Global cloud computing competition for China plans to kill 5 clouds in the world

In 2010, during the China (Shenzhen) IT Leaders Summit, Li Yanhong famously described cloud computing as "a new bottle of old wine," suggesting it was not entirely novel. Ma Huateng referred to it as "hydropower coal," emphasizing its potential for future growth, while Ma Yun expressed strong confidence in the technology, stating that Alibaba would "starve to death" without cloud computing. This early dialogue highlighted differing perspectives on the emerging field. By 2017, as the cloud computing industry began to boom, these initial views were revisited. Amazon had already launched its cloud services in 2006, and by this time, the strategic awakening of companies became evident, shaping today's global cloud market. As shown in the figure below, only Alibaba Cloud, which aimed to compete with Amazon Web Services (AWS), appeared in the Gartner 2016 Public Cloud Market report. According to Gartner’s October 2015 report, global public cloud service revenues reached $260.2 billion in 2017, a significant increase from $219.6 billion in 2016. By 2020, this number is expected to grow to $411.4 billion. The vast potential of the public cloud market suggests there is still plenty of room for expansion, whether for global giants like AWS or domestic players like Alibaba Cloud. Dr. Zhang Hongjiang, former CEO of金山云 (Jinshan Cloud), once predicted that the intensification of cloud competition would eventually leave only 5-10 major public cloud enterprises. With 2017 marking a pivotal moment in the market, we saw Huawei suddenly enter the public cloud space, signaling its ambition to become one of the "five clouds." A Morgan Stanley report also highlighted AWS, Microsoft Azure, and Alibaba Cloud as the "3A" leaders in the international cloud landscape. Alibaba Cloud aims to maintain its top-three position, while other domestic vendors seek to secure their place among the final five after the market stabilizes. In 2017, international cloud providers intensified their presence in the Chinese market. AWS Beijing, operated by Halo New Network, eventually obtained a license to operate in China, and AWS Ningxia District announced its launch later that year. At the 2017 Microsoft Technology and Ecology Conference, CEO Satya Nadella announced that Microsoft Azure, operated by 21Vianet, would triple its scale within six months. Products such as Azure Stack and SQL Server 2017 were also set to be introduced in China. Foreign cloud providers are now aggressively entering the market, making the Greater China region highly competitive. With strong competitors waiting in the wings, Chinese cloud companies have little time to rise as global leaders. As the second-largest economy and the world’s largest developing country, the Greater China region has become a focal point for cloud computing vendors. Gartner reported that the global public cloud market grew rapidly in 2016, reaching $22.1 billion. In China, the public cloud market hit 147.6 billion yuan in 2016, with a high growth rate of 35%-55%, far exceeding the global average. For Chinese cloud companies, capturing this market is crucial. To do so, three key strategies must be prioritized: improving PaaS strategy, seizing government cloud opportunities, and exploring industrial cloud development. Enhancing PaaS capabilities is essential for serving local businesses more effectively. Wang Honglin of 佰邦达科技 (Bai Bangda Tech) believes that PaaS is more important than IaaS at this stage, as it forms the core of digital business IT frameworks. Wu Kai of Yuntu Teng also noted that PaaS, once considered stagnant, has seen rapid growth due to improved application adaptation. Alibaba Cloud’s EDAS, Tencent’s Lingque, and Qingyun’s AppCenter2.0 are key tools in this area. Government cloud projects are another critical area. In 2017, Tencent Cloud won the Xiamen Government Affairs Cloud project with a bid of just 0.01 yuan, signaling fierce competition. According to the China Government Procurement Network, over 130 government cloud projects were launched in 2016 and 2017, with Inspur leading in wins. IDC data shows that China’s government cloud infrastructure investment reached nearly 10 billion yuan in 2016, with a projected 20% annual growth. By 2020, the IaaS investment in the government sector could exceed 16 billion yuan. Industrial cloud is another fast-growing segment. Tencent Cloud launched its first industrial cloud platform in Wuzhen, while Alibaba Cloud announced an Industrial Internet Cloud Platform in Guangdong. These efforts reflect the growing importance of industrial transformation under the "Made in China 2025" plan. Baidu Cloud also entered the industrial space, focusing on logistics, finance, and manufacturing. Expanding into international markets through the "One Belt, One Road" initiative is another key strategy. Alibaba Cloud has deployed data centers in multiple regions, while Tencent Cloud has expanded to Sydney, London, and Silicon Valley. Qingyun and UCloud are also targeting overseas markets, especially in Southeast Asia, India, and Europe. The integration of AI and big data is a defining feature of Chinese cloud computing. Google Cloud emphasizes AI-first strategies, Baidu focuses on ABC (AI, Big Data, Cloud), Meituan provides AI tools for developers, and Alibaba integrates AI into various industries through ET Brain. These efforts highlight the unique strengths of Chinese cloud companies in the AI era. Ultimately, the goal of Chinese cloud companies is to become global leaders, competing with AWS, Azure, IBM, and Oracle. The path ahead is challenging, but with strategic focus, innovation, and global expansion, the opportunity is real. Will Chinese cloud companies succeed in this new era? Only time will tell.

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