Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Reliance-Microsoft cloud tie-up poses threat to Amazon, Google in India

Published 12/08/2019, 15:28
Updated 12/08/2019, 15:28
© Reuters. Microsoft holds device-launching event in Barcelona ahead of the 2019 Mobile World Congress

© Reuters. Microsoft holds device-launching event in Barcelona ahead of the 2019 Mobile World Congress

By Promit Mukherjee and Sankalp Phartiyal

MUMBAI/COLOMBO (Reuters) - India's Reliance Industries Ltd on Monday announced a partnership with Microsoft's Azure cloud platform, in a move that deepens the offerings of its Jio telecoms unit while posing a direct challenge to rival cloud services providers such as Amazon.com (NASDAQ:AMZN) and Alphabet's Google (NASDAQ:GOOGL).

As part of the 10-year alliance, Jio will build data centres across India that will be hosted on Microsoft's Azure cloud, Reliance Chairman Mukesh Ambani told shareholders at the company annual shareholders' meeting.

"We now have the capability to develop truly India-native solutions, including speech recognition and natural language understanding for all major Indian languages and dialects," said Ambani, Asia's richest man with a net worth of $46.2 billion according to Forbes.

Reliance's foray into the cloud services market - essentially selling computer services such as website hosting and data storage - could intensify competition in an Indian market dominated by Amazon Web Services (AWS), say analysts.

Ambani disrupted India's telecoms industry in late 2016 when he launched Jio with free voice and cut-price data plans, pushing some rivals out of business and forcing others to match tariffs and consolidate in a crowded sector that once comprised more than 10 carriers.

"Other cloud players like AWS and Google will have to come up with new, perhaps cheaper pricing models for India," said Satyajit Sinha, an analyst at tech consultancy Counterpoint.

Ambani has always dubbed Jio a technology company, and used it to launch internet-enabled devices, deliver entertainment services, build fibre broadband and develop other offerings.

The Reliance-Microsoft partnership could help Jio extend its services to India's booming start-up ecosystem.

On Monday, addressing Reliance shareholders via a recorded video message, Microsoft's Indian-born Chief Executive Satya Nadella said: "Together, we will offer comprehensive technology solutions – from compute and storage, to connectivity and productivity – to small and medium businesses everywhere in the country."

PRICE WAR

Jio would provide free connectivity and cloud infrastructure to start-ups, Ambani said, adding the company would offer a "bundle of connectivity, productivity and automation tools" to micro, small and medium business for as little as 1,500 rupees ($21.05) a month.

"This pricing of elementary services is really the rock bottom price," said Naveen Mishra, of tech researcher Gartner.

Rivals such as Amazon Web Services and Google offer similar services at multiple times that price, and technology analysts said Ambani's move could spark a price war in the Indian cloud market, expected to grow at an average 23% annually over the next five years to touch $5.6 billion.

Amazon's cloud services unit declined to comment on the matter. Google did not immediately respond to a request for comment.

"We definitely will reassess whether we should keep using AWS or something else, because storage is a huge cost," said Aprameya Radhakrishna, the founder and CEO of Vokal, an audio-video knowledge-sharing platform similar to Quora.

"India is a price conscious nation in general and anything which is competing on price will definitely get attention."

Reliance's big push into cloud services also comes as India, one of the world's fastest growing web services markets, is framing a data privacy law, drafts of which have emphasized storage of key consumer data locally.

The country's central bank has also asked foreign firms such as Mastercard (NYSE:MA) and Visa (NYSE:V) to store payments data solely in India.

© Reuters. Microsoft holds device-launching event in Barcelona ahead of the 2019 Mobile World Congress

"Companies that have a fairly mature IT adoption or those that are playing with a lot of Indian consumer data, they might prefer to move to (Reliance) because this data is guaranteed to be stored locally," said Krishna Iyer, an independent technology advisor who was previously a senior executive at cloud services firm Akamai Technologies.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.