China takes to the cloud

Carol Ko
01 Aug 2011
Crowded market
In China, the cloud business operates on a public-private partnership model. This means multinational (MNC) cloud service providers have to either focus on MNC end users, or work with local partners to do businesses. "This is the case with EMC, which works with China Telecom in offering its cloud storage services. Without having a license, EMC cannot build data centers in China," Wang said.
China's cloud computing market is crowded with MNC and local players. Even with the presence of big brands such as Microsoft, VMware, Citrix, IBM, EMC, Cisco and Brocade, Wang sees local players of Software-as-a-Service, Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) being more active in the Chinese market.
For example, on the SaaS front, Sina, 263 and Netease offer email solutions, while, SAP ByD, 800App and Kingdee providing CRM or ERP solutions. On the IaaS front, while China Mobile and China Telecom are the dominant telcos, GDS and 21ViaNet offer internet data center services. As for PaaS, Amazon Beanstalk, Google App Engine and Microsoft Azure provide corporate applications while Alibaba provides e-commerce platforms.
Such a crowded cloud computing market in China has led to a significant reduction in public cloud service prices.
"Take SaaS CRM as an example, the competitive SaaS market has driven down the service pricing, and we expect a certain level of market consolidation in the next two years," said Wang. "We have even seen some local players selling standard or basic CRM solutions at the price of 200 yuan (US$31) per user per year. But does this make any business sense?"

In contrast, the SaaS email market is more stabilized, as the hosted email market is more matured. As for cloud storage, a form of IaaS, pricing will tend to become stable, as service providers and large players add their footprints in different locations to increase their national coverage, Wang said.


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