Microsoft charts a new data center in Spain, tightens partnership with Telefónica

Telefonica Spain
As part of an expanded partnership with Telefónica, Microsoft will open a new data center region in Spain. (Telefónica)

As part of an expanded partnership with Telefónica, Microsoft will open a new data center region in Spain. In addition to leveraging Microsoft's data center in Spain, Telefónica will lean on Microsoft to accelerate its internal digital transformation by picking Microsoft as its "strategic" cloud partner.

On the flip side, Microsoft will use Telefónica's infrastructure to deliver low latency, security and assured bandwidth services to mutual customers for new use cases around Industry 4.0, 5G and edge computing.

The deal is similar to the one that Microsoft struck last year with AT&T, which included AT&T using Microsoft's cloud to move most of its non-network workloads to the public cloud by 2024 as well as combined go-to-market strategies for both companies. Microsoft and Telefónica will also collaborate on go-to-market plans in the telco's footprint.

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RELATED: AT&T teams up with Microsoft on cloud, edge, AI, 5G

As part of the expanded partnership, Microsoft will serve up its cloud services – including Microsoft Azure, Microsoft 365, Microsoft Dynamics 365 and Microsoft Power Platform – from the new data center region in Spain. Telefónica has deployed Microsoft 365 to its global employee base across the 14 countries in its footprint. As a strategic partner for its multi-cloud strategy, Microsoft will also train hundreds of Telefónica employees on Microsoft Cloud services.

“The opening of a Microsoft data center region in Spain is a game changer, a key milestone in our strategic partnership that will boost Spain’s industrial fabric and digital economy," said José María Álvarez-Pallete, chairman and CEO of Telefónica, in a statement. “Cloud is one of the key priorities in Telefónica, as we announced in November, with the launch of Telefónica Tech, the new unit to boost the solid growth of digital services. This global strategic partnership with Microsoft will certainly help to achieve that objective.”

While expanding its partnership with Telefónica won't vault Microsoft past Amazon Web Services (AWS) as the top public cloud provider, it builds on top of the key partnerships that Microsoft announced last year, which, in addition to AT&T, included SK Telecom, NTT Communications and Reliance Industry.

Prior to Satya Nadella coming on board as CEO in 2014, Microsoft wasn't known for collaborating with other companies, but that has changed dramatically as enterprises are demanding cloud-based services and applications.

According to a recent report by Synergy Research Group (SRG), AWS had 33% of the market share at the end of the fourth quarter followed by Microsoft (18%), Google (8%), IBM (6%), Alibaba (5%), and Salesforce (3%.)

RELATED: Azure revenue ramps up in second quarter as it takes on AWS

Last month, Microsoft reported that Azure's revenue grew by 62% in the second quarter, which was a sequential increase over 59% in the prior quarter. Microsoft doesn't breakout Azure's revenues.

RELATED: Judge pauses Microsoft's work on 10-year, $10 billion JEDI cloud contract

Earlier this month, a U.S. judge granted a preliminary injunction to temporarily pause Microsoft from working on the $10 billion Joint Enterprise Defense Infrastructure (JEDI) cloud contract that Microsoft won over AWS on Oct. 25.

Tuesday's press release didn't say when the data center region in Spain would open or how many years the partnership will run.

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