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Why Who Runs Google Cloud Is a Big Deal

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Google Cloud gets new leader

Alphabet (GOOGL) has recently named former Oracle executive Thomas Kurian as the new leader of its cloud computing business, replacing Diane Greene, who stepped down from that role after three years. Alphabet’s cloud business operates under the Google Cloud brand. Who runs Google Cloud is a big deal for Alphabet and its shareholders because of how crucial this business is to the company’s future.

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A pillar of revenue diversification efforts

The cloud computing business is a key pillar in Alphabet’s efforts to diversify its revenue streams. The company currently relies heavily on advertising sales for the vast majority of its revenue. In the third quarter, for instance, advertising sales accounted for 86.1% of Alphabet’s total revenue. However, its advertising and cloud rival, Baidu (BIDU), is more diversified. Advertising sales accounted for 80.5% of Baidu’s total revenue in the third quarter.

Huge commercial opportunity

The commercial opportunity in the cloud market is enormous for Alphabet. Global public cloud revenue is on pace to rise to $175.8 billion this year from $145.3 billion in 2017, according to Gartner. By 2021, the global cloud market is forecast to be worth $278.3 billion.

Although Google is one of the top five cloud companies, the company faces strong competition as industry leaders Amazon (AMZN) and Microsoft (MSFT) seek to widen their lead and smaller rivals such as Alibaba (BABA) and Baidu fight to grow their market share.

Kurian, the new Google Cloud chief, spent 22 years at Oracle, a global leader in enterprise software. He’s coming to lead a business that is fighting hard to woo enterprise cloud customers.

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