By Amir Efrati
After announcing a new service that lets businesses tap Google’s data centers to run their websites and applications, Senior Vice President Sundar Pichai tried to answer what he called the obvious question: Why hadn’t Google done this before?
In truth, he said, “the idea has been around internally for so long” that he can’t remember when the company actually began to take concrete steps to make it happen.
A Google spokeswoman declined to comment on when Google decided to pursue the initiative.
“It always seemed natural to us,” Pichai said, but “with things like data centers you can’t do it on a whim, you need much deeper planning.”
The initiative, led by Urs Holzle, one of the first Google employees, aims to appeal to businesses as they increasingly shift to using Web-based services, or cloud computing, and also find it easier to outsource the management of servers and software needed to run their operations.
Google’s effort also takes aim at Amazon, the current market leader, which has said that it believes its cloud-services business could eventually be as big as its retail business, which hit $48 billion in sales in 2011.
Pichai said he thinks about Amazon’s and Google’s offerings as being “utilities” for the virtual world, similar to power companies in the real world.
“If you’re trying to service the whole world, you can have a few more [providers] than what’s offered in the marketplace,” he said, adding that “this is not a zero-sum game.”
That said, Messrs. Pichai and Holzle said Thursday that they believed they charged lower rates than other providers. (That couldn’t be immediately verified independently.)
Google also is hoping its reputation for efficiently operating large-scale data centers–which power its Web-search engine, YouTube, Gmail and other services–will go a long way in convincing small and large companies to sign up.
The profit margins from offering computing power and storage are nowhere near those of Google’s main revenue generator: selling online ads. But Pichai said that Google expects to generate more revenue through “value-added” services.
For example, some customers might be swayed to purchase Google’s suite of business software–such as Google Apps, which includes Gmail, Google Docs–or Google Drive, which lets people store files and access them from any Web-connected device.
Other customers might pay for “analytics,” or information about usage of their website or applications, while others might want to tap into Google’s online-payment service, for instance.
“The way we win and capture mind share is a much more holistic strategy,” he said.
