Leading cloud companies are moving fast to capture a share of the cloud computing business in China. International Business Machines Corp.(NYSE:IBM) announced yesterday its launch of IBM Cloud Managed Services (CMS) in the country in partnership with 21Vianet Group Inc (NASDAQ:VNET). According to the press release, local enterprises and multinational corporations in China will be able to utilize IBM’s leading cloud solutions for the first time, and “access IBM’s IT Infrastructure Library (ITIL)-based capabilities and solutions, managed infrastructure, service-level agreements (SLAs) and management above the hypervisor level.”
China embracing cloud computing
Initiatives by the Chinese government to boost the country’s cloud computing base, to take advantage of higher speeds, widespread availability of the internet and most important, the massive fall in computing costs, are drawing the attention of global cloud computing companies to the country’s immense business potential.
“The Chinese government’s 12th 5-year plan includes investing significantly in creating new cloud platforms, and building and deployment of cloud data-centres across the country,” says Research and Markets in its report ‘Cloud Computing Market in China 2014.’ “China has jumped on the cloud computing bandwagon as it makes way for huge developments in cloud computing aimed at servicing government and industry needs.”
IBM’s partnership with China Telecom
In August, IBM announced its partnership with China Telecom Corporation Limited (ADR) (NYSE:CHA) to help small and medium businesses (SMBs) implement secure, scalable SAP cloud-based applications. China Telecom will manage clients’ infrastructure that includes cloud platform resources, networking and mobile devices. IBM will integrate the software, hardware and end-to-end service capabilities to create a complete environment that supports SAP applications on the cloud. China Telecom is the largest IDC/cloud computing service provider in China, and has built “4+2” cloud resource network with Inner Mongolia and Guizhou as the center and with Beijing, Shanghai, Guangzhou and Chengdu as the backbone nodes.
Foreign cloud companies need to get around Chinese regulatory internet restrictions by offering their services through a local partner. Microsoft Corporation (NASDAQ:MSFT)’s Azure cloud computing service launched in the US in 2010 and the company commenced testing its service in China in May 2013. In March this year, it too partnered with 21Vianet Group Inc (NASDAQ:VNET) to launch the Azure service commercially in China, notching up revenues of $6 million in Q2.
Amazon Web Services
Amazon.com, Inc.(NASDAQ:AMZN)’s Amazon Web Services unit announced December last year that it was deploying a ‘limited preview’ of its cloud services in China in early 2014. “A select group of China-based and multinational companies with customers in China will be invited to begin using the new Beijing Region to build their businesses and run their applications in the cloud,” the company said. According to the website, that limited preview is still in progress, but the China (Beijing) Region became the first AWS Region to be located within China. “AWS has partnered with local Chinese providers of Internet Data Centers to provide the necessary infrastructure and network services required to support AWS information technology services in China,” it said.
Chinese cloud expertise
Chinese companies are not exactly letting the grass grow under their feet either.
Alicloud, the online technology and cloud services unit of Alibaba Group Holding Ltd (NYSE:BABA) already has five data centers operating in China. The unit processes the Alibaba Group transactions on its huge Taobao.com and Tmall.com ecommerce sites.
Like Amazon, the unit is now making a business proposition of its technological expertise in these areas by offering cloud services. Alicoud is based on Alibaba’s proprietary ‘Apsara’ cloud platform.