Daily Management Review

Google's Clouds Partners Are Drifting Away


09/14/2015


Google begins to lose American partners that promote the company’s cloud solutions, since the latter are no longer benefiting financially. Some companies, which have been accompanying Google from the outset of clouds’ launch the market, now are leaving the developer for Microsoft.



Anonymous sources told to the portal CRN that a number of participants of the first regional partnership program Google for Work, in which software and Apps for Work services are distributed, started adding Microsoft Office 365 to their product portfolio. Some of them have completely given up Google’s solutions.

One source of publication, close to Google, says that at least 80% of the hundreds of regional Google’s partners have already begun to sell Microsoft Office 365. By the end of 2014, Google Network partner had about 10 thousand companies operating in the 100 countries. Microsoft is working with more than 400 thousand resellers, consultants, system integrators, and other partners to help the corporation to distribute and maintain software.

According to rough estimates, over the past two years, gross margin from the sale of licenses and services Google Apps fell by a third due to the fall of interest in the online corporation’s products. At the same time, margin in Microsoft Office 365 has risen, according to various sources, by 25-100%.

In addition to the low profitability of the cooperation with Google, there are a number of other factors, due to which it’s hard for the partners to maintain and increase associated with the Google Apps business.

In the battle with Microsoft, Google is reviewing the strategy in the affiliate network, focusing on the major retailers, underestimating the power and influence of numerous regional players.

Research Group’s analysts estimated that more than half of the global cloud market is controlled by four major players in IT-sphere. These are Amazon, Microsoft, Google and IBM.

In the II quarter of 2015, the market volume of cloud infrastructures deploying services (including solutions IaaS, PaaS, as well as private and hybrid cloud systems) reached $ 6 billion, despite such a strong deterrent, as the strength of the dollar. For the year, sales of these solutions got closer to $ 20 billion.

More than half of the demand came from North America. The top three also includes the regions EMEA (Europe, Middle East and Africa) and Asia-Pacific.

It is also noted that in April-June 2014, the total share of Amazon, Microsoft, Google and IBM in the global cloud market was measured 46%. Now, after 12-month period, it rose to 54%. These companies’ revenue increased on average by 84%, while all considered within the scope market has risen by only 33%.

Each of the above  mentioned vendors was able to increase its market share in the second quarter, but Amazon remained the leader among them with 29% indicative of the presence.

IDC research company predicts the volume of the global market for cloud infrastructures to increase by 26.4% in 2015, compared with the previous year, reaching $ 33.4 billion.

It is expected that sales of servers, storage systems and Ethernet switches, purchased to run private cloud services, will reach $ 11.7 billion in 2015, which is 16.8% more than a year ago. In the segment of public clouds, growth will be 32.2%, while the volume of sales of hardware solutions - $ 21.7 billion.

Thus, the cost of cloud infrastructure will rise to $ 33.4 billion, which corresponds to one third of the total costs related to the IT infrastructure. In 2014, the equity ratio was measured 28.1%. This year, investments in the development of IT infrastructures that are not related to cloud projects remain at the level a year ago - about $ 67 billion.

IDC experts note that the cost of cloud infrastructure will grow in all regions and market segments. In most countries, the dynamics of the cost for public cloud solutions will be higher than for private clouds, as operators of public cloud services will continue to actively invest in the expansion of data centers and offers.

 






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