Friday, 27 November 2020 06:36

China cloud infrastructure services expenditure in 3Q crosses US$5b

China cloud infrastructure services expenditure in 3Q crosses US$5b Image by Jing from Pixabay

Expenditure on cloud infrastructure services in China grew by 65% in the third quarter to cross US$5 billion (A$6.78 billion), a rise of more than US$750 million in the second quarter and nearly US$2 billion more than the corresponding period in 2019, the technology analyst firm Canalys says.

The company said this was the biggest quarterly growth in dollar terms, with demand being boosted by the focus on digital transformation in the wake of the coronavirus pandemic, with delayed projects being restarted and a quick economic recovery taking place after the lockdown was lifted.

China was the second largest market, with 14% of global investment, Canalys said, adding that the top four vendors — Alibaba Cloud (40.9%), Huawei Cloud (16.2%) Tencent Cloud (15.8%) and Baidu AI Cloud (7.1%) — accounted for four-fifths of the total spend.

“Demand for cloud-based services reached new heights in China, as organisations reprioritised IT spending and accelerated digital transformation projects,” said Canalys chief analyst Matthew Ball.

“Remote learning and working, as well as gaming, streaming, ecommerce and other online services continued to drive consumption of cloud infrastructure resources.

china cloud 3q

"This, combined with the digitisation of processes and operations within enterprises and government organisations, will maintain demand. Organisations have overcome challenges caused by the COVID-19 pandemic by using digital services developed by cloud service providers.

"For example, online ordering and delivery services have expanded into many industries, such as retail and restaurants, while data management tools have become pivotal to operations in healthcare and banking.”

Canalys said while Chinese cloud infrastructure service providers had gained from their quick reaction to the health crisis, some deals had been either put off or else cancelled while contracts were re-drafted, especially in the sectors most affected such as hospitality and transportation.

The top firms saw growth in different industries with Alibaba Cloud reporting strong growth in finance and retail, while its existing customer base continued to grow. Huawei Cloud had witness rapid growth in the finance, industrial manufacturing, Internet and government sectors. Tencent Cloud saw rising demand for its PaaS solution while Baidu AI Cloud was boosted by growth in the transportation, healthcare and financial sectors.

“Customer requirements are increasing, while the pace of innovation is accelerating in China," said Canalys research analyst Blake Murray. "This makes the ongoing development of capacity and connectivity, as well as data services, including management and artificial intelligence, critical within a vertical-led model.

“Building successful relationships with customers while economic stability is returning will pay off in larger and more focused digital transformation projects in the future.

"This will also lead to a combination of hybrid-cloud and cloud-native deployments, where value must be demonstrated to drive additional opportunities. As cloud infrastructure spend continues to grow rapidly in the coming year, provider competition will be decided by the health of customer and partner relationships.”

Canalys defines cloud infrastructure services as being those that provided infrastructure-as-a-service and platform-as-a-service, either on dedicated hosted private infrastructure or shared infrastructure. This excluded software-as-a-service expenditure directly, but included revenue generated from the infrastructure services being consumed to host and operate them.

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Sam Varghese

Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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