When Microsoft announced their Fourth Quarter earnings last month, behind the news of the $7.6 billion write-down were more indications that their commercial cloud business is set to soar. In the fourth quarter of their last fiscal year commercial cloud revenue grew by 88% and projections are being made that Microsoft is on track to reach a $20 billion annual run rate by Fiscal Year 2018.
And now it looks like Microsoft has been really doubling down on their cloud business as CRN is reporting that Microsoft is spending more than $10 billion per year building Azure data centers to support its commercial cloud and Azure businesses. Microsoft General Manager George Taylor told a group of IT executives that they are now spending more money on building out its Azure data centers than it spends on its annual research and development budget.
When speaking at the CloudScape 2015 conference, Taylor said:
"The investment we are making in data centers is stunning. We used to invest about $10 billion in research per year, which we still do. Our data center investments are more than that. It is unbelievable.”
Taylor went on to say that with Microsoft having data centers in 19 regions, and a data center footprint growing annually at a rate of 10 times, they have taken the leading position in what he described as a "hyper-cloud arms race” in competition with Amazon and Google.
Some other details Taylor shared in his keynote address were that
- Azure is adding more than 90,000 customers each month.
- There are 1.4 million SQL databases in Azure.
- Azure active directory has 475 million users.
- There are 3,200 Azure MarketPlace applications.
- Microsoft has plans to expand its data centers into 5 more regions, bringing it to a total of 24 regions.
It’s clear that Microsoft recognizes the potential of their cloud business and is investing heavily to come out ahead of Google and Amazon in an area of competition that should be right up their alley, providing innovative technology solutions for the enterprise market.
Update: Microsoft has provided a clarification to the CRN report. "To be clear, per our latest earnings report, for fiscal year 2015, research & development spend was $12 billion and capital expenditures were $5.9 billion. Since opening our first datacenter in 1989, Microsoft has invested more than $15 billion in building our global cloud infrastructure," a Microsoft spokesperson told WinBeta.