Changes to Azure Germany Operations

Microsoft recently announced the opening dates of the two new Azure regions in Germany, and the freezing of the Azure Germany sovereign regions.

Codename Black Forest

Germany is the fourth largest economy in the world. That makes the country a big target for the growing business of cloud computing. However, Germany has a strange relationship with the cloud. Whether it’s a belief in a law that I’m told doesn’t exist, or a personal desire, a lot of German businesses do not want to use foreign owned cloud services. So even if Microsoft or Amazon built data centers in Germany, German customers wouldn’t be interested.
To get over this issue, Microsoft duplicated an approach that they used to enter the Chinese market, the second largest economy in the world. Microsoft opened two Azure regions that were not a part of the normal Azure network. The two regions, dubbed Azure Germany (Codename Black Forest), were a partnership with a subsidiary of the German telecoms company Deutche Telekcom called T-Systems, and opened in September 2016.
The idea was that if you wanted Azure, but with isolation from the potential oversight of the US government, then you could get an Azure Germany tenant and deploy subscriptions into it. That sentence includes the first gotcha. You could not deploy an Azure Germany subscription into an existing tenant, so you had double the administrative and governance overhead. As an “outside” system, Azure Germany was always going to be behind the rest of Azure when it came to support for new features. And the cost was also going to be higher.
On August 31st, Microsoft announced that Germany’s cloud customers’ needs had shifted. I’ve been told by some German colleagues that in certain parts of Germany, such as Frankfurt, one of the financial centers of Europe, the “buy German” approach to cloud computing didn’t really have much hold, because of the more international nature of business there. As a result of this, and the above restrictions, Microsoft will:

… no longer be accepting new customers or deploying any new services from the currently available Microsoft Cloud Germany.

If you are a German company and you want to use Azure in Europe today, then you have to use one of the Azure regions such as North Europe (Ireland), West Europe (Netherlands), France Central or France South – it’s unlikely that Europeans will deploy into the two UK regions with Brexit coming soon and probably with a hard split.

New German Azure Regions

Microsoft previously announced new Azure regions were being built in Switzerland (2), Norway (2) and Germany (2). Before the news of Azure Germany being frozen, the announcement of two new regions in Germany seemed puzzling.
In addition to announcing the freezing of Azure Germany, Microsoft said that the two new Azure regions will open in the fourth quarter of 2019 – they didn’t say if this was the calendar year 2019 or Microsoft’s financial year which runs from July 2018 until June 2019.
These two new regions are normal Azure regions, owned and operated by Microsoft. A customer with an Azure tenant will eventually be able to deploy into Germany West Central or Germany North – I would not be surprised if early entry might be limited to businesses with a German address. Microsoft will probably release the regions with core/strategic features like they did with the two UK regions, and grow them over time, while keeping everything up to date with the rest of Azure.

The Future of Azure in Germany

The question remains – will German businesses use a foreign-owned cloud? I don’t know if the two new Azure regions are full-blown facilities such as North Europe or West Europe. They might be similar to other Azure locations where Microsoft has rented data center capacity from other hosting companies. Or maybe Microsoft has another vision. They might have the market data to confirm that German businesses will invest in a Microsoft-owned cloud now. But there is also Azure Stack, which might be a genuine alternative for German enterprises.