The battle for cloud supremacy in France has intensified with both Microsoft Corporation (NASDAQ:MSFT) and Amazon.com (NASDAQ:AMZN) announcing significant investment in the country.
Recently, Amazon Web Services (AWS) announced that it intends to open an AWS Region in Paris in 2017. The region will be its fourth in Europe after Ireland, Frankfurt and the United Kingdom.
Yesterday, Microsoft announced its plan to build data centers in France so as to provide Azure, Dynamics 365 and Office 365 services to the French populace by the beginning of next year.
Microsoft also stated that its cloud capacity has more than doubled in Europe in the past year. The company noted that it has invested over $3 billion across Europe to date to develop its cloud footprint.
Why this Move?
Improved Latency: Both Amazon and Microsoft believe that allowing French organizations to store their data locally will improve latency for sensitive workloads.
Foray into Regulated Sectors: As a regulated sector such as finance doesn’t allow moving certain information to foreign jurisdictions due to legal bindings, hosting data centers within the nation will open up doors for both the companies to foray into such segments.
Market Expansion: We note that both companies could leverage their investments in France to tap into Eastern European markets such as Hungary, the Czech Republic and Poland.
Intensifying Competition
Competition in the cloud space is fierce with the presence of major players such as International Business Machines Corporation (NYSE:IBM) , Alphabet (NASDAQ:GOOGL) and salesforce.com apart from Amazon and Microsoft.
Amazon currently leads the Infrastructure-as-a-Service market. According to Gartner “AWS’s flagship S3 holds nearly twice as much customer data as the top seven other public cloud providers combined.”
Per the latest report from Synergy Research Group, Amazon is almost three times the size of its nearest competitor Microsoft in the cloud services infrastructure market.
Conclusion
Although Amazon is considered a pioneer in the cloud computing market, Microsoft’s aggressive investment will definitely bridge the gap between the two companies going ahead. Nevertheless, we believe Microsoft will find it significantly difficult to topple Amazon from its numero uno position at least in the near term.
Amazon’s dominance in the cloud computing market has also driven its returns on a year-to-date basis. The company’s shares have surged almost 23.8% compared with Microsoft’s return of roughly 5.6% and S&P 500’s 5.7% over the same time frame.
Zacks Rank & Key Picks
At present, Amazon carries a Zacks Rank #3 (Hold). A better-ranked stock in the broader technology space is eGain Corporation (NASDAQ:EGAN) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Notably, estimates for eGain for the current fiscal year have narrowed down from a loss of 25 cents to a loss of 21 cents.
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