- More money has been spent on data center deals so far this year than all of last year combined, according to new market research.
- Specifically, data center deals this year have reached nearly $15 billion, while they were at just shy of $15 billion last year.
- Expanding data center capacity is particularly right now important for top public cloud providers Amazon Web Services and Microsoft as the need for cloud services increases amid the coronavirus pandemic.
- The market researcher, Synergy Research Group, says that it’s aware of 50 new Amazon and Microsoft data centers in various stages of development across 15 countries.
- Click here to read more BI Prime stories.
Companies have spent more on data center deals so far this year than in all of 2019, according to new data from Synergy Research Group, as the coronavirus crisis forces aggressive expansions to keep up with a surge of users working from home.
The market researcher identified 28 data center deals worth a total of $14.8 billion have closed so far this year, and 17 more deals are pending. The total value of data center deals last year was $14.7 billion.
Expanding data center capacity is particularly right now important for top public cloud providers Amazon Web Services and Microsoft as the need for cloud services increases. With much of the world staying at home amid the COVID-19 pandemic, that means more people are turning to services like Netflix, Zoom, and Xbox Live to stay connected — in turn, placing more strain on the cloud platforms that underpin them.
John Dinsdale, the group’s chief analyst, told Business Insider he’s aware of 50 new Amazon and Microsoft data centers in various stages of development across 15 countries. “It may be a year or two before some of those come online, but many will be operational in the near future,” Dinsdale said.
AWS did not comment on that figure, but said it has 73 “availability zones” and has announced plans for 12 more. The company on Wednesday announced it opened new data centers in Cape Town, South Africa.
Microsoft declined to comment on its data center plans and referred to a recent note to customers explaining how the company is managing capacity during the coronavirus crisis.
It’s unclear exactly how the coronavirus crisis has shaped the companies’ expansions since widespread measures to keep people at home began in March, but Dinsdale said a clearer picture should emerge next week when both companies report first-quarter earnings.
Dinsdale expects to see continued aggressive investment in new public cloud data center capacity, and a slowdown in cloud server replacement as cloud providers try to squeeze out more working life from existing hardware.
Coronavirus crisis and cloud capacity
Where Microsoft is concerned, the coronavirus crisis has presented a big opportunity for its cloud business, but also a big challenge.
Microsoft not only has its Azure public cloud business, but business software used by most business around the world which share data center with its cloud business. That means the opportunity created from the coronavirus crisis for Microsoft is twofold, but it makes it more difficult for the company to ensure it has enough capacity for all of its cloud and software customers. Microsoft Teams, for example, experienced an outage in March.
A recent note to Microsoft customers suggests Microsoft is worried about capacity issues.
Microsoft said it would placed temporary restrictions for Azure cloud computing customers, including limits on free offers and “certain resources” for new subscriptions. The company has also said it would prioritize “first responders, health and emergency management services, critical government infrastructure organizational use, and ensuring remote workers stay up and running with the core functionality of Teams.”
Microsoft hasn’t released its plan for adding capacity, but has recommended that customers switch to other data centers with less demand and that it will work to expand data-center capacity in regions where demand is surging.
AWS, meanwhile, said it hasn’t had any capacity issues as a result of the coronavirus crisis. AWS is also more focused on public cloud infrastructure and doesn’t provide business software — like the Teams chat app, or the broader Office suite — at the same scale as Microsoft. Slack and Zoom, both significant AWS customers, have seen big surges in usage of their own, however.
Amazon and Microsoft are consistently active in expanding their data center footprints, Dinsdale said.
Are you an Amazon Web Services or Microsoft employee? Contact this reporter via email at firstname.lastname@example.org, message her on Twitter @ashannstew, or send her a secure message through Signal at 425-344-8242.