Microsoft probably builds a cloud computing data center in Germany

First, I have this information not from a Microsoft employee, so it is not a confirmed report. However, three people have told me, independently from each other, the fact that Microsoft plans to build at least one data center for its cloud services, including Windows Azure and Microsoft Office 365, in Germany. Therefore, one should assume that a little truth is behind this information. If Microsoft would confirm this, you should just say chapeau Microsoft! This is exactly the right way.

It fits into their strategy

Microsoft’s current strategy is “CLOUD First”. This is no secret and was confirmed to me several times by Microsoft’s side. Among others from the business division Dynamics CRM that is constantly growing through the cloud. At Microsoft since the launch of Dynamics CRM Online in 2011 the approach is “cloud first!” and this seems to prove themselves. The cloud solution has reached a high level of customer acceptance, which was able to win 30% more customers for Microsoft Dynamics CRM. While 60% of all new customers rely on the cloud solution.

The situation is similar in many other areas of the company. Be mentioned only Windows Azure, which is constantly being expanded, or Office 365. For this reason, the construction of at least one data center in Germany is and and would be the next logical step to meet us Germans with regard to confidence.

Data center in Germany: An enormous competitive advantage

Microsoft supplies the European market currently over its data centers in Ireland (Dublin) and the Netherlands (Amsterdam). This comes with many Germans, especially privacy officers and medium-sized enterprises, to discomfort. Storing data outside of Germany and a contract after a maximum of European law is not welcome. However, Germany should not be neglected as a business location. For U.S. companies Germany may indeed be a small country, but to underestimate the economic power would be fatal.

If the fact is true, that Microsoft is building a cloud data center in Germany, it would be an enormous competitive advantage over other providers such as Amazon Web Services or Google. Especially in the highly competitive market for corporate customers, where Amazon AWS and Google struggle and where Microsoft already has the best starting position, due to an existing broad customer base, Microsoft would make a big step forward.

Beyond – If the data center will be built, as I believe strategically, Amazon and Google will each no longer come around to build their own data center in Germany. Indeed both and in particular Amazon is the technologically leader in the cloud computing market, but the location advantage is not negligible with a data center in Germany to actively begin to take the concerns of the German companies.

After all, cloud computing is the future! Only the legal and data privacy issues need to be adapted to the level of countries plus the customer needs which must be considered. Technologies and services are allowed to and even have to be standardized! But contracts and organizational issues have to be lead at eye level.

By Rene Buest

Rene Buest is Gartner Analyst covering Infrastructure Services & Digital Operations. Prior to that he was Director of Technology Research at Arago, Senior Analyst and Cloud Practice Lead at Crisp Research, Principal Analyst at New Age Disruption and member of the worldwide Gigaom Research Analyst Network. Rene is considered as top cloud computing analyst in Germany and one of the worldwide top analysts in this area. In addition, he is one of the world’s top cloud computing influencers and belongs to the top 100 cloud computing experts on Twitter and Google+. Since the mid-90s he is focused on the strategic use of information technology in businesses and the IT impact on our society as well as disruptive technologies.

Rene Buest is the author of numerous professional technology articles. He regularly writes for well-known IT publications like Computerwoche, CIO Magazin, LANline as well as and is cited in German and international media – including New York Times, Forbes Magazin, Handelsblatt, Frankfurter Allgemeine Zeitung, Wirtschaftswoche, Computerwoche, CIO, Manager Magazin and Harvard Business Manager. Furthermore Rene Buest is speaker and participant of experts rounds. He is founder of and writes about cloud computing, IT infrastructure, technologies, management and strategies. He holds a diploma in computer engineering from the Hochschule Bremen (Dipl.-Informatiker (FH)) as well as a M.Sc. in IT-Management and Information Systems from the FHDW Paderborn.

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