Who can match Microsoft's data centre spending?

With Microsoft revealing it is spending more than $10bn on data centres for its Azure platform it makes you wonder why the channel should bother building its own offerings

Those channel players that were still thinking that the approach that needs to be taken to cloud is a 'build
it and they will come' approach might be pausing for breath given the size of investment it takes to build a
decent data centre infrastructure.

When the cloud first started to emerge as an area for growth some of the larger channel players took steps to
develop their own complete hosting solution, which in some cases involved building a data centre to house
customer data.

But increasingly the availability of public cloud platforms like AWS, Azure and Google have removed the need
for that type of investment.

For those with any lingering doubts the announcement that Microsoft is putting more than its $10bn R&D budget
into developing Azure data centres will have highlighted just how expensive this side of the business has
become.

The comments about the amount of money being spent by the software giant came at a conference in the US where
the vendor's general manager George Taylor told the audience that it was spending more on Azure than its
annual R&D budget as it looked to provide a solid infrastructure for its cloud platform.

In his keynopte slot at the Greenpages' Cloudscape conference Taylor said that there were 19 Azure regions
where it had data centres available today, which was much more than the competition could offer, and it was
planning to add five more locations to that list.

His comments were shared with the world via the US channel press, which pointed out that Taylor indicated that
it would continue to spend as it looked to secure a leading position in the market.

Microsoft is not alone in investing in cloud hardware and recent figures from IDC looking at Q4 last year,
indicated that nearly a third of money spent on IT infrastructure is connected to the cloud. That has
increased by 14.4% year-on-year to $8bn in the fourth quarter of 2014.

The market was growing strongly in the public cloud space with $16.5bn spent in Q4, a 17.5% increase on the
same period the previous year.

Zahl Limbuwala, CEO of Romonet, viewed the Microsoft Azure investments as something that should force those
looking to make their own investments to ask some serious questions of their strategy.

“The scale of Microsoft’s investment lays bare the sheer cost of building and managing data centres. As
investment in these backbones of the cloud continues, one of the greatest priorities for those doing the
investing will be understanding not just the scale of the investment involved, but where it will be spent," he
said.

"The most cost-intensive part of any data centre isn’t the initial building, or the technology that lives
there, but the systems needed to ensure that the technology keeps running as expected; from power to cooling.
One area where we see technology developing is in creating a firm understanding of the total cost of ownership
of these data centres, and just how those costs, and the eventual return on investment, will change over
time," he added.

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