Cloud Hosting

By Isabella Zhong

E-commerce giants Amazon (AMZN) and Alibaba (BABA) have been making an aggressive push into public cloud computing services but smartphone maker Huawei now wants to give the pair a run for their money.

Huawei has announced plans for a new business that will focus on turning the Shenzhen-based company into a global provider of cloud computing services that will rival Amazon and Alibaba. The company has previously offered private cloud services. Sijia Jiang of Reuters has more on Huaweis cloud strategy.

The Shenzhen-based firm, which last month reported its slowest profit growth in five years, said it will expand in cloud computing with a dedicated division that will recruit 2,000 more people this year.

By expanding in cloud computing, hardware-focused Huawei hopes to continue developing software-based revenue at a time of slowing growth in smartphone sales and reduced spending on telecommunication infrastructure.

Public cloud computing is big business. Morgan Stanley analyst Grace Chen sees a $300 billion market opportunity today that could grow to around $340 billion by 2020. But the potential could be even greater if the public cloud becomes a transformational technology like electricity.

If public cloud is a transformational technology like electricity, usage broadens and workload growth accelerates. Two signposts support confidence in this bull case: (1) In markets with the highest public cloud penetration to-date like salesforce automation, weve seen close to 100% inflation of the forecasted market opportunities. (2) With the emergence of machine learning techniques, public cloud environments now facilitate the automation of entirely new areas of work, like image recognition, natural language processing, and decision making. As a public utility, electricity represents a $1.6 trillion market globally, multiples of our $300-plus billion base case cloud market forecast.

Cloud computing has already become a hotspot for some of Chinas largest companies. Aliyun, Alibabas cloud computing unit, is the Internet giants fastest growing business unit and has been posting triple-digit revenue growth. Social media and gaming behemoth Tencent (700.HK) also has a presence in cloud computing and last month stirred controversy by winning a cloud computing contract in Xiamen for just CNY0.01, while commercial real estate giant Dalian Wanda Group has recently joined forces with IBM (IBM) to roll out its own public cloud offering in China.

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Watch Out Amazon and Alibaba! Huawei's Coming to the Public Cloud - Barron's (blog)