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Microsoft has signed a memorandum of understanding with the municipality of Shanghai and China service provider 21Vianet that will allow it to offer Windows Azure cloud services and Office 365.

Shanghai will become a user of both Windows Azure services and Microsoft Office 365 cloud-based applications, through 21Vianet.

21Vianet is a carrier-neutral provider of data center services with its own extensive, fiber optic network links to the Internet. It offers data center services in 33 cities in China. Microsoft's agreement gives it the opportunity to extend multi-tenant, public cloud services to millions of businesses in China, many of which have been using Windows, Office and other Microsoft software for many years. 21Vianet has 1,600 customers.

In addition to Azure infrastructure as a service, 21Vianet will also offer Microsoft's Office 365 products as software as a service. Office 365 is the renamed Business Productivity Online Standard suite, which includes such applications as Microsoft Exchange and SharePoint, with Office applications added in June 2011.

[ Want to learn how IBM got it's foot in the door in China? See IBM To Build Massive China Cloud Data Centers. ]

"We're excited to soon be able to satisfy the enormous appetite in China for a public cloud platform with the security and reliability features that customers demand from Microsoft," wrote Doug Hauger, general manager of Microsoft Server and Tools Division, in a post to the Windows Azure Team Blog on Nov. 1.

Hauger cited Forrester Research analyst Michael Barnes report last February, "Sizing The Cloud Markets In Asia Pacific," as indicating the market for cloud services will grow in China from $297 million in 2011 to $3.8 billion by 2020. "With today's announcement, Windows Azure is well positioned to have a strong presence in China and to serve local businesses seeking to take advantage of the cloud on their terms," Hauger wrote.

By using Vianet, Chinese customers of Azure will be using a Chinese company that guarantees the data they use with cloud applications will remain in China, a Microsoft spokeswoman noted.

Microsoft infrastructure and software as a service offerings will also available through Microsoft data centers in Hong Kong and Singapore.

"Although we've offered Microsoft productivity software in China for decades, this represents our first, big step towards making multi-tenant public cloud services available to millions of businesses," Hauger said.