Once it is sunk it will be almost impossible to repair.
A cable under the sea powers the cylinder and transports the data to the internet while the chilly waters of the North Sea keep it cool.
The data store is a 12.2-metre-long tube containing 864 servers which is enough to store 5 million movies and could be left under water for an estimated five years.
Dubbed Project Natick, the white cylinder is the second from Microsoft after it launched a similar data centre off the Pacific coast.
The data depot is powered by tidal turbines and wave energy converters with Orkney chosen because it is a major centre for renewable research.
Cooling is one of the biggest costs for land-based data centres.
The electricity for the data centre would power several thousand consumer PCs.
The tank was designed by French shipbuilding company Naval and Microsoft hopes the project could change the way cloud services are launched in coastal areas.
Microsoft hopes to sink groups of five of the cylinders elsewhere, if the Orkney project is successful, and deploy a data centre offshore in 90 days. Building a data centre on land can take years.
One of the biggest challenges for the engineers involved in Project Natick has been building a data centre that needs no maintenance while in operation, because if anything malfunctions it will need to be resurfaced.
It will be monitored for the next year to judge the feasibility of the project.
Microsoft said: “More than half of the world’s population lives within about 120 miles [200km] of the coast.
“By putting data centres in bodies of water near coastal cities, data would have a short distance to travel to reach coastal communities.”
The tech giant’s CEO Cindy Rose said: “Microsoft is exploring the idea that data centres – essentially the backbone of the internet – can be based on the sea floor.
“Phase two of this research project has just begun in the Orkney Islands, where a more eco-friendly data centre was lowered into the water.
“The shipping container-sized prototype, which will be left in the sea for a set period of time before being recovered, can hold data and process information for up to five years without maintenance.”
Project Natick is launched. Picture credit: YouTube