Status of cloud computing industry in China
Cloud computing market has been growing globally rapidly during recent years. The global market size has reached 74.5 billion dollars in 2017 [1]. As mentioned in class, it can be divided into three sectors including Iaas, Paas, and Saas. It has radically changed the way how new Internet companies develop and even large companies like Netflix have moved to cloud computing platform like AWS.
The cloud computing market in China started late compared to US and has been falling behind. The market size is only about 9.6 billion dollars, which is about 10 percent of global market [1]. Considering the size of Chinese economy and booming of IT industry, there is still large room for cloud computing market to catch up and the growth rate is expected to be much higher in the next few years. Also, due to the growing appetite for on-demand video, mobile gaming and online content in China, large investment will be needed in elastic compute service, auto-scaling, content delivery networks and server load balancers to provide uninterrupted service and fast download speeds, which provides greater room [2]. On the other hand, Chinese government also provides strong backing for cloud computing. The development of the cloud industry is a major strategic priority for the central government and featured prominently in both the country’s 12th and 13th Five-Year Plans [2].
Another special situation in China compared to US market is that private cloud in China currently has higher market share than public cloud as shown in Fig.1 [3]. The reason may be that industry standard in China has not been established for cloud computing and enterprises have their specific need that cannot be satisfied by public cloud. However, with the maturing of cloud market in China, public cloud and hybrid cloud will have higher market share.
Figure 1: Market share of public and private cloud in China and US.
In public cloud market in China, Alibaba is dominant with more than 45% market share and it is also the fifth largest public cloud company globally with 3% market share, which is still far behind AWS [4]. However, Alibaba is growing very fast with over 100% year-over-year increase in cloud revenue [5]. With the rapid growing of Asian cloud computing market as well as strong support from government, Alibaba is expected to take more market share. Noteworthily, the regulatory environment governing cloud computing in China is closely regulated where foreign cloud providers are unable to compete independently in the Chinese market due to certification restrictions and they are only permitted to offer services in China via a joint venture with a local Chinese company [2]. This kind of regulation provides crucial protection for growing of Chinese cloud provider.
Reference
[1] http://www.chyxx.com/industry/201803/619747.html
[3] http://www.chyxx.com/industry/201712/596645.html
[4] http://www.gongkong.com/news/201803/376611.html
[5] https://techcrunch.com/2018/02/06/alibaba-cloud-growing-like-gangbusters-but-still-far-behind-aws-and-other-market-leaders/
