Google Says It’s Closing More Big Enterprise Cloud Deals than Ever

Yevgeniy Sverdlik

July 25, 2017

2 Min Read
Google CEO Sundar Pichai speaks during Google I/O 2016 at the Shoreline Amphitheatre on May 19, 2016 in Mountain View, California.
Google CEO Sundar Pichai speaks during Google I/O 2016 at the Shoreline Amphitheatre on May 19, 2016 in Mountain View, California.Justin Sullivan/Getty Images

Alphabet CEO Sundar Pichai said the company’s subsidiary Google saw “impressive growth” in its public cloud infrastructure services business in the second quarter, illustrated by the number of high-value deals it closed with big customers.

Google Cloud Platform is doing more and more business with “large enterprise customers in regulated sectors,” he told analysts on the company’s earnings call Monday. “To be more specific about our momentum with big customers, in Q2 the number of new deals we closed worth more than $0.5 million is three times what it was last year.”

This is an important signal to send for Google, which is fighting to prove itself in the enterprise cloud market, dominated by Amazon Web Services and, to a much lesser extent, by Microsoft Azure. That it’s closing more customers in regulated sectors is a signal that GCP can be trusted to handle sensitive data owned by companies primarily in the insurance, financial services, and healthcare industries, as well as government agencies. Organizations in these sectors are governed by much stricter security and privacy regulations than others, which is often the reason they prefer to store data in their own data centers rather than in the cloud.

See also: VMware, AWS Mulling Joint Data Center Software Product

Like its biggest cloud competitors, Google has been investing billions every quarter in building data centers to support its cloud services, and second quarter wasn’t much different. It launched new cloud regions in Northern Virginia, Singapore, Sydney, and London in the second quarter.

Google invested $2.8 billion in production equipment, facilities, and data center construction during the quarter, Ruth Porat, Alphabet CFO, said on the call. The bucket of operational expenditures Alphabet reports as “other cost of revenue,” which includes the cost of operating Google data centers and content acquisition costs (mostly YouTube content), grew 27 percent year over year, totaling $5.3 billion in Q2. It’s unclear what portion of that Google spent on data center operations.

Pichai, who the company announced will be joining Alphabet’s board of directors, also highlighted a partnership Google made during the quarter with Nutanix, one of the top hyperconverged infrastructure vendors. The deal is aimed at capturing more enterprise business, as the partners plan to make Nutanix’s systems, usually deployed in companies’ own data centers, easily connected and interoperable with GCP.

The partnership is meant to enable customers to “run workloads in hybrid environments, on-prem and in the cloud, using containers and Kubernetes,” Pichai said.

Read more: Google Hopes Nutanix Can Unlock the Enterprise Data Center for Its Cloud Business

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