Google (GOOGL) has won a chunk of Vodafone’s (VOD) cloud computing business. Vodafone is the world’s second-largest mobile operator by subscribers after China Mobile (CHL). It operates in 24 countries and has a presence in 42 more countries through partnerships.
Vodafone selected Google as its strategic cloud platform for data analytics and machine learning. Google has invested heavily in AI and machine-learning research. Therefore, the Vodafone deal represents a win for the company’s investments in these areas. On Google’s gain of Vodafone’s cloud business, cloud chief Thomas Kurian noted, “We’re in an era of businesses leveraging the cloud to reinvent themselves and create entirely new offerings and services. We’re excited that Vodafone has decided to leverage Google Cloud to ensure they successfully make the journey of business transformation.”
Google Cloud going after large enterprise customers
Google’s addition of Vodafone as a cloud customer comes at a time when it’s made winning large enterprises the central focus of its cloud strategy. It’s raided SAP SE (SAP) and Oracle (ORCL) for talent, with a focus on hiring enterprise sales veterans. For example, Kurian came from Oracle. The tech giant also recently hired a former Microsoft (MSFT) executive to head its G-Suite business, a branch of its cloud division.
Amazon (AMZN) and Microsoft are currently the global cloud market leaders, ranking first and second, respectively. Google ranks third, but its market share is roughly half that of Microsoft. However, the search giant aims to grow its cloud business rapidly to overtake Microsoft in five years.
To this end, the tech behemoth is investing heavily in expanding its cloud capacity and cloud salesforce. It will spend about $3.3 billion to expand its cloud capacity in Europe over three years. Moreover, it aims to double its cloud sales team in the next few years. Amazon and Microsoft have assembled larger cloud sales teams, and Google wants to close the gap to boost its competitiveness.
The market presents a huge growth opportunity
Google last disclosed that its cloud business averages $8.0 billion in annual revenue. Amazon’s cloud business, Amazon Web Services, pulled in $9.0 billion in revenue in the third quarter alone. However, the cloud market presents a huge growth opportunity for Google, Amazon, and other vendors. The global public cloud market generated $194.2 billion of revenue in 2018, Gartner estimates show. That will grow to $354.6 billion by the end of 2022. Goldman Sachs analysts think Google’s cloud revenue could hit $38 billion by 2025.