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Amazon expands in Cape Town, strengthens Cloud Rivalry with Microsoft



Amazon.com expands its presence in the new technological hub of Cape Town, anchored in its regional battle with cloud computing rival Microsoft Corp.

Amazon will be the only tenant in a new, modern eight-story office building nearing completion in the South African city, several sources familiar with the project told Reuters. The company announces 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 ads include one for a software development engineer who says that Amazon is joining a "greenfield project" team that deals with machine learning, large data analysis and cloud computing, which are among the fastest growing areas in the technology industry.

The company's expansion shows how hard competition in the sky industry and increasing demand for computer power are driving power even in relatively undeveloped corners of the technology universe.

AWS is world leader in cloud computing with 32 percent of the market, against 1

6 percent for second-placed Microsoft in the first quarter of 2018, according to Canalys research firm. Microsoft has grown faster.

The global cloud infrastructure services market was worth nearly $ 55 billion (about 3.78 lakh crores) in 2017, and is expected to exceed $ 155 billion by 2020, said Canalys. AWS accounted for 73 percent of Amazon's operating profit of $ 1.9 billion in the first quarter, but only 11 percent of revenue.

Amazon's new Cape Town building is being pursued in August, according to a source familiar with the case. It is located near an existing Amazon Technical Center and Customer Support.

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

"As more South African customers and partners continue to choose AWS as their shippers, we continue to hire more employees to our offices in Cape Town and Johannesburg," Regional Manager Geoff Brown, AWS, South-Saharan Africa, told Reuters in a statement.

Another sign of Amazon's cloud computing running in South Africa, it launches free shooting for one year, according to local contractor Tumi Menyatswe – an agreement asking her to switch to AWS from Google Sky.

"This allows me to focus on my business and grow until I can pay them," says Menyatswe, CEO of the two-year business Minderz, as paired pet owners with people able to look for cats and dogs during vacations.

Edge in Africa
] It's difficult to measure relativity. Ive succeeded by the big cloud computing players in Africa, as they do not break down financial performance for the continent. According to analysts, data centers are, however, a target for Growth.

Despite its history on the continent, Amazon has not yet built a data center in Africa. Microsoft announced last year that it was building two data centers in South Africa, one in Cape Town and one in Johannesburg, both of launch later this year.

Microsoft said in a statement that the plans were on track but did not specify when the data centers were to be launched in 2018.

Local data centers offer advantages, including by reducing "latency" or delays in data transfer. "Closer is almost always better," said Carl Brooks, an analyst at 451 Research.

Clifford De Wit, former chief innovator in Microsoft South Africa, said that a local data center was a big advantage.

The actual data center closes has so many implications, "says De Wit, now chief engineer at Starter Digital. He cited privacy regulations that require banks and other companies to store data locally, including benefits.

Amazon Brown told Reuters that South Africa was "one of the many opportunities we are now looking at" globally to open a new data

He said that the company launched new "Edge" sites – infrastructure which increases transmission rates from primary data centers outside the continent – in Johannesburg and Cape Town over the past two months. This will reduce the latency of South African customers and give other benefits, he said.

Famous for its mountain bottom and sandy beaches, Cape Town is emerging as a continental technological hub, with about 35,000 employees in the sector, according to Wesgro, a trading and investment agency. The city has one of the largest publicly available fiber optic networks in Africa, says local economic development staff.

Amazon has played a key role in the city's internet industry from the outset. Two South Africans, Chris Pinkham and Willem van Biljon, led a small Cape Town-based team that developed the most important technical reasons for AWS, a software architecture known as EC2, and helped build the business plan for the service.

"We knew it would have a big impact," said Van Biljon, who left Amazon more than a decade ago, and still lives in Cape Town, told Reuters. "The speed of growth exceeded our best expectations."

© Thomson Reuters 2018

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