South Africa is now a major hub for big tech’s cloud datacenters

Image: Reuters/Benoit Tessier
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If you wanted a demonstration of how important cloud services have become in Africa, it was the unusual occurrence of high-level executives from both Amazon and Microsoft, the world’s biggest providers, being in South Africa at the same time this month.

Yousef Khalidi, Microsoft’s corporate vice-president of Azure Networking, was in Johannesburg to announce two data centers in the country; while Amazon’s chief technology officer, Werner Vogels, was also in town to launch the first so-called “Pop-up Loft” in Africa. This comes ahead of Amazon Web Services (AWS) first datacenter to be opened in Cape Town in the first quarter of 2020.

“It was sheer coincidence,” says Arthur Goldstuck, managing director of researchers World Wide Worx, “but the presence of the bosses of the two biggest cloud computing platforms in the world made South Africa seem like an eligible single being wooed by highly desirable suitors”.

And it’s not just the big American companies, Huawei, China’s giant telecoms company, is also building out data center in South Africa and announced it had begun offering commercial cloud services this month. It’s easy to see why. South Africa is the continent’s most developed economy, has advanced internet infrastructure and often hosts the African head office for many global technology and internet firms.

Having a cloud presence in South Africa is a no-brainer to access the established businesses here and is also a regularly-used stepping stone to the rest of the continent. However, the systemic challenges to South Africa’s economy from the “nine lost years” under former President Jacob Zuma that left the country reeling from widespread corruption, including crippling the country’s power utility, Eskom, that has seen nearly a week of severe rolling blackouts due to graft and a failure to maintain its infrastructure.

The arrival of Microsoft’s centers “is a massive affirmation of the growth of the digital economy in South Africa… [and]the clearest indication yet of the expectations of global players of massive growth to come across Africa,” Goldstuck says.

Both cloud behemoths AWS and Microsoft are putting massive resources behind their quest to become the preferred partner for cloud computing, he adds. Microsoft has installed what are known as hyperscale data centers, which IDC defines as more than 5,000 servers and 10,000 square feet, and are essentially global cloud platforms that offer the cloud-based services that the global digital economy runs on. Having a local presence generally makes such services faster and therefore more accessible.

“Public cloud is a billion-dollar market here. Microsoft is making a multimillion-dollar bet that cloud uptake in South Africa has reached a critical mass,” says Jon Tullett, the Johannesburg-based research manager for IT services in sub-Saharan Africa for researchers IDC. 

By opening its first enterprise-grade data centers in Africa, Microsoft says its Azure is the first global provider to deliver cloud services from data centers on the continent, including its Office 365 productivity suite.

“In our experience, local data center infrastructure—in addition to stimulating economic development for customers and partners—enables companies, governments and regulated industries to realize the benefits of the cloud for digital transformation, as well as bolsters the technology ecosystem that supports these projects,” says Tom Keane, corporate vice-president of Microsoft’s Azure Global.

The potential for growth is significant, says IDC’s Tullett, with cloud services forecast to grow at just over 30% year-on-year. “In South Africa, there’ll be a short-term acceleration in growth in that and related services here, as well as in other African countries, and in the long term, the impact will be factored in on traditional hosting.”

Huawei’s Johannesburg datacenter is leased from a partner, and it plans to operate more data centers in Kenya and Nigeria soon. “We are looking forward to Huawei Cloud’s innovative technologies and services, such as cloud computing and artificial intelligence assisting African governments, carriers, and enterprises in a variety of industries such as finance, energy, agriculture, to leapfrog to a fully-connected, intelligent era,” says Edward Deng, vice-president of Huawei’s Cloud Business Unit.

Goldstuck ­adds: “The Huawei announcement is of strategic significance but is nowhere near the scale of Azure and AWS. However, it does underline the sense that South Africa and the African continent are finally being taken seriously by the world’s major cloud vendors.”

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