Summary: Microsoft is to set up data centres in India as part of a 10-year deal signed with mobile operator Reliance Jio Infocomm, a subsidiary of India’s Reliance Industries. The first two data centres being built by Jio in the states of Gujarat (India’s westernmost state bordering Pakistan) and Maharashtra (spanning west-central India and including Mumbai) will have a combined capacity of up to 7.5MW. They are set to go into operation by the end of 2020.
Details: Jio will use the data centres and Microsoft’s Azure platform to develop services for Indian business customers. The two will also develop services that support major Indian languages and dialects to drive cloud takeup across the country – presumably using Microsoft’s speech recognition and natural language capabilities. Similar to the deal Microsoft struck with AT&T recently, Jio will use Office 365 internally and migrate all non-network applications to Azure.
Jio strategy: The company launched in late 2016 with free voice and low cost data plans, and is already the country’s largest mobile operator in terms of subscriber numbers. It plans to launch fibre broadband services with access to TV channels, fixed-line telephony and video conferencing – also with aggressive pricing starting at around $10/month. The Microsoft tie-up will have a similar strategy, with free connectivity and cloud infrastructure for startups, as well as connectivity, productivity and automation packages starting at around $21/month.
Reliance strategy: Reliance is diversifying away from its core oil and petrochemical businesses to focus on Jio and Reliance Retail, India’s largest retailer in terms of revenue. It plans to induct global partners into both in the next few quarters (saying it has strong interest from strategic and financial investors), with the intention of listing both within five years.
Angle: Another big win for Microsoft and a strategic push into the massive Indian market with a well-known brand that has disrupted the local mobile market in a short space and looks set to do the same with both fibre and cloud. Pricing – and presumably margins – will be low, but the sheer volume of potential customers is the draw in a price-conscious market with new data residency regulations underway. Other cloud providers – notably AWS which is growing strongly in the country – may need to cut prices to attract new customers and retain existing ones. As a side note, Reliance may also be gunning for Amazon on the retail front. Amazon is one of the country’s biggest online retailers, and it makes sense for Reliance to evolve its brick-and-mortar retail operations into online. It has outlined plans to on-board thousands of small merchants and shops with its digital systems, as well as deploy technologies including AI, IoT and blockchain. Nothing seems to have been announced, but surely Microsoft/Azure would be the obvious choice of technology partner?
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