April 11, 2017
Some of the world’s biggest technology companies — namely, Amazon, Microsoft and Google — are investing in massive data centers, dubbed hyperscale computing, to better provide services in the cloud. In that vein, Amazon just announced that it will open an immense network of data centers in Stockholm next year. According to company filings, the three companies spent $31.54 billion in 2016 alone in capital expenditures and leases, in major part linked to improving cloud offerings, which increased 22 percent from 2015.
The Wall Street Journal reports that Amazon didn’t put a price tag on its “new cluster of data centers in Stockholm,” but analysts believe it is valued at “several hundred million dollars.” Although that might seem like a steep price, the prize is significant. Last year businesses spent $500 billion on “computing, storage, networking, database technology and more,” and Gartner analyst Ed Anderson notes the money spent is shifting to the cloud.
Amazon, Google and Microsoft currently dominate that space, making it hard for others to compete, said Deutsche Bank Securities analyst Karl Keirstead. Amazon also has plans to open data centers in Paris and Ningxia, China in the next few months. Microsoft will soon open centers in France, Texas and Arizona, and Google plans to do so in California, Canada and the Netherlands.
Oracle is attempting to compete, having invested $1.7 billion in cloud-infrastructure services, a sum that “pales in comparison with [the investments] of Amazon, Microsoft and Google.” Oracle executive Steve Daheb insists that, despite the disparity in investment, “Oracle’s infrastructure services outperform the industry giants, allowing the company to compete without spending as much on data centers.”
Keirstead disagrees, but adds that, “it’s not too late if Oracle has narrower ambitions,” such as providing “infrastructure services to customers moving their databases running on Oracle software from their own servers to the cloud.”
Hewlett-Packard tried and failed to offer cloud services, closing its Helion Public Cloud in 2015. IBM, which bought SoftLayer Technologies in 2013 to compete with AWS, still deals with infrastructure services, “but places more emphasis on higher-margin offerings such as data analytics.”