New report reveals Microsoft Azure was struggling with reliability and capacity before coronavirus outbreak

Microsoft CEO Satya Nadella is often lauded for transforming the Redmond giant into a trillion-dollar company after making a big bet on cloud services year ago. With Azure, Microsoft is indeed the second biggest cloud provided after Amazon’s AWS, and Azure has also become one of Microsoft’s fastest-growing businesses in recent years.

The recent coronavirus outbreak revealed that cloud computing is now more important than ever, with lots of employees around the world being forced to work from home. This has put a huge pressure on the most popular Internet services including YouTube and Netflix, but Microsoft also had to implement some restrictions for its Office 365 services, including Microsoft Teams, to cope with higher usage.

“As demand continues to grow, if we are faced with any capacity constraints in any region during this time, we have established clear criteria for the priority of new cloud capacity. Top priority will be going to first responders, health and emergency management services, critical government infrastructure organizational use, and ensuring remote workers stay up and running with the core functionality of Teams. We will also consider adjusting free offers, as necessary, to ensure support of existing customers,” the company explained on March 21 on the Azure blog.

If this reassuring message suggested that Azure customers had no reasons to worry, a new report from The Information reveals today that Azure has actually been under some pressure before the coronavirus outbreak. Big Azure customers including Adobe Systems have been encountering performance issues, while others like Walmart and Chevron also had issues when accessing Azure services, the report reveals.

“It doesn’t appear that the issues big Azure customers have faced are bad enough that they have stopped using the service completely, at least not yet. Microsoft has broad, multiyear corporate alliances with some of those customers, including Adobe, Chevron and Walmart, that would be hard to walk away from. However, those companies could shift some of their computing chores to other cloud providers, making it harder for Azure to pick up additional business down the line,” the report reads.

Interestingly, GitLab, a competitor to the now Microsoft-owned GitHub also decided to move a “ significant portion” of its cloud business from Azure to Google’s cloud. “We had very long boot times that did hinder us in critical situations,” said Brandon Jung, Vice President of alliances at GitLab to the Information, adding that Microsoft’s acquisition of GitHub didn’t lead to its cloud deal with Google.

The report also reveals something interesting about the Azure infrastructure: Currently, Microsoft has more cloud regions than Amazon’s AWS, but compared to its competitors, Microsoft’s datacenters could be spread too thin. “Microsoft is trying to have the most regions possible but there is little evidence that each Azure region is materially more than a single data center,” said Corey Quinn, a cloud economist at The Duckbill Group to The Information.

Another issue with Azure could be an excess of large customers compared to the amount of SMBs. This is a problem that Amazon apparently doesn’t have with AWS according to a person doing business with the Azure team.

AWS, too, has big customers, but also has a wide mix of medium and small businesses, said the person who does business with the Azure team. The diversity in its customer base, along with the larger overall cloud capacity at AWS, lessens the risk that a single customer can suck up all of the computing resources in a specific data center, the person said.

Microsoft said on its Azure blog last month that it was “expediting the addition of significant new capacity that will be available in the weeks ahead.” Lastly, a Microsoft spokesperson gave a reassuring statement to The Information. “Microsoft is committed to our customers and to delivering cloud services built on security, privacy, compliance, and transparency. We have a strong sustained track record to meet customer demand at global scale. This requires careful demand planning and flexibility, which is what we are doing today. We are working closely with existing and new customers to help them best manage their infrastructure needs,” the spokesperson said.

The success of Microsoft Azure took many by surprise in recent years, and Microsoft was indeed one of the very few companies with the resources and scale to challenge Amazon Web Services. However, AWS remains far ahead of Azure. If the cloud remains a big priority for Microsoft CEO Satya Nadella, Google may reportedly have second thoughts about its own cloud business. Back in December, a previous report from The Information revealed that Google was considering giving up on competing with AWS and Azure if it didn’t reach a top two position by 2023.