China’s wireless telecommunication infrastructure is about to upgrade to the latest fourth-generation standard. As mobile data transmission speeds become much faster in the 4G era, it will pave way for a boom in the cloud computing industry in the coming years. Among those aiming to ride this opportunity is Amazon.com Inc, the American online retailing giant.
Making a foray into the fledging market in China, Amazon sees cloud computing as an enabler foron-demand delivery of IT resources via internet. Given its massive economy of scale, first-mover advantage, and global reach, the US tech giant can offer its clients great savings and convenience in mobile data storage and online computing.
According to market research firm Gartner, China’s cloud computing services market was at about US$2.78 billion in 2012. But it is expected to grow to 200 billion yuan (US$32.94 billion) by 2015 under the government’s initiative. It goes without saying that almost every internet giant wants to tap into the rapidly swelling market. Amazon is no exception.
However, cloud computing is categorized as a kind of value-added service in China’s sensitive telecoms industry under current regulations. The burgeoning business thus had long been out of bounds for foreign investors. Amazon, IBM and Microsoft have managed to enter China circuitously by establishing joint-ventures with local partners.
Amazon had to cede control of data centers, the core part of the entire cloud computing chain, to its local partner in China. But the situation will reverse soon as telecom value-added service has been listed as one of the fields that will be opened up for foreign investors in the newly-created Shanghai Free Trade Zone.
Among all the domestic cloud computing service providers, Alibaba Group should have the biggest cause for worry with Amazon’s entry, since the two firms are key rivals in e-commerce and their cloud computing operations focus on serving e-vendors. It is worth noting that Amazon has an edge in both experience and technology in cloud computing. If the new operation gains a firm footing in China, it will reinforce the competitiveness of Amazon’s e-commerce in the country.
In an obvious precautionary move, Alibaba slashed the pricing on its cloud services last Wednesday, the same day when Amazon’s cloud computing unit announced its entry into China.
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