- The cloud market in Asia-Pacific is getting more competitive, driven by the Chinese cloud giants: Huawei, Alibaba and Tencent.
- The growing competition offers businesses wider options beyond the traditional cloud providers such as AWS, Microsoft and IBM.
The three Chinese ICT giants – Huawei, Alibaba and Tencent – are originally from different ICT areas. Huawei started with telecommunications equipment, Alibaba with e-commerce and Tencent with instant messaging. However, today, they all actively play in cloud market, challenging the traditional cloud players such as AWS, Microsoft, Google and IBM.
Huawei was announced to be the top five-cloud players globally, competing head-to-head with existing leaders like AWS, Microsoft, Google and IBM. Huawei’s strategy is to partner with carriers. Most carriers offer cloud services in the market and tend to offer a strong channel to market. In Asia, it partners with OBS, looking to target European businesses expanding into Asia-Pacific and vice versa. They are also looking at intra-Asian Chinese inbound and outbound opportunities (e.g., Singapore and China; Belt and Roads). For OBS, Huawei could also be an ideal partner to grow its business in China.
Alibaba and Tencent go to market (GTM) both through channel partners and directly. The wider GTM options offer them an advantage to expand faster and capture the growing cloud opportunity, especially in emerging Asian markets. Knowing data residency is still the main concern for the majority of Asian businesses, Alibaba and Tencent are actively expanding their footprints, especially in countries in South and Southeast Asia. Alibaba opened new data centres in Indonesia and Malaysia. It also partners with ASL, to expand its cloud footprint in Hong Kong and Macau, and with Australian start-up hub Haymarket, to enable businesses in ANZ. Tencent opened a data centre in Mumbai, India and announced its intention to expand its footprint in several other locations including Southeast Asia.
The Chinese competitors are expanding faster than the traditional incumbents in the region. However, it is not just a race to expand their local footprints; it is also about the products and features available in the market. Just like the other cloud leaders, these Chinese giants have comprehensive portfolios to offer businesses. They support open standards and offer cloud security, IoT, analytics, artificial intelligence (AI), content delivery network (CDNs) and cloud management platforms. This is important in addressing the dynamic demands of Asian businesses. For example, AI and management platforms provide businesses a solution to optimize their workload management and achieve higher operational efficiency. PCI-DSS features enable e-commerce, which is growing in emerging countries such as the Philippines and Thailand. IoT cloud usually includes edge computing, which can be addressed by domestic data centres.
Chinese vendors are also known to disrupt a market with competitive pricing driven by large-scale deployments in their home country. They have done so in the telecom equipment and smartphone markets. And it is not a surprise for them to do it again in cloud market. For example, with AWS known for its linear pricing and synonymous with ‘bill shock’ with some enterprises, there is an opportunity for these Chinese cloud players to address this gap, e.g. by offering volume-based discounts.