Cloud infrastructure providers invest heavily in data centers
Amazon, Microsoft, and Alphabet’s Google are investing heavily in cloud-based hyperscale computing, according to Jay Greene at The Wall Street Journal. He notes that last week, Amazon announced it would invest in data centers in Stockholm.
The Stockholm cluster will become what’s known as a “region,” which, Greene says, can represent a price tag of several hundred million dollars.
For its part, Google claims six regions, 18 zones, 100 points of presence, and hundreds of thousands of miles of fiber-optic cable. The company recommends its customers choose zones and regions near their respective customers to reduce latency but also suggests distributing apps and storage across zones to protect against service disruptions.
Greene writes, “Combined, Amazon, Microsoft and Alphabet doled out $31.54 billion in 2016 in capital expenditures and capital leases, according to company filings”—up 22% from 2015. He adds, “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 massive investment is crowding out rivals. Greene quotes Deutsche Bank Securities Inc. analyst Karl Keirstead as saying the top three players have “…created a powerful moat” and that “game is over” for any company wanting to compete in general-purpose cloud infrastructure services.
The possible exception is Oracle, Keirstead said, which may succeed with customers moving their Oracle databases from their own servers to the cloud.
Greene notes that HP closed its Helion Public Cloud, while IBM still sells infrastructure services but is focusing on higher-margin activities such as data analytics.
Adds Greene, “The pace at which the big cloud-infrastructure providers are opening regions isn’t likely to slow. In addition to Stockholm, which is expected to open next year, Amazon has announced plans to open regions in the coming months in Paris and Ningxia, China. Microsoft is set to soon add locations in France, Texas, and Arizona. And Google announced plans last month to open regions in California, Canada, and the Netherlands.”
