Cloud Computing Market – China

July 2014
2
Executive Summary
Market
Drivers &
Challenges
Competition
 Cloud Computing market in China, still in its naïve stage, is expected to grow from USD xx bn in 20-- to USD xx bn
in 20-- with a CAGR of xx% over the period 20--
 Owing to its cost saving attributes, cloud service will be largely used by institutions such as government,
telecoms, education, medicine, finance, petrochemistry, and electric power distribution
Government
Initiatives
 Initiatives by Chinese Government
 Pilot Projects Bases for Cloud Computing
 Initiatives by Local Government
Drivers:
- Cost Reduction
- Speed, Flexibility and Responsiveness
- Widespread Adoption of Internet
- Rising Smartphone Usage
- Indigenous Innovation
- Scope in Micro, Small and Medium Enterprises
Trends
 Promising National Policy
 Emerging Cloud Computing Industrial Chain
Challenges:
- Lack of Knowledge and Experience
- Lesser Use of Virtualization
- Data Security Concerns
Major Domestic Players
Player 1 Player 2 Player 3 Player 4 Player 5 Player 6
Major Foreign Players
Player 1 Player 2 Player 3 Player 5
CLOUD COMPUTING MARKET IN CHINA 2014.PPT
 Raid need for Mobile Cloud Computing
 Hybrid Cloud Boom
3 CLOUD COMPUTING MARKET IN CHINA 2014.PPT
•Introduction
•Market Overview
•Cloud Computing – Pros and Cons
•Initial Opportunities for Using Clouds
•Direct Investments Scenario
•Drivers and Challenges
•Government Initiatives
•Trends
•Partnerships
•Mergers and Acquisitions
•Competitive Landscape
•Strategic Recommendations
•Appendix
4
SAMPLE
CLOUD COMPUTING MARKET IN CHINA 2014.PPT
Cloud computing – Introduction
Cloud computing is an Internet-based, pay-as-you-go and use only what you need,
computing, whereby shared resources, software, and information are provided
to computers and other devices on demand
Cloud Computing - Definition
Key Characteristics of Cloud Computing
Sold on Demand Rapid Elasticity
• Cloud computing services are
available on-demand and clients are
billed as per their respective usage
• Cloud is flexible and scalable to suit
ones business needs. One can easily
add or remove users and resources
Broad Network Access
• Client can access data from any
device wherever they are located
with a simple online access point.
Internet Computing
On-demand Computing Utility Computing
Cloud Computing - Synonyms
5
Traditional IT ecosystem Vs. cloud ecosystem (1/2)
CLOUD COMPUTING MARKET IN CHINA 2014.PPT
Works only for a single organization
Traditional IT
Ecosystem
• Text
O
n

P
r
e
m
i
s
e

Service
Providers
Network
Data
Centers
Hardware Software
Application
Hosting &
Developme
nt
6 CLOUD COMPUTING MARKET IN CHINA 2014.PPT
Structure of cloud computing
Mini-Note
Mobile
Remote Desktop
Database
Remote Server
Notebook
Personal Computer
Internet
“Amazon cloudFront”
“Proud”
“Window Azure” “OrangeScape Cloud”
“DeskAway” “Google Apps” Software as a Service
Platform as a
Service
Infrastructure as a Service
Virtual (or physical ) Server and application
Web URL for Single Entry Point
7 CLOUD COMPUTING MARKET IN CHINA 2014.PPT
Cloud computing – Categories
• Organization outsources the
devices used to support
storage, hardware, servers
and networking components
• Service provider owns the
device and is liable for
housing, running and
maintaining it
• Client usually pays on a per-
use basis
IaaS
(Infrastructure as a Service)
PaaS
(Platform as a Service)
SaaS
(Software as a Service)
Major Categories of Cloud Computing
• Service provider makes the
hosted software applications
available to customers over
Internet
• Clients rent virtualized
servers and associated
services like hardware,
operating systems, storage
and network capacity for
running existing applications
or developing and testing
new ones
• Service provider hosts
applications and makes
available to customers over
a network, usually the
Internet
• Small and medium-sized
enterprises can cut costs by
software deployment over
Internet
• With the maturity of web
services and service-
oriented architecture, SaaS
becomes more prevalent
8
SAMPLE
CLOUD COMPUTING MARKET IN CHINA 2014.PPT
Types of deployment of cloud computing
Deployment
of Cloud
Private Cloud
• Text
Community Cloud
• Text
Public Coud
• Text
Hybrid Cloud
• Text
9
Demand and supply model of cloud services
CLOUD COMPUTING MARKET IN CHINA 2014.PPT


CLOUD
Text
Text
Text
Text
Text
Text
Text
Text
Text
Text
Text
Text
Text
Text
Text
Text
D
e
m
a
n
d

D
e
m
a
n
d

S
u
p
p
l
y

S
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p
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Note: The list is not exhaustive
SAMPLE
10
Cloud computing market in China is expected to grow at a
CAGR of xx% between 20-- to --
• Cloud computing market in China is expected to reach USD xx bn in 20--
• Chinese Government has cited cloud computing as “Strategic Emerging Industry” in its 12
th
Five Year Plan
 It has been identified as a key investment area within next generation IT for development of new digital technology and infrastructure
 China Mobile had planned investments of about USD xx bn by the end of 20-- to expand its cloud offering nationwide
• Owing to high significance of Cloud computing in Information and Communications Technology (ICT), both domestic
and foreign companies are eyeing the market for a larger chunk
 Foreign giants like IBM and Microsoft are entering into partnership with the domestic vendors to gain a strong foothold in the market
 In the next 10 years China will become one of the biggest markets for cloud computing
Market Size and Growth
China Cloud Computing Market – Overview
d
a
c
0
b
e
xx
xx
20-- 20--
xx
20--
xx
X%
20-- 20--
USD bn
xx
20--
xx
Note: ERP refers to enterprise resource planning, CRM refers to client relationship management and ICT refers to Information & Communication Technology
CLOUD COMPUTING MARKET IN CHINA 2014.PPT
11 CLOUD COMPUTING MARKET IN CHINA 2014.PPT
Cloud computing takes off among Chinese SMEs
a
g
b
f
c
d
e
• With the introduction to cloud SME’s can now access all those applications earlier which would require heavy
investment if hosted in-house
• The potential for cloud computing services is huge as only 5% of Chinese SMEs now use hosted servers
• SME’s can use the pay-as-you-go option which helps them to save huge expenditure that is required for managing
IT in-House

Mainland SME
cloud services
reached USD xx bn
in 20--


Mainland SME
cloud services
adoption rose by
xx% in 20--
12
SAMPLE
Eastern China is emerging as the cloud computing hub of
the nation
Cloud Computing Hubs of China
Text
Note: MIIT refers to Ministry of Industry & Information Technology
Cloud Computing Bases

Text
Cloud Computing Base
CLOUD COMPUTING MARKET IN CHINA 2014.PPT
13
Investments in new projects in China….
Investors Investments in Projects
Text
• Text

Text

• Text

Text

• Text

Text

• Text

Text

Text

Text

• Text


Note: R&D refers to research and development
CLOUD COMPUTING MARKET IN CHINA 2014.PPT
SAMPLE
14 CLOUD COMPUTING MARKET IN CHINA 2014.PPT
Beijing
Shanghai
3. Telehouse Shanghai Jinqiao
• Text
2. Equinix China Data Center
• Text
1. Aliyun Cloud data Center
• Text
1
2, 3
Cloud computing data centers – China (1/2)
15 CLOUD COMPUTING MARKET IN CHINA 2014.PPT
Cloud computing offers numerous benefits to the client
organizations…
`
Text
Text
Text
Text
Cloud
Computing -
Pros
SAMPLE
16
`
CLOUD COMPUTING MARKET IN CHINA 2014.PPT
Being an internet based service, cloud computing comes
with its …
Text
Text
Text
Cloud
Computing -
Cons
SAMPLE
17
SAMPLE
CLOUD COMPUTING MARKET IN CHINA 2014.PPT
Initial opportunities for using clouds (1/2)
Value to the Enterprise
E
a
s
e

o
f

I
m
p
l
e
m
e
n
t
a
t
i
o
n

D
i
f
f
i
c
u
l
t

High Value
E
a
s
y

Text
Text
Text
Text
Text
Text
Text
Text
Text
Text
18
SAMPLE
CLOUD COMPUTING MARKET IN CHINA 2014.PPT
Direct Investments Scenario – Summary

• The section highlights investments made by companies between the year 2000 to 2014
• The list of investments comprise both current and pending investments
Note:
•The section summarizes the total number of investments made by the
company across industry sectors, so far
Total Investments
– Sector-wise
•The section summarizes the total number of Information Technology
investments made by the company across various geographic regions, so far
IT Investments –
Geography-wise
•The section summarizes the total number of Information Technology
investments made by the company across IT sub-segments, so far
IT Investments –
Segment-wise
19
SAMPLE
CLOUD COMPUTING MARKET IN CHINA 2014.PPT
Direct Investments – X company
X%
Y%
Z%
Total Investments – Sector-wise
IT Investments – Geography-wise
Sector 2
Sector 3
Sector 1
IT Investments – Segment-wise
70% 20% 10% 50% 30% 60% 0% 40% 80% 100% 90%
X% Y% Z%
Y%
X%
Region 2
Region 1
Segment 1
Segment 2
Segment 3
Investment Snapshot
•The company has been investing since 20--
•Maximum number of investments were seen in the
Segment 1 followed by Segment 2
 A total of xx investments were made in the IT sector
•Maximum number of investments were seen in the
Region 1
•In terms of the Sector 1, the company invested mostly
in segment 1
20 CLOUD COMPUTING MARKET IN CHINA 2014.PPT
Drivers & Challenges – Summary
Drivers
Cost Reduction
Speed, Flexibility and Responsiveness
Widespread Adoption of Internet
Rising Smartphone Usage
Indigenous Innovation
Scope in MSMEs
Challenges
Lack of Knowledge and Experience
Lesser Use of Virtualization
Data Security Concerns

21
SAMPLE
The elimination of large capex component boosts cloud
adoption by a large extent
Cost Reduction (1/3) Impact
•Cloud Computing reduces IT costs dramatically as users can replace a large up-front capital
expense with a low, pay-for-use operating expense
•Public clouds provide access to advanced applications and storage with minimum costs
•Private cloud adoption can reduce a company’s total IT cost by 25 - 30%
•Cloud computing has the ability to drastically reduce the operating expenses of a company
within a span of 5 years
 Xiwang Group in China pays only around USD 9,000 – USD 12,000 annually for cloud services avoiding
millions of dollars it would have to spent towards the maintenance of a conventional system
C
l
i
e
n
t

C
o
s
t


E
l
i
m
i
n
a
t
i
o
n

Cost of servers, software
licenses, maintenance
fees, data center space,
electricity and IT labor
Cost Comparison Among Different Solutions
Scenario On-premise Approach Using Amazon EC2 Public Cloud
Hardware
• SUN E25K: 72CPU + 1 TB
memory
• TimesTen In-Memory Database
• 150 virtual server
Cost
Factors
•Capital cost = above USD 4 mn
• License cost = above USD 1
mn/yr
• Power cost = USD 70,000/yr
• Variable cost = USD 131,000/yr
• Power cost = 0 (Assuming 24x7x365)
Energy • 40kW/hr + 40kW/hr N.A.
CLOUD COMPUTING MARKET IN CHINA 2014.PPT
22
SAMPLE
Lack of expertise and knowledge among IT executives
restricts the growth of cloud computing in China
• Chinese IT executives lack knowledge and experience in cloud computing than their
counterparts in other nations
• Chinese executives are more skeptic about the cloud performance in the long run
Lack of Knowledge and Experience
Chinese IT executives lack IT exposure
to cloud computing unlike their foreign
counterparts
Key Factors
Advanced or Expert Knowledge Level*
Chinese IT Executives Other Country’s IT Executives
21% 64%
Note: *Survey by Accenture Institute for High Performance and the Chinese Institute of Electronics’ Cloud Computing Expert Committee (CIE) on 103 IT executives and five
academic researchers from major Chinese enterprises, government agencies, and universities along with some global respondents, Nov-Dec 2009
Global firms who provide wide range of cloud
services in other countries are less active in China
Chinese organizations have limited options
of cloud services
Immature cloud market due to
limited research on cloud computing applications
Impact
CLOUD COMPUTING MARKET IN CHINA 2014.PPT
23
SAMPLE
Chinese government intend to invest USD 173.2 bn for the
development of key domestic cloud computing hubs
Initiatives Taken by Chinese Government
Text
Text
Text
Text
Text
CLOUD COMPUTING MARKET IN CHINA 2014.PPT
24
SAMPLE
Local government aims to create cloud computing bases in
the cities of Beijing, Shanghai, Chongqing and Harbin
Initiatives by Local Government
•Text
 Text  Text
 Text
City Major Participants
Beijing Baidu Inc, Lenovo Group Ltd and China Mobile Ltd. will focus on cloud search and storage
Shanghai
Shanda Interactive Entertainment Ltd will work on cloud computing for the cultural sector and China
UnionPay will work on electronic payments and commerce
Hangzhou Alibaba Group Holding Ltd to develop technology for small and micro-sized enterprises
Southwestern Municipality of Chongqing
Beijing’s City Government
Local government in Shanghai
Harbin, capital of Heilongjiang Province
CLOUD COMPUTING MARKET IN CHINA 2014.PPT
25
Summary – Trends
CLOUD COMPUTING MARKET IN CHINA 2014.PPT
Rapid Growth of Mobile Cloud
Computing
Hybrid Cloud Boom
Promising
National Policy
Emerging Cloud
Computing
Industrial Chain
Trends
26
SAMPLE
Chinese Government is giving greater importance to the
opportunities offered by cloud computing
Promising National Policy
Chinese
Government is
financially
supporting cloud
projects
3G, geospatial Information
Industry (3S), things internet,
information security and
cloud computing
New generation
of information technology
Gets highest priority
among China's current strategic
and emerging industries
Process of other strategic growth of
new industries will be accelerated
Investors paying more attention to cloud computing companies
Use of digital,
information, intelligence
Chinese national policy
supports cloud computing
business
• China’s National Development and Reform Commission has established a
Cloud Computing Special Fund to invest in 15 pilot projects in Beijing,
Shanghai, Shenzhen, Hangzhou and Wuxi
• Shanghai issued 3.1 billion 3-year plan to promote 13 projects
• Beijing clouds program already started, and strived to world-class cloud
computing base
CLOUD COMPUTING MARKET IN CHINA 2014.PPT
27
SAMPLE
Partnerships on Cloud Computing in China during 2012-13
Investors Partnerships
Text • Text
Text • Text
Text • Text
Text • Text
Text • Text
Text • Text
Text • Text
CLOUD COMPUTING MARKET IN CHINA 2014.PPT
28
SAMPLE
Mergers & Acquisitions(2012-2013)
CLOUD COMPUTING MARKET IN CHINA 2014.PPT
Announced Date Closed Date Target Buyer/Investors Sellers Size (USD mn)
Text Text Text Text Text Text
29
SAMPLE
Porter’s Five Forces Analysis
Competitive Rivalry
• Text
Bargaining Power of Buyers
• Text
Threat of New Entrants
• Text
Impact
High
Impact
High
Impact
Medium
Bargaining Power of Suppliers
• Text

Impact
Medium to High
Threat of Substitutes
• Text
Impact
Low
CLOUD COMPUTING MARKET IN CHINA 2014.PPT
30
SAMPLE
Competitive Benchmarking (x/x)
Public Trading Comparable (FY 20--)
Player 1 Player 2 Player 3 Player 4
Market Capitalization (USD mn) xx xx xx xx
Share Price (USD) xx xx xx xx
EV/EBITDA (USD ) xx xx xx xx
EV/Revenue (USD) xx xx xx xx
PE Ratio xx xx xx xx
CLOUD COMPUTING MARKET IN CHINA 2014.PPT
31
SAMPLE
Key Ratios of Major 4 Companies – Operational Basis (FY 20--) (x/x)
Competitive Benchmarking (x/x)
• xxx
0
5
10
15
20
25
xx
xx
Player 3 Player 1 Player 2
xx
xx
xx
xx
xx
xx
Player 4
Inventory Turnover Ratio Debtors Turnover Ratio
Note: Assuming all sales are credit sales
CLOUD COMPUTING MARKET IN CHINA 2014.PPT
32
SAMPLE
Public: Domestic Company – Player 1 (x/x)
Key People
Products and Services
Company Information Locations – China
Corporate Address
Tel No.
Fax No.
Website
Year of Incorporation
Ticker Symbol
Stock Exchange
Name Designation
Headquarters
CLOUD COMPUTING MARKET IN CHINA 2014.PPT
Category Products/Services
Cloud related
products
33
SAMPLE
Financial Snapshot Key Ratios
Financial Summary
• The company earned a net profit of USD xx mn in FY 20--, as
compared to a net profit of USD xx mn in FY 20--
• The company reported total Income of USD xx mn in FY 20--,
registering an increase of xx % over FY 20--
• The company earned an operating margin of xx% in FY 20-- an
increase of xx percentage points over FY 20--
• The company reported debt to equity ratio of xx in FY 20--, an
increase of xx % over FY 20--
Financial Summary
Total Income Net Profit/Loss
c
b
b
0 0
a a
y
x
20--
y
y
Profit
USD mn
x
Total Income
USD mn
x
20--
y
x
20-- 20--
Indicators Value (12/05/2014)
Market Capitalization (USD)
xx
Total Enterprise Value (USD)
xx
EPS (USD)
xx
PE Ratio (Absolute) xx
Improved Decline
Particulars
y-o-y change
(20--)
20-- 20-- 20-- 20--
Profitability Ratios

Operating Margin
Net Margin
Profit Before Tax Margin
Return on Equity
Return on Capital Employed
Return on Working Capital
Return on Assets
Return on Fixed Assets
Cost Ratios
Operating costs (% of Sales)
Administration costs (% of
Sales)
Interest costs (% of Sales)
Liquidity Ratios
Current Ratio
Cash Ratio
Leverage Ratios
Debt to Equity Ratio
Debt to Capital Ratio
Interest Coverage Ratio
Efficiency Ratios
Fixed Asset Turnover
Asset Turnover
Current Asset Turnover
Working Capital Turnover
Capital Employed Turnover
CLOUD COMPUTING MARKET IN CHINA 2014.PPT
Public: Domestic Company – Player 1 (x/x)
34
SAMPLE
A%
B%
0%
Z%
Y%
20--
x
Z%
Y%
20--
x
0%
A%
B%
20--
x x
20--
Y% Y%
20--
x
Y%
Industry1
Region 1 Region 2
Key Business Segments Key Geographic Segments
Key Recent Developments
Description News
Overview

Approval

Joint Venture & Cloud news

CLOUD COMPUTING MARKET IN CHINA 2014.PPT
Public: Domestic Company – Player 1 (x/x)
35
SAMPLE
• Text
• Text

• Text

• Text

T
O
W
S
Strength Weakness
Opportunity Threat
CLOUD COMPUTING MARKET IN CHINA 2014.PPT
Public: Domestic Company – Player 1 (x/x)
36
SAMPLE
Key People
Products and Services
Company Information Locations – China
Corporate Address
Tel No.
Fax No.
Website
Year of Incorporation
Category Products/Services
Solutions
Services
Product
Name Designation
Regional Offices
CLOUD COMPUTING MARKET IN CHINA 2014.PPT
Private: Foreign Company – Player 2 (x/x)
37
SAMPLE
Financial Snapshot Key Ratios
Financial Summary
• The company earned a net profit of USD xx mn in FY 20--, as
compared to a net profit of USD xx mn in FY 20--
• The company reported total Income of USD xx mn in FY 20--,
registering an increase of xx % over FY 20--
• The company earned an operating margin of xx% in FY 20-- an
increase of xx percentage points over FY 20--
• The company reported debt to equity ratio of xx in FY 20--, an
increase of xx % over FY 20--
Financial Summary
Total Income Net Profit/Loss
c
b
0
b
0
a a
x
y
Total Income
USD mn
x
y
Profit
USD mn
20--
y
x
x
20--
y
20-- 20--
Indicators Value (12/05/2014)
Market Capitalization (USD)
xx
Total Enterprise Value (USD)
xx
EPS (USD)
xx
PE Ratio (Absolute) xx
Improved Decline
Particulars
y-o-y change
(20--)
20-- 20-- 20-- 20--
Profitability Ratios

Operating Margin
Net Margin
Profit Before Tax Margin
Return on Equity
Return on Capital Employed
Return on Working Capital
Return on Assets
Return on Fixed Assets
Cost Ratios
Operating costs (% of Sales)
Administration costs (% of
Sales)
Interest costs (% of Sales)
Liquidity Ratios
Current Ratio
Cash Ratio
Leverage Ratios
Debt to Equity Ratio
Debt to Capital Ratio
Interest Coverage Ratio
Efficiency Ratios
Fixed Asset Turnover
Asset Turnover
Current Asset Turnover
Working Capital Turnover
Capital Employed Turnover
CLOUD COMPUTING MARKET IN CHINA 2014.PPT
Private: Foreign Company – Player 2 (x/x)
38
SAMPLE
0%
B%
A%
Z%
x
Y%
x
20--
Y%
20--
Z%
A%
0%
B%
x
20--
Y% Y%
20--
x x
Y%
20--
Industry1
Region 1 Region 2
Key Business Segments Key Geographic Segments
Key Recent Developments
Description News
Overview

Approval

Joint Venture & Cloud news

CLOUD COMPUTING MARKET IN CHINA 2014.PPT
Private: Foreign Company – Player 2 (x/x)
39
SAMPLE
• Text

• Text
• Text
• Text

T
O
W
S
Strength Weakness
Opportunity Threat
CLOUD COMPUTING MARKET IN CHINA 2014.PPT
Private: Foreign Company – Player 2 (x/x)
40
SAMPLE
CLOUD COMPUTING MARKET IN CHINA 2014.PPT
Vendor Name Headquarter
Address
Total
Revenue
(USD mn)
Net
Income
(USD mn)
IaaS PaaS SaaS Others
Player 1 Text xx xx Text Text Text Text
Player 2 Text xx xx Text Text Text Text
Other leading cloud service providers in China (x/x)
41
SAMPLE
Increase
Affordability and
Flexibility of
Cloud Solutions
Strategy Adoption Area
Offer Different Types
of Hybrid and Mobile
Cloud Solution
Regional Growth
Introduce Loyalty
Programs and
Increase Benefit
Awareness
Strategic Recommendations (1/2)
• Text
• Text
• Text
• Text
CLOUD COMPUTING MARKET IN CHINA 2014.PPT
42
SAMPLE
Strategic Recommendations (2/2)
Know Your Customer (KYC)
• Text
Awareness Creation
• Text
Right Selling
• Text
Localized Offerings
• Text
CLOUD COMPUTING MARKET IN CHINA 2014.PPT
43
Thank you for the attention
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