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MSFT Expands Cloud Services in Japan

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Microsoft Corp. (MSFT) recently announced the expansion of Windows Azure cloud services in Japan and is setting up new data centers for the purpose.

Microsoft plans to open two new cloud computing data centers in the suburban Tokyo and Kansai regions in Japan. We know that Japan is an earthquake prone region. The addition of these data centers will shorten response time and provide uninterrupted services even at the time of natural disasters.

Windows Azure is Microsoft’s cloud computing platform for building, deploying and managing applications and services through a global network of managed datacenters. Windows Azure core offerings include Media Services, Mobile Services, Cloud Services, Virtual Machines, Websites and Big Data. It competes with Amazon's (AMZN) cloud computing platform Amazon Web Services (:AWS) and OpSource Cloud Computing Services.

Earlier, companies incurred significant costs to build their own infrastructure for data storage. They had to make a substantial payment upfront, after which they would invest further to purchase additional storage space anticipating growing demand for backup. This resulted in under-utilized capacity and unnecessary expenses. With Microsoft’s cloud-based storage services, companies do not need to waste time and money to manage their own data centers.

Management stated that its cloud services are already being used by more than 50% of the Fortune 500 companies. It has more than 20,000 Windows Azure customers across the world. We believe that the expansion of data centers will improve the quality of services in the region.

Market research firm IDC predicts that the cloud market will jump 130%, reaching $43.0 billion in 2016. Also, the firm estimates that the cloud market in Japan will be $3.5 billion by 2017. Microsoft, with its solid portfolio, should be able to tap this opportunity.

The company is expanding Windows Azure internationally, which represents a significant investment in the company's cloud strategy. The cloud market looks attractive and given the slump in the PC market and the company's struggle on the desktop and mobile fronts, it is important for the company to increase focus on emerging segments such as mobile hardware and the cloud.

Currently, Microsoft has a Zacks Rank #3 (Hold). Other stocks that have been performing well and are worth a look include Aspen Tech (AZPN) carrying a Zacks Rank #1 (Strong Buy) and Yahoo Inc. (YHOO) carrying a Zacks Rank #2 (Buy).

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