Microsoft Corporation (NASDAQ:MSFT) To Open Two New Data Centers in South Africa


Microsoft Corporation (NASDAQ:MSFT) plans to open two new data centers in South Africa as the race for cloud computing customers heats up. The tech giant has picked Johannesburg and Cape Town, South Africa as the homes for the new data centers that should be up and running by 2018. The opening of the two will bring the company’s data centers footprint to 40.

 Untapped Opportunity

Opening data centers in Africa is part of the software giant’s push to deliver its various services like Office 365 as well as its Azure cloud across the continent. Expanding in Africa does not come as a surprise given that the market presents a ripe untapped opportunity.

The fact that the other major cloud infrastructure providers are yet to make a push for the African cloud market means Microsoft stands a better chance to set the pace. Opening data centers in South Africa should help the tech giant attract new customers who’ve wanted to host their operations on the cloud.

The company’s customer base currently boasts the likes of Standard Bank of South Africa and South African State Information Technology Agency. However, some customers have been unwilling to transition to the cloud given that most companies providing such services have data centers in Europe. The fact that cloud services can be quite slow when data has to travel long distances has been a major concern, something that Microsoft plans to address with the Africa push.

New Revenue Source

Cloud revenue in South Africa is expected to grow by 20% from $243 million as of last year by 2021, presenting yet another lucrative opportunity for the tech giant.

“We’re excited by the growing demand for cloud services in Africa and their ability to be a catalyst for new economic opportunities,“ said Executive Vice President of cloud and enterprise Scott Guthrie.

Tech giants are aggressively opening data centers around the world as cloud computing arms race heats up. Microsoft, Inc. (NASDAQ:AMZN), and Alphabet Inc. (NASDAQ:GOOGL) spent a combined $31.54 billion in capital expenditures last year. A good chunk of the amount according to estimates went to cloud infrastructure seen as the new battleground.

Microsoft stock was unchanged in Thursday trading session having rallied by 0.34% to end the day at $67.71 a share.

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