Why the big tech companies are in a race for the cloudby Peter Griffin
It began with the most nebulous of names, but cloud computing is now a massive business as a three-way race emerges among the tech giants to crunch the world’s data online.
It is dominated by online retailer Amazon, which through its Amazon Web Services division last year claimed over 50 per cent of the market. Such is the insatiable demand for storing the data our increasingly digital lives generate here in New Zealand, Amazon has bought capacity on the new Hawaiki cable connecting New Zealand to Australia and the US.
It has data centres in both countries and the new cable capacity Hawaiki has delivered in addition to the existing Southern Cross Cable may encourage Amazon and other large data hosts to finally build their own data centres here.
But the nature of cloud computing is changing as it becomes about much more than just storing data and applications that would previously have sat on servers in a company’s own IT department.
Walmart’s big move
Amazon, Google, Microsoft and their Chinese rival Alibaba have developed artificial intelligence and machine learning tools that allow businesses to make sense of the data they are generating and to build new applications and services based on them.
Start-ups and digital companies typically begin life in the cloud as the cost of building their own infrastructure is too great. But now legacy companies are taking a cloud-first approach as they seek to best take advantage of these AI-powered tools.
US retailer Walmart last month signed a five-year deal with Microsoft to use its Azure cloud computing platform, machine learning tools and Office 365, the online version of the Office productivity suite.
A key factor in choosing Azure was Walmart’s desire not to be dependent on Amazon, its arch-rival in the retail space. The move by big blue-chip companies to the cloud has fueled 89 per cent growth in Microsoft’s cloud business, which was worth US$3.1 billion in 2017.
“Effectively we've been doubling the business around Azure,” says Julia White, corporate vice president at Microsoft and responsible for developing its cloud computing business.
“There have been early adopters in Silicon Valley start-ups that take up a lot of capacity. But they are few in number. Now the mainstream is starting to say, hey, I can run my systems better using the cloud than I can internally.”
For a consumer-facing and logistics-driven behemoth like Walmart, the cloud will increasingly network all of its stores and warehouses. For a company with US$500 billion in revenue last year and 2.3 million employees worldwide, even small changes make a big difference.
“You have stores that aren't connected and not getting all of this digital information, you don't know when something is bought, how to adjust your supply chain based on that,” says White.
Firing up the cloud
In our part of the world, the move to the cloud has been slower.
“In New Zealand, we are starting to see more growth there, it Is not quite like Australia but it is starting to come online,” she says.
Microsoft last year used Azure to network up fire trucks for Fire and Emergency New Zealand, giving first responders situational data delivered to tablets in the trucks. As machine learning tools are applied to information about fires and traffic accidents, insights will inform how the emergency teams respond in future.
Wellington-headquartered breast screening company Volpara Health Solutions is using Microsoft’s cloud tools to help improve the accuracy of its mammogram imaging.
A surge in data centre investment followed the Christchurch earthquakes, in response to demand for rapid access to back-up infrastructure in future. The local scene is dominated by Spark and Datacom, the country’s largest IT company.
But the New Zealand Government has a cloud-first policy that has to a large extent rendered location irrelevant when it comes to storing data generated by government departments. Even restricted data, in principle, no longer must be kept within the country’s borders as cloud security has improved.
Microsoft is looking to exploit that with the development of two Azure sites hosted in the Australian capital by Canberra Data Centres, of which New Zealand company Infratil is a part owner.
Those sites are geared up to host “unclassified and protected data for government departments in both Australia and New Zealand.
But White said many companies still preferred to keep their data local, which had led Microsoft to develop Azure Stack, which brings those cloud computing tools to a local server installation.
“We take the Azure code base and allow it to run in a server rack in a customer's data centre, wherever they want,” she says.
“It could be disconnected out on an oil rig or a farm in New Zealand. It could be tax information that needs to stay in New Zealand.”
In a similar vein, Microsoft is also developing “intelligent edge” technology so that AI tools typically offered in the cloud can be delivered on remote devices. It is squarely aimed at the rise of the Internet of Things - a multitude of networked devices that will increasingly run their own AI models and make decisions on our behalf.
“It is totally ubiquitous devices all over the place, from my watch to my shoes to my car to my building and everything in between,” says White.
The ultimate emerging example is the driverless car, which is already traversing the highways of California and other states as Google-owned Waymo, Uber and car makers test the autonomous technology ahead of a commercial launch.
“You are riding in an autonomous car, right at that moment it needs to make a decision. There's no chance you are going to wait for that to go to the cloud, make a decision and shove that back down in one moment. No way,” says White.
“The data and the computing needs to sit locally on the car. The AI model sits on the car. The same thing happens on a factory floor - is this part good or not, do I need to stop the line?”
Powering IoT devices was a small but fast-growing part of the Azure business. A group of New Zealand university students last week won international recognition in Microsoft’s Imagine Cup for its use of the technology to remotely monitor water tanks.
“IoT will be big,” says White.
But a new emerging technology that Microsoft has been chipping away on for over 13 years is also set to get the cloud treatment - quantum computing. The idea of exploiting the laws of particle physics to extend computer processing power far beyond what conventional supercomputers can offer, is being pursued across Silicon Valley, as well as by the world’s top universities.
“We've been working on our Qubit for years,” says White.
“It is going to start with limited access, but ultimately we are building quantum computing to be just another Azure cloud service. We know the potential of it, it could be completely revolutionary.”
Peter Griffin visited Microsoft’s Redmond campus as a guest of Microsoft
It's a matter of taste, the degree to which readers can tolerate the harshness of these stories.Read more
Drug companies have a lot to answer for in regard to America’s opioid crisis, as Beth Macy's new book Dopesick reveals.Read more
In its advocacy against 1080 poison, the SPCA has fallen out of step with this country’s conservation priorities, but they have a point.Read more
Christchurch designer Steven Junil says clothing, once considered precious, has now become disposable.Read more
Last year, British newspapers ran a story that shocked Londoners. The city, said the headlines, had a higher murder rate than New York.Read more
A startling new book reveals how much genes determine identity.Read more
Lawrence Arabia’s scheme to release 12 tracks in 12 months finished with something of a flourish – and a revelation.Read more