Microsoft’s $US7.7 billion investment in the cloud is “baffling”
Microsoft’s recent acquisition of cloud provider CloudFlare is “shocking” and “bizarre”, according to tech blogger Johnathan Zuniga.
“It’s not really surprising,” he told TechCrunch.
“Microsoft is a giant corporation, and their CEO is the biggest name in tech in the world.”
Zunigas biggest criticism of the deal is that it doesn’t offer enough cloud services.
“You’d be amazed at how much of the cloud infrastructure is actually used for applications.
It’s very, very limited.
There’s not even a central point of access for a lot of that,” he said.
“The whole point of the CloudFlatere is to help businesses scale their business by giving them the ability to deploy their own applications on their own infrastructure.”
CloudFlute is now available in over a dozen countries, with more coming on top of that in the future.
Zuni said that, for now, it’s a good bet that the company will retain its market position, despite the acquisition.
“I think there are some people who think CloudFlake is a great deal for Microsoft.
That is not the case.
It was a really, really bad deal,” he added.
Zungu is right about the acquisition, but not all investors agree.
“This is one of those deals where I think it was a little too early to tell,” said Jason Rubin, a cofounder of the venture capital firm Sequoia Capital.
“There’s a lot more going on in terms of the technology side, and it’s really hard to say at this point how the future will look for CloudFlase,” he continued.
“But this is a very good deal for the company.
They’re getting a huge amount of exposure for a service that was already on a lot less money.”
But the deal will take a long time to get off the ground.
“When you look at this from a company perspective, this isn’t a deal that was going to come together in the next three years,” Rubin said.
He added that while it’s good that Microsoft is offering cloud services, it is hard to see how that’s going to translate into an increased value for investors.
“A lot of the value that CloudFlace brings is in the number of users, the number and the amount of data that it has,” he explained.
“If you’re not using the cloud, you’re wasting a lot, and if you’re going to scale it, you have to scale that.”
But, Rubin added, Microsoft will likely benefit from the new company’s growing revenue and growth in the coming years.
“They’re definitely going to get more revenue.
It could be quite a good deal, but it’s still going to be a very risky deal,” Rubin told Tech Crunch.
“As you scale the business and you make the service more accessible, you might find that it gets a little bit easier to get users.”
Cloudflare is currently a subsidiary of Amazon, but that doesn’t mean the two companies are incompatible.
In fact, Rubin believes Amazon will eventually want to use CloudFlares cloud services as a revenue stream.
“Amazon is looking at this a little differently.
They’ll use Cloudflase as a business.
But they’re looking at it as a platform, not a service,” he concluded.
CloudFlas services will continue to be offered on Amazon’s own AWS services, but the move is likely to be made to a more open cloud.
“We’re definitely open to using it as an alternative,” Rubin explained.
But the company’s strategy isn’t going to change in the long run.
“In the long term, the company has a lot to do with how the business is structured, the value the company creates,” he emphasized.
“Because they’re going from being a service to a company, they’re still going in that direction.”