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Google's Cloud Advantage

Summary

Recently, a Seeking Alpha contributor made various claims on the future of Google's cloud business.

He suggests Google can only compete on price while admitting not knowing anything about cloud services.

In this article, I counter these claims and illustrate Google's competitive moat in the cloud-driven future.

Google (NASDAQ:GOOG) (NASDAQ:GOOGL) recently began expanding its cloud service business. This has prompted various articles trying to estimate Google's chances of succeeding in this space. A particular piece by SA contributor Bert Hochfeld caught my eye due to the variety of its claims. I believe many of these claims to be wrong and based on a lack of understanding of the makeup of the cloud market. In this article, I illustrate by example what brings me to these conclusions.

What follows from nothing?

Let me briefly summarize the above article's claims. First, the author claims to know nothing about cloud computing.

But the issue is going to be one of scale for Google. The only real reason that I can see for Google to gain market share is based on costs. It does have lower and simpler prices than either Azure or AWS. It has huge disadvantages in terms of geographic coverage, its performance is probably the same as AWS and I really can't even begin to comment on whether it has better or more features than Amazon. Just reading about it is the same as reading about two kids playing or fighting in a sandbox.

I have a problem with this paragraph, especially the ending. It's okay to not know details about everything we discuss, but we should not say they do not matter or be derisive towards them. From not knowing something follows nothing. In the comments, the author continues to claim:

I would add, that when companies choose to compete on price it is usually because they have nothing else material to compete with. You can readily go through Google's marketing material to determine that at this time, price is their big selling point. Sometimes it is price/performance to be sure but that is a dangerous slope down which to go as most of the consultants felt that latency was an issue where distance was a factor.

I do not purport to understand some of what all of the consultants had to say when evaluating the positives and negatives of the services as they exist today. I really don't purport to have written anything close to a cloud buying guide. If a company cannot articulate a marketing message that can be understood by normal people, then they do not have a marketing message at all. If the message is that we perform better, than why put a 40% discount on it.

If normal people cannot understand a marketing message, there is no marketing message at all? A marketing message needs to reach the targeted customers. The author of the comment is presumably not the customer of...


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