The future of cloud computing looks vast, connected and increasingly fast. While the concept and initial design of cloud computing began in the United States as a way to store data, networks, intelligence and more over the Internet, the refinement of cloud-based platforms and services are spreading widely in China. From individual consumer cloud services for storing photos, to multibillion-dollar corporations that need to house intelligent data, this technology has become globally ubiquitous in the last ten years. According to Wikibon Research, the global cloud market hit $237 billion in 2018 and is estimated to reach $814 billion by 2027. With mega corporations like Google, IBM and Amazon mostly running cloud systems in the U.S., it’s easy to overlook China’s market for now. Data shows, however, that companies like Alibaba (which currently ranks third in the global cloud computing market), Tencent and Huawei have worked their way up the ranks.
Already the world’s largest market for e-commerce and mobile payments, it comes as no surprise that China is boosting its use of cloud technology. According to the Chinese Ministry of Industry and Information Technology, from 2015 to 2019 officials have been working on more than doubling the scale of China’s cloud computing industry, and analysts predict that public cloud usage rates could grow more than 20 percent annually over the next three years. While cloud computing technology competition has ramped up between the U.S. and China, both countries were in talks during the trade negotiations about the possible access of U.S. cloud computing companies to China through special free trade zones. In April’s round of negotiations, Chinese Vice Premier Liu He proposed a “trial liberalization” that would allow foreign cloud companies to operate in China in a free-trade zone without a domestic partner.
Given the economic fluctuation as a result of current trade talks, the direction of cross-border cloud computing business opportunities remains unclear. Once the dust settles, however, businesses that are positioned to pounce on cross-border cloud computing opportunities will reap the benefits.
Cloud computing has already impacted everything from the way transactions are made online, to how software is designed for an app. So, what’s next?
“If you consider how computing and storage have evolved thanks to all of the Amazons, Googles and Microsofts that have pushed the envelope, cloud computing and networking softwares really need to be on demand, instantaneous and hyper-scaled for consumption,” says Jezzibell Gilmore, co-founder and senior vice president of business development of PacketFabric, a highly scalable network connectivity-as-a-service platform. PacketFabric began because the founders saw a need for an automated network service.
"If you consider how computing and storage have evolved thanks to all of the Amazons, Googles and Microsofts that have pushed the envelope, cloud computing and networking softwares really need to be on demand, instantaneous and hyper-scaled for consumption."
Some cloud computing trends that are taking off include infrastructure-as-a-service (IaaS), cloud-based software-as-a-service (SaaS) and advanced machine learning (ML) capabilities. Higher digital capabilities call for greater responsibility on the business side to deliver fast and seamless results. IaaS providers allow businesses to rent or lease computer infrastructures such as servers, data center space and network components from a cloud provider. In addition to the baseline infrastructure, the cloud host can also offer services such as monitoring, security, detailed billing and storage resiliency to ensure good internet experiences for customers. Amazon Web Services and Google Cloud Platform are examples of larger IaaS providers.
“I think that there are certainly benefits for companies to consider utilizing companies like PacketFabric to manage their network infrastructure,” says Johnny Lee, managing director of venture capital lending in emerging technologies at East West Bank. “By leveraging a network-as-a-service provider like PacketFabric, you reduce or eliminate the costs associated with building and maintaining your underlying network infrastructure, including the need to hire a team of employees who need to have the appropriate knowledge/expertise to manage the network and can constantly stay on top of new IT developments.”
Spiceworks State of IT’s 2019 survey predicts that more organizations will be jumping on board to use IaaS for various goals at a relatively low risk. The survey states that by 2020, 61 percent of organizations plan to use gigabit wi-fi networking technology, 57 percent plan to use some form of IT automation, 48 percent plan to adopt IoT devices, and 39 percent plan to use converged or hyperconverged infrastructures.
“The biggest challenge that we actually still face today is that the concept of what we provide is still very new to many enterprises,” says Gilmore. “When we tell people that we can order and provision network services instantaneously through a single portal, people just say, ‘yeah right!’” According to Gilmore, unlike traditional network service providers, PacketFabric provides on-demand network automation services, pricing transparency and flexible month-to-month contracts. “We’ve expanded the reach of our network to more than 150 locations in 19 markets in the U.S. and Europe, and have secured partnerships to bring PacketFabric to Asia as well.”
In PacketFabric’s case, private networking services can be ordered in a matter of minutes: “You could go to our website right now and turn on a circuit anywhere on our platform in about two minutes,” says Chad Milam, president and COO of PacketFabric. This model allows for greater tech efficiency, especially for larger corporations, and is used for things such as sales management, human resource management, billing and customer relationship management.
But why the need to have these shared and leased network models? “The interesting thing that sort of happened over the last decade is that, over time, there tends to be a detraction of services, and what happens is that certain skillsets get pushed up higher and higher in the value chain,” says Milam. “The folks that are working closer to the actual infrastructure become more specialized in their work and their skills become very high in demand. They get poached by big, hyper-scaled companies like the Amazons, Googles, Facebooks and Microsoft, so then enterprises have a hard time attaining and retaining these highly skilled and talented engineers. An enterprise that wants to do something sophisticated and novel is going to find that even if they decide that they want to create their own infrastructure, they’re going to have trouble finding the right people to do it.”
Advanced machine learning and artificial intelligence (AI) are also being adopted by more enterprises today. Companies like Google, Amazon and Microsoft have invested heavily in these technologies in business areas such as fraud detection, business intelligence and customer support. According to the Cloud Academy, there are many benefits to using the cloud for ML. One of the biggest benefits include the ease of scaling machine learning capabilities in relation to an enterprise’s workload. With a number of open-source ML frameworks, businesses don’t have to build their own ML solutions or train new ML models. Leading cloud platforms make it easier for companies to use ML to streamline business functions without needing to invest much time or money into the tech side. Whether for language processing such as automatic transcription and translation services or fraud detection using machine algorithms, businesses can use these ML frameworks that are available on the cloud and tailor it to their specific needs.
“The number one thing that’s really been happening is that the cloud has certainly moved out of its infancy with enterprises, and more enterprises want to have a reliable and secure performance connection as they move more data and real production workloads to the cloud,” says Milam. “We’re seeing more people wanting to get secure connectivity to get their cloud resources, and the public internet just doesn’t really cut it.”
China has been a frontrunner in many different tech industry verticals, from AI and the Internet of Things (IoT), to smart cars and virtual reality (VR) services. As a direct result, the Chinese government and businesses have worked to also strengthen cloud computing technologies to support the data infrastructure of many of these emerging technologies. According to Zhang Feng, chief engineer with China’s Ministry of Industry and Information Technology, China’s overall cloud industry reached a scale of $48 billion, and the IoT industry surpassed $174 billion in 2018. In other words, there are many businesses within many industries looking to implement cutting-edge cloud computing technologies.
"By leveraging a network-as-a-service provider like PacketFabric, you reduce or eliminate the costs associated with building and maintaining your underlying network infrastructure, including the need to hire a team of employees who need to have the appropriate knowledge/expertise to manage the network and can constantly stay on top of new IT developments.”
“I believe that China is a force to be reckoned with,” says Gilmore. “There’s been a tremendous amount of investment that’s been made by Chinese telecom companies.” Gilmore also notes the difference between the U.S. and China in the level of sophistication of smartphone markets and mobile network reach. “We have a much smaller population and Americans obviously have mobile phones, but people still use their broadband at home either through a cable modem or DSL,” she says. “In China, there are billions of migrant workers in rural and urban areas who are getting all of their information and entertainment through their mobile devices.”
Current regulations stipulate that foreign cloud providers must partner with local Chinese companies to serve customers in China, and the cloud computing industry is still regulated. While its tech market is growing, China still needs to enhance its cloud technology and encourage its adoption across markets. According to a recent report by Alibaba, areas that Chinese businesses require the most cloud assistance include IoT integration, mobile security and expansion into overseas markets. Alibaba Cloud, for example, has announced its plan to invest $1.4 billion in global data centers to further support its cloud network and meet consumer demands. Alibaba Cloud currently makes up about one-third of China’s cloud market and is looking to take its services to the global marketplace.
The convergence of emerging cloud technology trends and China’s increasing demands for the use of cloud services will open cross-border business opportunities. While current trade talks vacillate frequently, the tech sector could benefit tremendously from collaboration and partnership initiatives between firms in China and the U.S.
“Knowledge is power, and what drives me to work in the telecommunications and networking space every day is knowing that we’re on the frontlines of a digital renaissance,” says Gilmore. “From the internet to the cloud, we are in the midst of a revolution that’s making information available to all corners of the world.”
We’ll keep you in the know about the latest US-Asia business news and trends.
Lo mantendremos informado sobre las últimas noticias y tendencias comerciales entre Estados Unidos y China.