Stronger than expected cloud demand compels Microsoft to triple Azure presence in China

Microsoft CEO Satya Nadella recently announced during the Microsoft Tech Summit 2017 in Beijing
the company intends to triple its Azure presence in China over the next six months to meet stronger-than-expected demand from local companies. As part of the expansion, Microsoft said it will provide new opportunities for Azure customers, allowing companies to widen their area coverage in Asia.

China is one of the biggest IT markets in the world. According to Ministry of Industry and Information Technology data, China’s cloud computing industry is expected to be worth 430 billion yuan ($63.3 billion) in 2019, an increase from 150 billion yuan in 2015. “China is one of the most dynamic markets, where enterprises are aggressively pushing forward digital transformation, creating abundant growth opportunities,” Nadella said at a forum.

According to Microsoft, Azure was the first international cloud service to become generally available in the China market when it was originally deployed in March 2014. Since then, Azure in China has accumulated over 1,000 cloud partners and 80,000 enterprise customers, including Chinese brands like Haier, Lenovo, and Huawei. Microsoft said previously it intended to double the growth of Azure cloud services in China this year. The company reported triple-digit growth in 2016.

Expanding Azure coverage in China is easier said than done. Foreign organizations that seek to deploy cloud operations in China are required to partner with a locally licensed vendor. Consequently, the cloud computing market in China is dominated by native organizations like Alibaba and Baidu.

21Vianet is the locally licensed vendor that Microsoft Azure partnered with to makes it services available in China. The company will be investing a hefty sum on the infrastructure needed to triple Azure’s presence; although, Nadella did not disclose an exact figure during the announcement.

Microsoft isn’t the only tech giant significantly investing in IT infrastructure in China. In July, for example, Apple announced it intended to expand its footprint in the country by building a $1 billion data centre in partnership with Guizhou-Cloud Big Data Industry (GCBD), a Chinese data management company.

During the summit, Nadella also announced the Azure Stack hybrid cloud solutions, which were created in collaboration with Huawei Technologies, would be released during the first half of next year. According to the company, the new cloud service is tailored to meet increased customer demand for local data centers with agile compute capability.

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