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Why Microsoft Is Eyeing Cloudyn to Bolster Its Azure Cloud

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Catching up to AWS and staying ahead of Oracle

A Calcalist report cited by Fortune on April 20, 2017, noted that Microsoft (MSFT) is on the verge of acquiring Cloudyn. This little-known startup with offices in the US (SPY) and Israel could lend some dimension to Microsoft’s Azure cloud in a time of tough cloud competition.

At this juncture, Microsoft is fighting a variety of cloud battles. It sees Amazon (AMZN) leading the pack and would like to catch up to it and, if possible, overtake it. According to Synergy Research Group, Amazon through its Amazon Web Services (or AWS) controls more than a third of the public cloud market. Microsoft is also watching its back for threats from Oracle (ORCL) and Alphabet’s Google (GOOGL).

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Azure grows 93%

The acquisition of Cloudyn would bolster Microsoft’s position in the cloud space, allowing it to edge closer to the leader—Amazon Web Services—while staying ahead of Oracle and the rest of its competitors. Microsoft’s Azure registered 93% growth in fiscal 3Q17,[1. fiscal 3Q17 ended March 31, 2017] down from 120% in fiscal 3Q16. In our view, Cloudyn could help accelerate this growth.

Cloudyn’s cloud resource monitoring tool helps developers utilize their cloud computing resources more efficiently. For example, developers would be able to identify and shut down cloud resources they don’t need, saving money. Cloudyn could help Microsoft gain a competitive pricing edge without actually cutting prices.

Putting its money to work

Looking at Microsoft’s recent cloud-oriented actions, it seems the company has discovered that to deal with Amazon and other competitors, it has to look outside and put its money to work. Although it hasn’t confirmed the acquisition of Cloudyn, Microsoft acquired Deis in April 2017.

In its company blog, Microsoft stated, “Deis gives developers the means to vastly improve application agility, efficiency and reliability through their Kubernetes container management technologies.”

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