When Microsoft released its earnings reports for the third quarter of the 2016 fiscal year last week, the company reported that its revenue in the Intelligent Cloud division grew from 3% (up 8% in constant currency) to $6.1 billion. To achieve these good results, a new report from FierceCIO (via Data Center Knowledge) explains that the company spent $2.3 billion in capital on its cloud data center this past quarter, which represents a 65% increase in data center expenditures year-over-year.
According to the report, Microsoft Executive Vice President and Chief Financial Officer Amy Hood shared during the company's earnings conference call that "as planned, we accelerated our data center and cloud services investments to meet growing global demand." While Microsoft's cloud services such as Azure and Office 365 make it the second largest provider of cloud services behind Amazon Web Services, the company currently has an edge over its competitors as it can claim the most available cloud regions around the globe.
According to Data Center Knowledge, the Redmond giant achieved this key point of differentiation by using a mixed data center strategy of building its own data centers with leasing space from wholesale and retail providers such as Digital Realty Trust, DuPont Fabros Technology, Vantage Data Centers and CyrusOne.
Microsoft will likely keep accelerating its cloud data center spend over the next few months to stay ahead of its competitors including Google and IBM. According to the report, Google revealed that it plans to build 12 new data center sites around the world and also lease existing ones to keep up with the competition.
When Satya Nadella became the new CEO of Microsoft back in 2014, he explained that he would transform the Redmond giant to a "mobile-first, cloud-first company." Do you think Microsoft is doing the right thing to keep its rank as one of the three worldwide largest providers of cloud services? Please tell us what you think in the comments.