Amazon grows in Cape Town, stepping up its rivalry with Microsoft

AMAZON.COM is expanding its presence in the emerging tech hub of Cape Town, upping the ante in its regional battle with cloud computing rival Microsoft.

Amazon will be the sole tenant in a new, modern eightstorey office building that’s nearing completion in the city, multiple sources said. The company is advertising dozens of jobs in Cape Town, which played a key role in the early development of its Amazon Web Services (AWS) cloud-computing business.

The adverts include one for a software development engineer that says Amazon is assembling a team for a “greenfield project” dealing with machine learning, big data analysis and cloud computing, among the fastest-growing areas in the technology industry.

The company’s expansion shows how fierce competition in the cloud business is, even in relatively undeveloped corners of the technology universe.

Growing AWS is the global leader in cloud computing, with 32 percent of the market, versus 16 percent for second-placed Microsoft in the first quarter of 2018, according to research firm Canalys. Microsoft has been growing faster.

The global cloud infrastructure services market was worth nearly $55 billion (R726.6bn) in 2017 and is expected to exceed $155bn by 2020, Canalys said. AWS accounted for 73 percent of Amazon’s $1.9bn operating profit in the first quarter, but only 11 percent of its revenue.

Amazon’s new Cape Town building is due for completion in August, a source said.

Amazon did not offer details about the new building in Cape Town, or what its function might be.

“As more South African customers and partners continue to choose AWS as their cloud provider, we continue to hire more staff at our offices in Cape Town and Johannesburg,” Geoff Brown, AWS’s sub-Saharan Africa regional manager, said in a statement.

In another sign of Amazon’s cloud-computing drive in South Africa, it is offering start-ups free cloud trials for one year, according to local entrepreneur Tumi Menyatswe – a deal that prompted her to switch to AWS from Google’s cloud.

Amazon will be the sole tenant in a new, modern eight-storey office building that’s nearing completion in the city.

“This allows me to focus on my business and to grow until I can pay them,” said Menyatswe, the chief executive of two-year-old business Minderz, which pairs pet owners with people able to look after cats and dogs during holidays.

It is difficult to measure the relative success of the big cloud-computing players in Africa, as they do not break out financial results for the continent. However, according to analysts, data centres are one measure of growth.

Despite its history on the continent, Amazon has yet to build a data centre in Africa.

Microsoft, by contrast, announced last year that it was building two data centres in South Africa, one of them in Cape Town and the other one in Johannesburg.

Both are due to launch later this year.