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Google hires a big name in cloud services to take on Amazon

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Google wants to get serious about cloud computing, and it's appointed well-known Silicon Valley entrepreneur Diane Greene to lead the charge, according to The New York Times. Greene was chief executive of early cloud computing pioneer VMware from its founding in 1998 until 2008 and has been serving on Google's board since 2012. She'll now be acting senior vice president for Google's enterprise businesses. Google has also agreed to acquire Greene's startup Bebop, which has been working on cloud technologies for the last three years.

For Google, the move signals an intent to move beyond its traditional consumer software and advertising businesses. The dominance of Google search, the Chrome browser, and the Android operating system have turned the company into a web behemoth, yet one without a strong presence in the corporate realm. To expand into the lucrative enterprise market, Google needs to harness its technology prowess to create software platforms for cloud apps and development tools for building those apps. The combined market for such software is expected to more than double to around $25 billion in the next four years, according to market researcher IDC.

Google wants to compete with Amazon and Microsoft in the cloud

Google confirmed that 60 percent of Fortune 500 businesses use a paid Google cloud service like corporate-grade Gmail and Google Docs. But those products produce only a fraction of the potential revenue of competing cloud products from market leader Amazon and close runner-up Microsoft. Urs Hölze, Google's senior vice president of technical infrastructure, predicted today at the Structure conference that Google's cloud revenues would surpass its advertising revenues by 2020.

It's an ambitious goal that would require a profound shift in Google's business. The company's advertising efforts accounted for 89 percent of a total $66 billion in revenue last year, while its cloud business — which Google does not break out in quarterly earnings — may notch only $500 million in sales this year.