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MSFT Expands Cloud Services in Australia

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Microsoft Corp. (MSFT - Free Report) recently announced the expansion of Windows Azure cloud services in Australia and is setting up new data centers for the purpose.

Microsoft plans to open two new cloud computing data centers in the Australian states of New South Wales and Victoria. Management stated that it has more than 200,000 Windows Azure customers across the world. We believe that the launch of this new cloud computing platform will expand the Windows Azure consumer base in the region.

The new Australian data center will provide customers access to Microsoft services including NET and Open Source applications, SharePoint, SQL and Active Directory on virtual machines in Windows Azure.

Windows Azure is Microsoft’s cloud computing platform for building, deploying and managing applications and services through a global network of managed datacenters. Windows Azure core offerings include Media Services, Mobile Services, Cloud Services, Virtual Machines, Websites and Big Data. It competes with Amazon's (AMZN - Free Report) cloud computing platform Amazon Web Services (AWS) and OpSource Cloud Computing Services.

Earlier, companies incurred significant costs to build their own infrastructure for data storage. They had to make a substantial payment upfront, after which they would invest further to purchase additional storage space anticipating growing backup demand. This resulted in under-utilized capacity and unnecessary expenses. With Microsoft’s cloud-based storage services, companies now do not need to waste time and money on managing their own data centers.

Cloud storage came into prominence in 2009, with Nirvanix and Amazon's Simple Storage Service (S3) being two of the major pioneers. Since then, Amazon has continued to dominate the space, with other players like Microsoft and Rackspace offering their own solutions.

Market research firm IDC predicts that the cloud market will jump 130%, reaching $43.0 billion in 2016. Further, Gartner predicts that around $677.0 billion would be spent on cloud services within the 2013–2016 timeframe. Microsoft, with its solid portfolio should be able to tap this opportunity.

The company is expanding Windows Azure internationally and investing in technology infrastructure to support rapid growth. Microsoft remains one of the best positioned software vendors, given the wide range of its products, emerging markets strength, continued technology deployment at data centers and growth in cloud computing.

It is important for the company to focus more on emerging segments such as mobile hardware and the cloud. Last month, the company announced that it won customers such as Domino's Pizza (DPZ - Free Report) , Xerox India and Pedcor Co. for its cloud and server services, Windows Server Hyper-V. Therefore, its server and tools business remains as strong as ever, which is evident from the series of customer wins in the recent past.

However, just like other PC makers, Microsoft is also battling the slump in the PC market caused by the sluggish economy. In addition, the popularity of smartphones and tablets from Apple (AAPL - Free Report) and Google have been cannibalizing its core PC market.

Currently, Microsoft has a Zacks Rank #4 (Sell).

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