Microsoft Extends Cloud-Computing Arms Race to Africa
May 18 2017 - 8:59AM
Dow Jones News
By Jay Greene
Microsoft Corp. plans to extend the cloud-computing arms race
among technology giants into Africa by opening two big data centers
there next year.
The data centers, which will serve customers of the software
giant's Azure cloud-computing business, will be the first of their
size built in Africa by one of the three major cloud-infrastructure
providers -- Microsoft, Amazon.com Inc., and Alphabet Inc.'s
Google, according to global maps the companies posts online."
Microsoft plans to open the centers in Johannesburg and Cape
Town.
Microsoft believes the African tech market is "a pretty ripe
opportunity, " said corporate vice president Julia White.
Microsoft's cloud computing customers in the market include
Standard Bank of South Africa and the South African State
Information Technology Agency, she said.
Research firm International Data Corp. estimates that total
cloud revenue in South Africa last year was just $243 million, but
expects it to grow nearly 20% a year through 2021.
Microsoft, Amazon, and Google have been racing to open data
centers around the globe. They have been willing to shoulder the
costs for such centers, which can run into the hundreds of millions
of dollars, to keep pace with one another and create a barrier for
would-be rivals to catch up. After the openings, Microsoft will
have 40 major data centers globally.
Combined, Microsoft, Amazon and Alphabet spent a combined $31.54
billion in 2016 in capital expenditures and capital leases, up 22%
from 2015, according to company filings. Not every dollar of that
is spent on data centers that deliver infrastructure as a service,
but each company describes the cloud as a major investment
area.
The new data centers should help Microsoft win over South
African business customers who've wanted to move their computing
operations to the cloud, but have been unwilling to have that
service provided by data centers in Europe, said IDC analyst Jon
Tullett. Cloud services can run more slowly when data has to travel
such distances. Moreover, recent South African regulations require
businesses to keep some customer data on servers in the
country.
With the new data centers, Microsoft has taken those issues "off
the table completely," said Mr. Tullett, who was briefed by
Microsoft on the news. He expects cloud adoption in the country to
climb as a result.
Write to Jay Greene at Jay.Greene@wsj.com
(END) Dow Jones Newswires
May 18, 2017 08:44 ET (12:44 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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