order=asc. Bala, Raj, et al. “Magic Quadrant for Cloud Infrastructure as a Service, Worldwide.” Gartner, 16 July 2019, www.gartner.com/doc/reprints?id=1-1CMAPXNO&ct=190709&st=sb. Bolton, M. (2019). Building Your Cloud Strategy. NewYork: O'Reilly Media, Incorporated. Blokdyk, G. (2010). Cloud Strategy A Complete Guide - 2020 Edition. NewYork: 5STARCooks. Weinman, J. (2012). Cloudonomics: The Business Value of Cloud Computing. NewYork: John Wiley & Sons. Kassner, E .(2016). Enterprise Cloud Strategy. NewYork: Pearson Education. Msmimart. “What Is B2B Collaboration in Azure Active Directory?” What Is B2B Collaboration in Azure Active Directory? | Microsoft Docs, docs.microsoft.com/en-us/azure/activedirectory/b2b/what-is-b2b. “GCP Pricing | Google Cloud.” Google, Google, 2019, cloud.google.com/pricing. 19 CISCUSS IESUILS YSIS as ategy: Recommendations (20 points) Here, you identify recommendations to the company. To simplify your task, identify recommendations in each section of the report. For example, in the introduction section, you may have recommendations regarding the vision, mission, or objectives. You may find that some of the 2 may objectives does not satisfy the SMART criteria. You may find out that the mission statement doesn't cover what it is supposed to cover. The same way, you can draw recommendations from the sections on industry, competition, and company. As well, the SWOT analysis can generate useful insights about the threats facing your company and its weaknesses. As such, your recommendation offer ideas about how to deal with or resolve the threats and weaknesses. You may find the TWOS framework insightful in generating recommendations. This part is a very important part of your consulting job. As such, you need to be as much insightful as possible. Also, your recommendations should address as many of the Wh-questions' as possible. That is, you should not just state what the company should do, but you need to be specific in terms of 'how/where/when/why' it should do it.
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