It's official: China is the wild, wild west of cloud computing
Barb Darrow Dec 18, 2013 - 10:57 AM CST
Within hours of Amazon's announcement of a new Beijing region for Amazon Web Services, IBM (s ibm) jumped into the mix, announcing a new relationship with 21Vianet to offer high-end SmartCloud Enterprise + cloud services from a new 21Vianet-hosted facility in Beijing.
IBM claimed that while AWS is a "newbie" in China and to enterprise-class workloads generally, IBM has worked with customers in China for years as an enterprise IT provider while AWS "is most known for its support of Netflix." So there.
Wake-up call: AWS is or will be an enterprise competitor
This is a feisty IBM, obviously stung by losing the $600 million CIA cloud contract to AWS. SmartCloud Enterprise+ is an OpenStack-based cloud for enterprise customers, an IBM spokesman said. IBM characterizes it as an "open standards-based" cloud compared to Amazon's "proprietary" cloud. You see how this is being played.
If 21Vianet sounds familiar, it's because it's a huge carrier-neutral internet services company working with Microsoft to deliver Windows Azure, Office 365 and other services in China. Those services are still in a public preview stage, according to a Microsoft spokeswoman.
While AWS, IBM and Microsoft rush into China, Google appears to be heading in the other direction, perhaps due to internet censorship clashes with China in the past. You have to wonder how long that reticence will last given the potential size of the market in China. The Openstack Foundation staged the OpenStack in Summit in Hong Kong this fall to capitalize on what it saw as huge interest in cloud in the region.
Gigaom Research analyst Janakiram MSV said China is the place to watch. "Google is backing out because of its past experiences of dealing with Chinese censorship. Google primarily suffered from it because of its consumer business. Amazon may not get into a tussle with the Chinese government because they operate in the B2B environment. Having said that, it will not be easy for AWS to win enterprise and public sector deals in China," he said.
On the other hand, he agreed that IBM's long-standing presence in China and India make it a credible player in these local markets. "IBM has very strong partnerships with local [system integrators] who drive most of the technology decisions for enterprises. It's partnership with 21Vianet will attract large enterprises and government customers while restricting AWS to startups and [small and medium businesses]. It's a good move from IBM to counter the threat and enter a promising market like China at the right time." He expects IBM to repeat this exercise in India in partnership with a large telco or data center provider.
The Register reports, however, that AWS is already on track to gain some public sector jobs having signed a memorandum of understanding with the Beijing municipal government and the Government of Ningxia Hui Nationality Autonomous Region.
Giant market opportunity
IDC estimates that IT spending in emerging countries will grow 13 percent year over year, led by China, which is seeing an economic recovery. According to IDC: "In dollar terms, China's IT spending growth will match that of the United States, even though the Chinese market is only one-third the size of the U.S. market. And according to Gartner(s IT) the market for IaaS in China will grow at a healthy 35.4 percent compound annual growth rate from 2011 and 2016. For the current year, Gartner estimates China IaaS market to be at a modest $96.3 million.
Still, anyone reading headlines about censorship and tensions between the U.S. and China knows that doing business there will pose special challenges. But it seems the siren call of a huge market and potential huge upside outweighed any risk as U.S. cloud providers jump into the fray.
Photo courtesy of Flickr user Arian Zwegers
3 Responses to "It's official: China is the wild, wild west of cloud computing"
AC December 18, 2013
What a bold headline backed by a single development. Grabbing page views looks pathetic, that's what GigaOm has devolved to it seems!
Ric December 19, 2013
Cloud computing doesnt possess a wild wild west anymore. The back room surveillance state of any of the sovereigns that represent a potential growth market will mitigate a significant move to the cloud whether b2b or c2b!
Steve Sanders December 19, 2013
Einstein, it's not one development, but two — guess you were too busy picking your nose to learn this during whatever math class and second rate primary school you attended. Find a nearby cliff and take a leap, please!
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