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Optus gearing up to fight Telstra on Microsoft 365 turf

Date

Andrew Colley

John Paitaridis, managing director Optus Business.

John Paitaridis, managing director Optus Business. Photo: Louise Kennerley

Optus is preparing to tread on Telstra’s turf in the cloud computing market after securing a long overdue partnership with Microsoft.

Telstra has dominated sales of Microsoft’s cloud computing offerings in Australia ever since the software giant chose the carrier to be its exclusive launch partner for the cloud version of its office software suite, Office 365, in 2011.

Those exclusivity arrangements – which saw Office 365 sold solely through Telstra’s T-Suite portal - have since expired and Microsoft has found other channels to get it to market.

Optus has held off on establishing its own partnership with Microsoft but Optus Business chief John Paitaridis told Fairfax Media that was about to change.

“We’re about to make some announcements on partnerships and Microsoft will be in that announcement set,” Mr Paitaridis said.

When asked for details of which Microsoft cloud products included in the carrier’s software-as-a-service line-up Mr Paitaridis declined to comment further and only said: “We will be working more closely with Microsoft”.

Microsoft Office 365 would be a likely candidate given Australia’s market is dominated by small and medium-size businesses. However, the partnership could involve a much deeper relationship with the software giant if it includes Microsoft Azure.

Azure, Microsoft’s enterprise cloud-computing infrastructure platform served from its global network of managed hosting sites, is expected to launch in Australia soon.

It’s understood that Brisbane-headquartered data centre operator NextDC has taken the position as favourite to partner with Microsoft on its local version of Azure.

In April last year, Optus formed a strategic alliance with NextDC that saw it upgrade capacity on carriage links to its data centre sites around Australia.

Both Telstra and Optus see cloud or ''utility'' computing as natural extensions of their telecommunications services, and are investing in it as a hedge against margin declines in their traditional businesses.

Optus established its ICT division by merging four subsidiary operations as part of a major restructure of SingTel in early 2012 with the intention of clarifying the split between its enterprise and consumer operations. A third unit, Digital Life, was created to incubate innovations to support both.

Telstra has invested in cloud aggressively since June 2011 when it announced it would spend $800 million on cloud infrastructure over five years. Last week it announced it had extended its network to the US, to better serve global customers.

While Telstra has invested heavily in its own infrastructure, Mr Paitaridis said that Optus would adopt a multi-prong approach, which would include providing ''brokerage'' to other cloud service operators.

''The challenge for us as an industry is that we’re also seeing the big guys, the multinationals come in commoditising computing and commoditising that storage to a level that we’ve got to find other ways to differentiate,'' said.

Optus has been far less vocal than Telstra about its cloud pedigree over the last few years. Mr Paitaridis gave assurances that its credentials in cloud were firmly established in the market place.

He said that Optus ICT’s revenue grew 10.8 per cent year-on-year in 2013 driven by new deals worth $700 million since May 2013 including with Westpac, Virgin Airlines and UGL.  

The ICT division currently generates a third of Optus revenue and Mr Paitaridis said he would like to see it reach 50 per cent.

Telstra reported that its network applications and services business revenue grew 29 per cent to reach $821 million in the six months to December 2013 compared to the previous corresponding period. However, it is not clear how much of that can be attributed to its investment in cloud.

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3 comments so far

  • Nice Post! Congratulations for the tie-up.

    Commenter
    Bhavna Singh
    Date and time
    June 23, 2014, 7:48PM
    • Microsoft? I do not trust Microsoft. My Skype account was hijacked six months ago and they will not re-open my account as they say I cannot prove who I am.
      Trust MS at your own risk.

      Commenter
      Rod Sexton
      Location
      Hawthorn
      Date and time
      June 24, 2014, 11:20PM
      • Azure vs Open Stack.

        No brainer.

        Commenter
        M
        Date and time
        June 25, 2014, 8:01AM

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