Urs Hölzle was Google’s eighth employee.
When he was hired in 1999, his job was to keep one of the fastest-growing sites on the Internet from crashing and burning. It was a crazy time, and the only way to survive was to keep throwing more physical servers at the problem.
“We were growing at something like ten per cent week after week, so every Monday was a new traffic record,” he told Business Insider.
“If you just barely made it or if you melted down last week and next week is going to be ten per cent bigger, that’s going to be what you focus on.”
He barely took a breath until 2003.
These days, he says, startups have it almost too easy — they can simply buy capacity from a provider like the Google Cloud Platform, which Hölzle now runs, or a competitor like Amazon or Microsoft, “and it’s just a credit card problem,” he said. “This was actually a supply chain, an installation, a whole thing you had to do from scratch….It was actually very physical.”
Now, Google is trying to make life even easier for startups and larger companies alike by providing access to the same technology Google uses to power its own massively popular web sites, while constantly lowering prices at a rate that’s consistent with the pace of Moore’s Law — the axiom from Intel cofounder Gordon Moore that basically says computing power should double every eighteen months at the same price.
This morning, Google announced price cuts of 5% to 30% on various Cloud Platform services, as well as a new service called Preemptible VMs, which will allow customers to run certain jobs about 80% cheaper than they were before. (The new service is cheaper because it has no availability guarantee, which means it’s best for lower-priority jobs that need to be done soon, not immediately.)
Hölzle thinks that fairer pricing and unique features that only Google could build will help wrest the cloud crown from Amazon, whose cloud business is now booking $US6 billion a year in revenue.
Amazon benefited from first-mover advantage: Back in 2006, when it introduced Amazon Web Services, it basically invented the “infrastructure as a service” market.
That’s a geeky term, but it means that customers are responsible for figuring out what kind of services they will need — computing power, storage, whatever — and how to run it. Amazon simply leased them space. (AWS has evolved a lot since then.)
Google launched its first cloud product, App Engine, a year later. But it was more “platform as a service” — customers simply wrote the code, and Google would figure out how to run it for them. Microsoft’s initial focus with Azure, which was first announced in 20o8, was similar.
It turns out customers wanted what Amazon was delivering.
So while Google App Engine got traction — “if AppEngine was its own startup, it would be one of the glowing lights of the valley,” Hölzle says — AWS became the standard for startups who wanted to get running fast.
So over the last few years, Google has upped its game with more basic services like like storage and compute power, and a couple years ago it rebranded all of those services as the Google Cloud Platform.
It may seem like Google is late to the game, but Hölzle insists the game has just started.
“Statistically speaking, everyone says cloud, cloud, cloud, but only 1% of storage capacity in the world is in any public cloud. So it’s very early,” Hölzle told us. “Of all these players, we’ve had by far the longest and strongest track record of doing cloud.”
The war for startups is only part of the battle. Hölzle also says Google can do a better job than Amazon of providing the kind of security and compliance requirements that bigger enterprises need (and startups grow into needing), because of how it thinks about its consumer services.
“If your Gmail gets compromised you’re going to get very nervous and upset about that, even if you never paid for Gmail. It’s no longer true that consumer is not compliance-oriented and enterprise is. We’ve been living in that world for a very long time. Amazon hasn’t, because they have a single app which is really merchant information and your purchasing history.”
The number-two cloud player, Microsoft, has a similar kind of breadth as Google, with a wide range of consumer cloud services, plus a longstanding relationship with the biggest enterprises in the world, Hölzle admits.
But Google’s historic commitment to open source — that is, publishing technical details of some of its technology and allowing others to adapt and change it — is a critical advantage over Microsoft, which has been slow to embrace that level of openness.
When you open source your technology, customers have less reason to worry that you’re trying to lock them into your cloud.
“We realise that if you want to move to the cloud, you want to move from a single vendor system where you have less lock-in and fewer choices. We’re actually not afraid to help you, because we believe you’re going to pick us because we build better services over time. We don’t need to lock you in.”
He continues, “And if we deviated from the user interest then it’s open source. Anyone can take it and say this is the new standard. That’s actually the best assurance that ultimately the artifact is managed for the benefit of the community. If you have a bad actor in open source, when it gets bad enough the community can basically say ‘You’re no longer where we all go to contribute our changes. We’re now contributing our changes over there.’ And now suddenly you’re out in the cold.”
This sounds very similar to Google’s strategy with Android — release the underlying technology under an open source licence to gain the trust of partners, innovate rapidly with help from the community of partners, and win.
That’s no accident. What happened in smartphones is going to happen in cloud computing, Hölzle believes.
“An analogy I use is 2012 versus 2007 in smartphones. January 2007, you have the best phone in the world, right?…And January 2012, you have the Samsung this or the iPhone that, and you look at your iPhone or Samsung, and say I love my phone because — here’s five things, whatever. Touchscreen, high res, apps, etc. None of the top five things you mention were present five years earlier on the best phone you could buy. I think the same thing will be true for cloud in 2020.”
Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.
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