(Bloomberg) -- Google is consolidating its various cloud businesses into a single group to be led by Diane Greene, a co- founder and former chief executive officer of software maker VMware Inc., as the search giant seeks to diversify its sales from its bedrock advertising business.
The reorganization, announced late last week in a blog post, brings Google for Work, Cloud Platform, and Google Apps into one organization, led by Greene, who has served on the company’s board for three years. Urs Holzle, the company’s senior vice president of infrastructure, said he wants Google’s cloud services to make more money than its ad products in 2020.
“Only a tiny fraction of the world’s data is currently in the cloud -- most businesses and applications aren’t cloud-based yet,” Google Chief Executive Officer Sundar Pichai said in the blog post. “This is an important and fast-growing area for Google, and we’re investing in the future.”
Advertising products generated almost 90 percent of the revenue in the most recent quarter for Google’s parent company Alphabet Inc., while sales from its work, cloud and apps businesses are categorized as “other” revenue.
“It shows that they’re here to make a name for themselves in cloud and will do what it takes to go toe to toe” with Microsoft Corp. and Amazon Web Services, said James Cakmak, an analyst at Monness Crespi Hardt & Co. He has a buy rating on the stock. “Can it overtake advertising? I don’t think so.”
As part of the reorganization Google also acquired Bebop Technologies Inc., a company founded by Greene that provides tools to build and run complicated software applications. Greene’s team at Bebop also will join Google when the acquisition closes. No terms were disclosed.
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