Microsoft Corporation (NASDAQ:MSFT) has seen strong growth in its server products and cloud services division.
The company is aggressively growing its data center business.
What Happened: The results of an underwater study called Project Natick were made public.
A shipping container-sized data center was placed on the sea floor off the coast of Orkney Island, Scotland for two years. The performance was up to eight times more reliable than its dry land counterparts, the study showed.
Why It’s Important: Fifty percent of the world’s population lives within 120 miles of the coast. Companies are also looking for data centers that are closer to their physical presence so that sensitive data doesn’t have to travel as far.
“The proven reliability of underwater data centers has prompted discussions with a Microsoft team in Azure that’s looking to serve customers who need to deploy and operate tactical and critical data centers anywhere in the world,” said Ben Cutler, a Microsoft special project manager who leads Project Natick.
Microsoft plans on using the increased performance for the underwater data center to increase efficiency for its land data centers.
“To learn how to make data centers reliable enough not to need human touch is a dream of ours,” said William Chappell, vice president of mission systems for Azure.
The Microsoft team believes the atmosphere of nitrogen, as opposed to oxygen, is part of the reason for the improved performance.
The lack of people to bump components could also be a contributing factor. These findings can be translated to performance at land-based data centers, according to Microsoft.
The data from the underwater study proves there is a way to scale up data centers with lower costs.
“We have done what we need to do. Natick is a key building block for the company to use if it is appropriate,” Cutler said.
Microsoft's Data Center Segment: Microsoft is one of the largest spenders on data centers.
Second-quarter spending on data centers hit an all-time high, according to CRN, led by Amazon.com Inc. (NASDAQ:AMZN), Google (NASDAQ:GOOG), and Microsoft.
What’s Next: Microsoft beat out rivals Amazon.com Inc., International Business Machines Corporation (NYSE:IBM), and Oracle Corporation (NYSE:ORCL) for the $10-billion JEDI Cloud contract from the Department of Defense.
Microsoft continues to see strong growth from cloud services.
Microsoft said in its fourth-quarter report that its commercial cloud business surpassed $50 billion for the first time this year.
The server products and cloud services business saw year-over-year growth of 19% in the fourth quarter, led by 47% year-over-year growth for Azure.
Microsoft shares are up 29% in 2020. Growth in products like cloud services has propelled shares 370% higher over the last five years.
Photo courtesy of Microsoft.