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)