- November 21, 2019
- Posted by: Ramkumar
- Category: Mergers And Acquisitions
Google’s acquisition of CloudSimple
A few periods back, Google announced a partnership with a company called CloudSimple to help more enterprise teams move their on-site operations to the cloud. Now Google is outright acquiring CloudSimple. Google’s acquisition of Cloudsimple will support its cloud computing sales. According to Synergy estimates, Google inches notably behind Amazon and Microsoft in cloud computing. Amazon commands with close to 40% of the worldwide business, and Microsoft is a distant second with around 18%. Google is third with a 9.0% share. Although Microsoft has twice its market share, Google aspires to overtake Microsoft as the world’s second-largest cloud corporation by 2024.
Google’s Cloud Strategy
The cloud is an essential business for Google for several reasons. First, the cloud market offers a huge revenue opportunity for Google. The global cloud market generated $196.7 billion in revenue last year, and that’s expected to jump to $354.6 billion by 2022. Second, the cloud market continues to promise for Google’s efforts to broaden its revenue sources. Currently, Google and parent Alphabet rely on the advertising market for the vast majority of revenue. For example, ad sales contributed 84% of the Alphabet’s total revenue in the third quarter.
Google intends to build its cloud market share by tripling its cloud sales team in the next few years to adding more capability. Google proposes to spend about $3.3 billion to grow cloud infrastructure in Europe.
Google’s acquisition of cloudsimple helps it in pursuit of big cloud customers
CloudSimple lets businesses run VMware vSphere workloads on the cloud, allowing them to take their existing on-premises tools and databases and plug them into Google Cloud with minimal re-tooling. While Google would surely love for all enterprises to move to containers and utilize its Anthos hybrid cloud service, most large companies currently use VMware.
Enterprises love VMware and have substantial install bases of essential applications running on it. They’ve also invested a significant amount of the tooling and expertise required to operate VMware as a critical infrastructure. Enterprises cannot move these workloads to the public cloud without VMware because this would mean essentially re-architecting the applications in many cases. Cloudsimple’s technology helps enterprises quickly shift their workloads from in-house data centers to public cloud platforms.
To overhaul Microsoft, Google is targeting big enterprise customers. Cloudsimple targets businesses, including several prominent corporations, that use VMware Tools to run their in-house data centers. Therefore, Google desires to acquire CloudSimple will increase its possibilities with large enterprise cloud purchasers. After buying CloudSimple, Google has turned Microsoft into a customer as well as a competitor.
Strategic acquisitions are becoming central to Google’s strategy.
CloudSimple is not the only Google’s cloud purchase this year. Google struck a deal to acquire Looker, a provider of business intelligence and data analytics solutions. It also purchased Elastifile, a cloud storage provider targeting enterprise customers this year,
Additionally, in its pursuit of big cloud customers, Google has poached enterprise sales executives from Oracle and SAP SE. Google cloud chief Thomas Kurian was a longtime Oracle executive before he jumped ship last year. Google has also picked up talent from Microsoft for its cloud business.
This acquisition is an opening for Google, but it is in no way a given deal. There are still many obstacles to swaying enterprises that VMware-on-Google is the right choice, particularly given Google’s propensity for killing off products that people like using.
While AWS and Azure are substantial competitors, Google’s biggest problem is Google itself.