While the financial details of the
Jio-Google Cloud deal haven’t been disclosed nor the timeline for its interpretation, analysts peg the partnership as similar to Google’s deal with Deutsche Bank—which is among the biggest cloud deals for the Mountain View, California-based company.
“The goal is to build a modern and AI-driven transformation platform that’s much needed at Reliance to power its digital ambitions. Think of this as a multi-billion-dollar extension of the original $4.5-billion investment,” said Ray Wang, founder of Constellation Research, Inc.
“The deal will rank among Google largest cloud deals, next to customers like Deutsche Bank. With that, you get an implicit sense of the scale,” said Tom Reuner, senior vice president, HFS Research.
There is no ballpark figure yet, but the best way to think about it is Google’s $4.5 billion investment in Reliance last year. “With that you get a sense of the priority but also the depth of collaboration across the various businesses of both Reliance and Google,” Reuner said.
The partnership, which is not only for 5G collaboration but also to transition legacy Reliance businesses like Retail and JioMart to the Cloud, also includes developing apps with Edge Computing, which is being touted as the technology of the future for cloud installations.
Naveen Mishra, senior research director analyst at Gartner, said that the partnership will help Reliance in predicting the customer journey, modernising its operations, cross and upsell its customers across the whole ecosystem.
The first phase of the technology implementation is likely to be 5G and JioMart since they involve less legacy and are more tech-driven, he said. “The legacy business is highly customised and the complexity there is huge. It is likely to become the last part of the journey,” Mishra said.
He did not offer comment on the size of the Reliance-Google deal but said it could potentially be over $1 billion given the size of Reliance but will depend on how the project is executed over the next few years. “I look at this as a multi-year execution…a minimum of 3-5 years.”
Google Cloud has become aggressive under the leadership of
Thomas Kurien and seen some big-name client wins. The deal will come as a big fillip in the Indian market for Google as it adds a strong partner in India.
For Reliance, it means getting access to solid technology, especially Edge Computing, as it expands into 5G and goes deeper into new-age businesses like e-commerce. Google, considered a late entrant in the Cloud market, will also gain a foothold into the complex telecom market in India as it competes fiercely with players like Amazon Web Services, Microsoft and IBM.
“Google Cloud, which continues to be a “far third” however, has signed marquee clients such as Deutsche Bank, Ford, and Nokia to enhance its reputation. Working with telco vendors give more credence to the capability of a Cloud vendor as telco workloads are extremely complex,” said Peter Bendor-Samuel, CEO of Everest Group.
Reliance and Google did not respond to ET’s queries.
Reliance Industries, which now has both
Microsoft Corp. and Google on board, is trying out a multi-vendor strategy, as it does not want to engage much with Amazon given the ongoing feud on the retail side, said Pareekh Jain, founder of Pareekh Consulting. “They are hedging the bet by having a multi-vendor sourcing strategy. They seem to have got a better deal from Google on this,” he said.
Alphabet, in its latest quarterly results in April, said revenues for the Google Cloud segment, including Google Workspace, rose 46% to $4 billion for the first quarter, but Google Cloud’s operating loss also came in at $1 billion.
In an interview with ET, Google Cloud CEO Thomas Kurien said that the only way to get the company on the road to profitability was to scale, and partnerships like the one with Reliance will help achieve that.
“Google could not enter India without a partner such as Reliance. Reliance would take longer to succeed without the technology and talent from Google. This one is massively significant because of the size of the market and the partner—Reliance,” said Wang of Constellation Research. “It also shows why strategic investments and technology partnerships also need a local flavour to be successful.”
If edge computing takes off in India, one could see co-located data centres and apps which run on near-shore servers generating huge revenue for Reliance, analysts said, adding that Google has demonstrated its tech capability in this space.
“Google has Anthos platform which will help Reliance deploy edge computing, it will be a very strategic win for both,” said Janakiram MSV of Janakiram & Associates.
The strategic goals for the expansion of the partnership between Reliance and Google are manifold, added Reuner of HFS Research.
will attack the smartphone market with cheapest offerings by leveraging Android OS, while Google will ring-fence a go-to-market partner that helps drive its cloud offerings into the Indian market, even while it leverages the domain expertise of Reliance in the telecom space and beyond.
“As Google is working hard to catch up with AWS and Microsoft, its strategy is focused on data and analytics at the same time as recruiting partners that add industry and domain expertise. Reliance fits all those criteria,” Reuner said.