More data centres on the ground in Australia give Microsoft more capacity to sell, and secure, a reliable home to offer services across the region.
Globally, Microsoft is way behind AWS in the cloud computing race, but in Australia it is much closer to parity, according to the world’s biggest tech research firm, Gartner.
Rapid market growth
For public cloud services, called infrastructure as a service (IaaS) in the tech sector, AWS has 40 per cent market share, with Microsoft at 21.5 per cent. This amounted to an eye-watering $US48 billion and $US26 billion revenue respectively last year.
In Australia, however, AWS has 31.9 per cent of the market, with Microsoft nipping at its heels on 29.8 per cent. The scale of the commercial opportunity underpinning Microsoft’s new investment is that this already lucrative market is still growing rapidly.
Last year, Gartner says, the Australian IaaS market grew by 37.1 per cent to be worth $2.68 billion, and it isn’t going to slow down any time soon. Every time you see a company talking about digital transformation and AI, you can listen hard and hear tills ringing in Microsoft HQ in Redmond.
“Microsoft Azure is typically the default IaaS option for Microsoft-centric organisations in Australia, particularly among small to midsize organisations in industries such as construction, local government, accounting and legal services,” Gartner VP analyst Michael Warrilow says, when asked about Microsoft’s relatively strong position here.
“They see equal or greater value in remaining Microsoft-centric, with their cloud infrastructure no exception because they believe it helps them avoid diluting scarce IT skills and expertise.”
IBRS analyst Joe Sweeney, meanwhile, says that anecdotally, almost all its research and advisory clients (more than half being public sector) are using Microsoft Azure as their preferred platform.
“We see migrations of on-premise infrastructure and solutions to Azure growing more strongly than AWS migrations, at least in the mid to larger organisations in Australia,” he says.
Microsoft’s investment in Australia, and its accompanying collaboration with the Australian Signals Directorate on a cybersecurity initiative called the Microsoft-Australian Signals Directorate Cyber Shield, is good news for both sides.
Clearly there is much political and literal capital to be gained from international alliances spilling over into business initiatives, and the AUKUS agreement promises to offer opportunities for Australian tech firms to win US and UK deals, particularly in areas such as cybersecurity and quantum computing.
The politicians can keep smiling, and the investors will keep buying.
