By Aaron Tilley
Cloud-computing providers are emerging as among the few
corporate winners in the coronavirus pandemic as office and store
closures across the U.S. have pushed more activity online.
The remote data storage and processing services provided by
Amazon.com Inc., Microsoft Corp., Google and others have become the
essential link for many people to remain connected with work and
families, or just to unwind.
The hardware and software infrastructure those tech giants and
others provide, commonly referred to as the cloud, underpins the
operation of businesses that have become particularly popular
during the virus outbreak, such as workplace-collaboration software
provider Slack Technologies Inc., streaming video service company
Netflix Inc. and online videogame maker Epic Games Inc.
Demand has been so strong that Microsoft has told some customers
its Azure cloud is running up against limits in parts of
Australia.
"Due to increased usage of Azure, some regions have limited
capacity," the software giant said, adding it had, in some
instances, placed restrictions on new cloud-based resources,
according to a customer notice seen by The Wall Street Journal.
A Microsoft spokesman said the company was "actively monitoring
performance and usage trends" to support customers and growth
demands. "At the same time," he said, "these are unprecedented
times and we're also taking proactive steps to plan for these
high-usage periods."
"If we think of the cloud as utility, it's hard to imagine any
other public utility that could sustain a 50% increase in
utilization -- whether that's electric or water or sewage system --
and not fall over," Matthew Prince, chief executive of
cloud-services provider Cloudflare Inc. said in an interview. "The
fact that the cloud is holding up as well as it has is one of the
real bright spots of this crisis."
The migration to the cloud has been happening for about a decade
as companies have opted to forego costly investments into in-house
IT infrastructure and instead rent processing hardware and software
from the likes of Amazon or Microsoft, paying as they go for
storage and data processing features. The trends have made
cloud-computing one of the most contested battlefields among
business IT providers.
"If you look at Amazon or Azure and how much infrastructure
usage increased over the past two weeks, it would probably blow
your mind how much capacity they've had to spin up to keep the
world operating," said Dave McJannet, HashiCorp Inc., which
provides tools for both cloud and traditional servers. "Moments
like this accelerate the move to the cloud."
In a message to rally employees, Andy Jassy, head of the
Amazon's Amazon Web Services cloud division, urged them to "think
about all of the AWS customers carrying extra load right now
because of all of the people at home."
An Amazon spokesman declined to discuss use rates of it service,
but said "we have taken measures to prepare and we are confident we
will be able to meet customer demands for capacity in response to
COVID-19."
Brad Schick, chief executive of Seattle-based Skytap Inc., which
works with companies to move existing IT systems to the cloud, has
seen a 20% jump in use of its services in the past month. "A lot of
the growth is driven by increased usage of the cloud to deal with
the coronavirus."
For many companies, one of the attractions of cloud services is
they can quickly rent more processing horsepower and storage when
it is needed, but can scale back during less busy periods. That
flexibility also is helping drive cloud-uptake during the
coronavirus outbreak, said Nikesh Parekh, CEO and cofounder of
Seattle-based Suplari Inc., which helps companies manage their
spending with outside vendors such as cloud services.
"We are starting to see CFOs worry about their cash positions
and looking for ways to reduce spending in a world where revenue is
going to decline dramatically over the next quarter or two," he
said. "That will accelerate the move from traditional suppliers to
the cloud."
Even cloud-service providers, though, are expected to feel the
impact from the wider downturn in global growth. Many of them serve
companies such as airlines and hotel operators that have been hit
hard by the outbreak and have been cutting costs, which could
include slashing spending on cloud services in coming weeks and
months, said Corey Quinn, a cloud-computing economist at the
Duckbill Group, a firm that helps customers lower their Amazon
cloud bills.
Still, some startups selling software tools that run on the
major cloud platforms are seeing a noticeable increase in interest
in their products. Qumulo Inc., which sells software to help users
manage the data they store across different cloud-providers, saw a
surge in demand as customers sent employees to work from home in
recent weeks, its CEO, Bill Richter, said.
Qumulo, he said, offers a similar file-management system to
handle data on in-house servers but, amid the health crisis, 90% of
new and existing customers are asking for the cloud version --
traditionally, it was more of an even split. Some of the biggest
users, he said, are media and entertainment-services providers that
shifted to remote working while still having to edit large files
stored in the cloud.
--Dana Mattioli contributed to this article.
Write to Aaron Tilley at aaron.tilley@wsj.com
(END) Dow Jones Newswires
March 27, 2020 13:06 ET (17:06 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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