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'Project Natick' Dunks Microsoft's Cloud in the Ocean

Microsoft's cloud business is red-hot, but the company may have found a new way to keep its cloud server farms cool.

During Microsoft's earnings call last week, CEO Satya Nadella gave investors an update: "Our commercial cloud run rate surpassed $9.4 billion, up over 70 percent year over year and almost halfway to our [fiscal year 2018] goal of $20 billion." As one impressed financial analyst put it in the Q&A portion of the call, that run rate is "up $1.2 billion quarter to quarter, 70 percent year over year."

With that increased usage comes increased investments. Microsoft CFO Amy Hood said investments in datacenters and servers to respond to the demand included $2 billion in the last quarter, up from $1.5 billion the quarter before.

On Monday, Microsoft revealed where some of its R&D budget is going -- straight into the Pacific Ocean via an effort code-named Project Natick.

Providing air conditioning and power for tens of thousands of servers has always been a problem for the cloud megavendors. Microsoft, Google and others have pioneered different next-generation datacenter designs over the last decade. The earliest reports about Microsoft's huge datacenter buildout featured former Microsoft senior executive Ray Ozzie poring over maps for remote sites with enough water and power for the huge facilities.

But since the middle of last year, Microsoft has been testing an eight-foot-diameter steel capsule sunk 30 feet underwater off the coast of California. The ocean water keeps the servers cool, and Microsoft is theorizing about ways to use ocean currents to provide power.

"Microsoft researchers do believe this is the first time a datacenter has been deployed below the ocean's surface. Going under water could solve several problems by introducing a new power source, greatly reducing cooling costs, closing the distance to connected populations and making it easier and faster to set up datacenters," according to Microsoft's account of the project. See the full description and related video here.

It's not Microsoft's first go at the ocean in its cloud buildout. Over the last two years, Microsoft announced a number of major undersea cable projects. With Project Natick, though, Microsoft could completely change the way datacenters are built and deployed.

Posted by Scott Bekker on February 01, 2016