Microsoft Corp. (MSFT.O) launched a new set of technologies on Tuesday aimed at making its cloud computing services work in data centers it doesn’t own, such as those run by competitors.
Microsoft executives and analysts credit the strategy with the company’s rise in the cloud computing infrastructure market, which Gartner estimates to be worth $64.3 billion and in which Microsoft trails only Amazon.com’s (AMZN.O) Amazon Web Services. Microsoft announced last week that sales from Azure, its main cloud service, increased by 48%, allowing it to surpass Apple Inc (AAPL.O) as the world’s most valuable publicly traded corporation.
Microsoft’s goal has been to build its most profitable cloud software services, such as database tools, so that they may run in its own data centers, customers’ data centers, or even competitors’ data centers, such as Amazon’s.
According to Scott Guthrie, Microsoft’s cloud and artificial intelligence director, the movie has persuaded some customers to use Microsoft’s services when they can’t always use Microsoft’s data centers. According to Guthrie, the Royal Bank of Canada is required by law to keep some of its computing work in its own data centers, and it utilizes Azure Arc to connect those facilities to Microsoft’s cloud.
“The challenge with higher-level services historically has been the concern of ‘lock in’ – what happens if I can only use them in your data center?” Guthrie said. “That freedom of movement causes customers to feel much more comfortable using those services.”
According to Ed Anderson, a vice president senior analyst at Gartner, Microsoft’s strategy opens doors with consumers, but it also compels the business to compete on the quality of its software services rather than on the cost of processing power.
“To be honest, that’s a better way to compete,” Anderson said. “Customers are suspicious of rhetoric. They look for evidence of capabilities and are cautious of things wherein principle technology is multi-cloud but maybe the software licensing doesn’t support it.”
