No Leader is Secure in Cloud Computing's Long-Haul Race in China, Kingsoft CEO Says
Lv Qian
/SOURCE : Yicai
No Leader is Secure in Cloud Computing's Long-Haul Race in China, Kingsoft CEO Says

(Yicai Global) Nov. 13 -- The cloud computing sector is a long-distance contest, so uncertainties abound. China's cloud computing market's future is not fixed, any more than Microsoft's asset value exceeding that of Amazon's was, Wang Yulin, chief executive of the major Chinese player Beijing-based Kingsoft Cloud, told Yicai Global.

The sector's first round of competition has seen a group of players ejected, but who will now become front-runner remains uncertain, Wang commented on the heated contest in the field yesterday.

Internet businesses were the major players before last year as cloud computing applications quickly shifted to traditional businesses from the internet as the demographic dividend waned, Wang told Yicai Global.

China's cloud computing has begun a remarkable expansion into government and conventional company markets this year, Wang noted, citing as examples integration of cloud computing with finance, smart cities and intelligent manufacturing. The company entered the sector at the end of last year when it won the bid in the third heat of the Beijing e-government cloud project, China's largest such.

Users have changed from internet companies to standard businesses and government, Wang said. Kingsoft Cloud can cooperate with internet companies seamlessly as the two share the same standards and needs, but traditional firms and government users have totally different requirements, so the company has to start from scratch and build the simplest SaaS (software as a service) platform for these clients.

Cloud computing services provided to these non-internet customers also require support of their omni-channel partners, which involves building the user's ecosystem and is far more important than just providing cloud solutions, Wang noted.

Slim Chance

China has more than 300 prefecture-level cities and thousands of county-level cities, so the likelihood of direct competition with Alibaba Cloud, the cloud service unit of Hangzhou-based Alibaba Group Holding, is not that high, Wang stated on the issue of confronting one of its major rivals but added China's cloud computing terrain is still very much terra incognita.

Cloud computing's penetration rate in internet companies approaches 100 percent, but the sector only makes up less than 10 percent of the entire potential market, so its scope for growth is still very large, Wang stressed.

The difficulties lie in helping traditional businesses adapt to cloud computing, Wang noted, but domestic market share will go above 50 percent in about five years, he projected.

Kingsoft, the company's parent, has two decades of experience in video games. Its Kingsoft Cloud unit provides game cloud services for nearly 90 percent of major domestic game developers and publishers. The company also enjoys vertical advantages in the video and Internet of Things fields. 

Video cloud is currently China's largest and fastest growing cloud business, but its consumption, financial demand, business growth and other indicators do not yet match those of the US, Wang said.

Kingsoft Cloud is also hastening its expansion into novel technologies such as artificial intelligence and edge computing. It joined hands with Beijing-based consumer electronics giant Xiaomi to release their 1KM Edge Computing to explore its application to hundreds of millions of IoT devices Xiaomi produces. The two aim to up the speed of the whole network by 30 percent.

Third-Place Finish

Alibaba Cloud occupied 48 percent of the domestic cloud computing market, Tencent Cloud of Shenzhen-based tech titan Tencent Holdings ranked second with a market share of 9.6 percent, with Kingsoft Cloud took the bronze with 6.5 percent in the first half of last year, Framingham, Massachusetts, US-based market analytics firm International Data Corporation, better known as IDC, said in its survey on the IaaS (infrastructure as a service) of Chinese public cloud services last November.

The income from Kingsoft's cloud business reached CNY603 million (USD87 million) in an annual rise of 68 percent and a quarterly jump of 29 percent, the company said in its third-quarter earnings report yesterday. 

The cloud business income's proportion of the company's total revenue climbed to 39 percent, it added. Kingsoft Cloud has thus far spanned the areas of government, finance, medical, manufacturing, Internet of Vehicles and IoT.

Editor: Ben Armour

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Keywords: Cloud Computing , Industry Analysis, Xiaomi ,