The tremendous rise of the Chinese cloud market

Dec. 6, 2020, 4:23 p.m.

Topline

In the third quarter of 2020, China’s clouds have grown by a whopping amount of 65%. This boom in China’s clouds has been estimated to have hauled a revenue of over $5 billion. Estimates suggest that when the spending in the third quarter is compared with the spending in the second quarter, there is a possible growth of $750 million. It has been suggested that this sudden boom was majorly because of the restarting of projects delayed due to the Coronavirus pandemic.

The demand for cloud in China has boomed largely due to the increasing digitization of processes owing to the Coronavirus pandemic..png

Key Facts

1
According to Macau Business, the top five companies that have contributed to China’s cloud industry the most include Inspur, China Telecom, IBM, Huawei, and Accenture.
2
China’s current cloud expenditure is being estimated at 13.7% of the global total according to The Register . However, even as the cloud sector has witnessed a massive boom, it is still miles behind others in the industry.
3
The industry share of Microsoft Azure (in terms of cloud) alone is higher than the combined share of China’s cloud. During this third quarter of 2020, Microsoft Azure alone bagged $6.9.
4
The demand for cloud in China has boomed largely due to the increasing digitization of processes owing to the Coronavirus pandemic. The industries that have been the biggest drivers of this boom are e-commerce, online learning, remote working, online streaming, and gaming.
5
When comparing the China cloud with the US cloud, it has been noticed that the China cloud offers less power availability since they operate out of data centers. On the other hand, the US cloud industry is increasingly looking towards increasing the cloud power for customers per rack.

Details

The rapid boom in China’s cloud has been largely attributed to the country’s outlook towards digital transformation for the future. With a renewed focus on digital transformation, China is aiming to recover its weak economy rapidly and boost the quality of business in the country. This has been found to be helpful for the country since China’s economy continues to recover despite the slump induced by the Coronavirus pandemic.

Demand for cloud-based services reached new heights in China, as organisations reprioritized IT spending and accelerated digital transformation projects.
Matthew Ball
Chief Analyst, Canalys