What’s behind Amazon, Microsoft and Google’s aggressive cloud expansions

It wasn’t long ago that the big spectator sport in IaaS cloud computing was to watch a leading provider such as Microsoft or Amazon Web Services announce price cuts and then ready for its rivals to follow suit.

The new game in town plays out in a similar way, except now the vendors are matching or one-upping each other with new data centers and cloud computing regions.

Throughout the month of October, AWS, Microsoft Azure and Google Cloud Platform have all announced plans to build out new regions for their Infrastructure-as-a-Service cloud operations. AWS brought a new region online in Ohio and announced plans to open one in France; Microsoft also announced plans for two new regions in France and new government regions in Arizona and Texas. Google aired big plans to add, on average, a new region per month to its cloud in 2017.

The regions will add to an already impressive roster around the globe for each vendor. Amazon Web Services boasts 14 regions that include a total of 38 Availability Zones, and AWS has plans for four more regions. (Each AWS region is made up of at least two Availability Zones (AZ) for failover protection; each AZ has at least one data center). Microsoft doesn’t use an AZ approach but instead has 30 regions for its cloud, with eight more planned. Google has five regions with announced plans for nine more.

Keeping up with demand

Experts who track the IaaS market say the slew of regions being added to these already massive cloud platforms is driven by a handful of factors.

First of all, there’s a seemingly insatiable demand for services as users get more comfortable using the public cloud.

AWS says it has more than 1 million active customers using its cloud platform every month; the company is on an $11 billion annual revenue run rate and it’s growing 58% year over year. Microsoft this summer announced that its Azure IaaS cloud usage more than doubled year over year, and IDC estimates that IaaS cloud revenue will more than triple from $12.6 billion in 2015 to $43.6 billion in 2020. Vendors are rapidly onboarding data center capacity to keep up with this demand.

“More and more workloads are moving to the cloud, and increasingly they’re analytical, machine learning, IoT and cognitive,” says IDC Research’s Rick Villars, vice president of data center and cloud. “Latency is critical for these applications.”

Cloud vendors want to be able to service customers no matter where they are, hence the international expansion.

“Big Fortune 500 companies need that global reach not only for scale, but for data sovereignty,” says Jared Wray, former CTO of CenturyLink’s cloud computing platform and now an entrepreneur.