The partnership between Jio and Microsoft to set up data centres could be a game changer in the fast-growing cloud industry.
According to industry experts, Reliance Industries is doing a Jio in the technology space what it did earlier in the telecom industry.
The difference is that there would be two winners in this case. Not only will the partnership help Jio expand its footprint in the technology sector, but it will also aid Microsoft gain market share in the cloud space in India.
According to reports, Microsoft is the third largest player in India, after Amazon and Google Cloud.
Arun Gupta, founder, MoMagic, a digital analytics firm, said, “It is just like how Reliance disrupted the (cellular) market with Jio. The same thing will happen with the partnership.”
“Other Cloud players will have no option but reduce the prices. So even if I’m not going to migrate to Jio my cloud and connectivity cost will come down,” he said.
Cost parameter
The 10-year partnership between Jio and Microsoft promises to establish data centre across India. Two such centres are coming up in Gujarat and Maharashtra, and will be operational by 2020. These centres, powered by the Microsoft cloud platform Azure, will offer the latest capabilities such as data analytics, AI, blockchain, cognitive services, IoT and edge computing. Basically everything that a deep tech startup would need.
Mukesh Ambani, Chairman and Managing Director, Reliance Industries Ltd, said in his speech on the 42nd annual general meeting that the connectivity and services would offered free for Indian startups. According to reports, the partnership will offer new age technology tools to small and medium businesses at Rs 1,500 per month. In the case of Amazon's AWS, an entrepreneur who is on the platform said, the minimum amount is Rs 8000-10,000.
Gupta said, “Given that for companies in the data analytic space, connectivity and cloud take up chunk of working capital, this will be a boon.” For MoMagic, Gupta said Cloud and connectivity cost is over 10 per cent of working capital. For other companies it could be much more.
Given the pace at which deep tech startups are being founded and growing, migrating to Jio and Microsoft cloud will bring down the cost in connectivity and cloud by almost 90 per cent. “Even if the cost reduction is only 20 percent, it is significant for startups,” he said.
Another entrepreneur pointed out: “In such partnerships the company gives you business leads in a bid to increase your cloud usage on their network. So it will be a win-win for both.”
Competition for SMBs
However, this news is not so good for other players in the country. This partnership will give stiff competition to the largest cloud service providers in the country — Amazon Web Services (AWS) and Google Cloud.
Both AWS and Google Cloud have significant market share, especially in the small and medium businesses. Unlike enterprise customers, these are volume drivers. Microsoft, while strong in the enterprise space, has been lagging in this space, and is counting on the partnership with Reliance to gain that edge.
Pareekh Jain, founder, Pareekh Consulting, a technology consultancy firm, said, “Microsoft wants a pie of the Cloud business in SMBs to compete with AWS. The partnership with Jio will help that.”
In addition, unlike enterprises, SMBs are the fastest growing when it comes to Cloud adoption. “However it is largely untapped and there is huge space for growth. The very focus on SMBs could give Cloud service providers room for growth,” Jain said.
Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust, which controls Network18 Media & Investments Ltd.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
