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Inside Microsoft’s $3 Billion European Cloud Computing Bet

Monday, October 3, 2016 4:33
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(Before It's News)

Microsoft LogoSoftware giant Microsoft Corporation (NASDAQ:MSFT) has spent billions in recent years to bolster its presence in the European cloud computing market, as the company competes for foreign business dollars with fellow juggernauts Amazon and Google.

The massive investments should start paying off soon. From Bloomberg:

Next year the software maker will open data centers in France as part of the investment push, Nadella said in an interview Sunday. Microsoft already has more than doubled its computing capacity to deliver Internet-based services in the region, including a network of centers in various European countries to address laws and preferences for keeping data stored locally.

The company’s expenditures in the EU aren’t over, either:

“My expectations would be that investments will continue,” Nadella said ahead of a four-day tour through Europe with stops in Dublin, Berlin, Paris and London. “There will be cyclicality to how we invest, but I fully expect the investments to grow with our business and the impact it has.”

Western Europe represents a huge opportunity for cloud computing companies. The region represents 21% of global annual cloud spending this year, or $42.5 billion, according to market research firm Gartner Inc. That number is projected to swell to nearly $74 billion by 2020.

“Europe represents a large market and a pretty complex one in terms of the requirements — Microsoft’s expansion plans reflect that,” said Ed Anderson, an analyst at Gartner. “Europe is a pretty complex web of different regulatory requirements, some of which bubble up to the EU and some are very country specific.”

Once known chiefly for its Windows operating system and Office productivity suite, Microsoft has aggressively expanded its cloud and other next-generation technology footprint under Nadella. The company has also introduced its own branded tablet/laptop computer and acquired business-focused social network LinkedIn to diversify its offerings.

MSFT-2016-10-03

Microsoft shares were unchanged in premarket trading Monday. Year-to-date, MSFT has gained 3.82%, versus a 6.09% rise in the benchmark S&P 500 during the same period.

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