All about Clouds – Strategic Global Expansion May be the Clever Way to Go for UCloud
Though still far behind Alibaba Cloud and Tencent Cloud, UCloud's future looks fairly pinky in China. However, the global market does not seem friendly enough for it.
UCloud (优刻得科技) received IPO Readiness Assessment and Preparation Service offered by China International Capital Corporation (中金公司) last October, readying itself to go public. The company has maintained fairly high revenue growth rate for a continuous period of time, certified as "Trusted Cloud" by MIIT (The Ministry of Industry and Information Technology of the People's Republic of China), won a significant lot of Chinese enterprise customers. It seems the company had put all the chips down for the future IPO.
The IPO prospects in China are indeed quite optimistic, but the competition environment outside of China does not seem so friendly since the big two, AWS and Azure are dominating more than 60% of the global cloud computing market. Nevertheless, UCloud is facing strong competitors such as Alibaba Cloud (阿里云) and Tencent Cloud (腾讯云) domestically as well, strategic global expansion may as well be a clever way to dodge the fierce competition and win some other markets, such as Southeast Asian countries, Latin American countries, and African countries the like.
At present, China's cloud computing market only accounts for 5% of the global market. Compared with the United States, cloud computing in China still far away lagged behind. The US cloud market has already entered a mature period, while China is still in the initial expansion stage.
The Ministry of Industry and Information Technology of the People's Republic of China (MIIT) published the Cloud Computing Development Three-year Action Plan (2017-2019) on April 10, 2017, to promote the healthy and fast development of China's emerging cloud computing industry. The Plan sets the goal of having an RMB 430 billion (USD 67.5 billion) cloud computing industry by 2020. This year will witness the actual results of this action plan.
Also, though the action plan ends by 2020, there are high possibilities for it to be further extended. Since China's Cloud market is burgeoning right now, and it still needs a large amount of time to reach maturity. This period is very crucial, and it can not pass without promotion, observation, guidance, and help from official Chinese organizations such as MIIT.
SaaS, PaaS and IaaS
No matter which one among these three customer chooses, users can adjust resource usage at any time according to their needs, avoiding excessive investment on not needed resources, and reducing hardware and software maintenance costs. Also, the larger the cloud is, the more resources could be shared, and the lower the cost per user.
In 2017, the scale of IaaS market in China is up to USD 2.1 billion, an increase of 70.14%; PaaS market size of USD 170.8 million, an increase of 52.64%; SaaS market size of USD 1.5 billion, an increase of 39.15%. IaaS would continue to lead the market growth in China in the near future, while PaaS will leap to become a major driver of market growth soon. According to Gartner, by 2022, 90% of enterprises purchasing public cloud IaaS will switch to integrated IaaS and Platform-as-a-Service (PaaS) and will use both the IaaS and PaaS capabilities from that provider.
Public, Private or Hybrid？
In 2017, the size of China's public cloud market reached USD 3.9 billion, a year-on-year increase of 55.7%. The growth rate far exceeded the global average. It is estimated that by 2021, the size of China's public cloud market will reach USD 13.3 billion and CAGR will be 35.87%. Consumption for private cloud is large, while the public cloud market is growing at a brisk pace. Unlike the US cloud market, China's private cloud market scale is much larger than the public cloud market currently. This is possibly because Chinese enterprises need to build their own IT infrastructures according to industry norms and the Chinese government's regulations. The standardized public cloud cannot meet the needs of each Chinese enterprise. They are more inclined to choose a private cloud or a hybrid cloud rather than a public cloud.
Large enterprises are more sensitive to data security and less sensitive to cost. Because of the resource sharing feature of the public cloud, it's understandable for big companies to feel reluctant in embracing public cloud rapidly. It is more reasonable for these companies to choose hybrid clouds, in which they could share a number of resources in the public cloud while hiding some crucial information to themselves in their own private cloud.
IDC predicts the industries that are forecast to spend the most on public cloud services in 2018 are discrete manufacturing, professional services, and banking. The process manufacturing and retail industries are also expected to spend a lot on public cloud services in 2018. These five industries will remain at the top in 2021 due to their continued investment in public cloud solutions.
This trend is universal, therefore, for UCloud, there seems to have abundant opportunities in discrete manufacturing, financing, retail and process manufacturing industries home and abroad in the future.