Microsoft Corporation has recently announced its plan to build out two large data centers in Canada. One will be located in Toronto and the other in Quebec City. While this may seem like a relatively large initiative, it pales in comparison to Microsoft’s cloud infrastructure plan of $15 billion – $1 billion of which is annual spending.
Currently, Microsoft generates roughly $6.5 billion in cloud services revenue, with millions coming from Microsoft Azure customers. Needless to say, the US is a primary market for Microsoft, where a majority of their revenues come from. Though Microsoft has potential to dominate in Canada as well, even given the fierce competition from AWS and SAP with the build outs of their own data centers in Canada, the question that cloud enthusiasts are asking is: why invest heavily in a smaller market?
As countries experience rapid cloud growth, the need for data security and protection is increasingly vital as well. With all of the current security cracks, governments across the world are less keen on storing their data in the cloud in a remote location. This is extremely apparent in regard to Canada, as they are looking for complete data control. Thus, the data centers need to be built within Canada’s borders. Janet Kennedy, President of Microsoft Canada said that this move was solely for the Canadian government. “There’s no technical reason to do it, this is for the government,” said Kennedy.
It’s Not All Government
It is important to note that this move was primarily for the benefit of the Canadian government. However, perhaps equally as important, Microsoft really has the ability to conquer the Canadian cloud market. There are tens of thousands of small, medium and enterprise business cloud customers in Canada. Yet, only about one fifth of these are using the cloud. The majority are still relying on outdated infrastructure that is far more costly than the cloud. Once these businesses realize the cost savings the cloud will enable them to achieve, the demand for cloud services will skyrocket.
Microsoft currently has over 2,000 employees based in Canada. This will likely grow as more Canadian customers discover the cloud.