The east-west computing resource transfer was the most-watched phrase of this year’s Two Sessions. The launch of the national infrastructure project drew attention across the IT industry, and the three telecom operators together with Huawei, Tencent, Alibaba, Baidu and ByteDance have each announced their plans. Several analysts expect the project to drive more than RMB 100 billion of cloud-related investment a year, and a new round of competition among cloud vendors has quietly begun.
Who builds the new data centres
The project lands on ten national data centre clusters, which will push some regions to expand or add new data centre investment. As the core infrastructure of cloud computing, upgraded data centres underpin better cloud services, which makes them the ground operators and internet companies both want.
China’s IDC market is dominated by the three operators. CICC’s research notes that all three have already deployed large-scale capacity in the four hotspots — Beijing-Tianjin-Hebei, the Yangtze Delta, the Greater Bay Area and Chengdu-Chongqing — and their existing footprints largely match the hub locations and service positioning set out in the plan.
The internet companies run fewer data centres but lead on green power and cloud capability. Alibaba’s Zhangbei centre, Tencent’s Gui’an Qixing centre, Huawei’s Ulanqab cloud centre, Baidu’s Yangquan centre and ByteDance’s Huailai Guanting Lake green centre all draw partly on wind and solar, and use AI and cloud tooling to cut cost and energy use, differentiating on technology, low carbon and intelligent operation.
‘As providers of capacity infrastructure and backbone transport, operators are better at allocating resources as a whole and have an advantage serving government and state-owned clients,’ said Zhang Yi, CEO of iiMedia Research. ‘Internet companies have more advanced technology and more flexible business models and capacity services, closer to SMEs and consumers.’
‘The project has to solve secure, efficient transmission between hubs, and operators are irreplaceable in building and optimising hub networks,’ said Yao Xuechao, a senior analyst at CCID. ‘Turning capacity into a service is also a priority, and new or upgraded data centres will be cloud-native ones — where the big internet vendors have deep experience.’
Decentralised cloud becomes the new battleground
The plan sets up eight computing hubs, four in the east and four in the west, with large-scale cross-region data transfer and in-region capacity scheduling. That puts decentralised cloud computing at the centre of the argument over who sets the agenda.
Decentralised cloud rests on blockchain at the base layer: data sits across many individual compute nodes, expanding storage while reducing marginal cost, with better data security and privacy, a lower entry barrier, and more elastic, lower-latency service. The project itself, laying capacity across a national network and pushing storage and computation down to the hub nodes, is a step in the same direction.
‘Placing a user’s cloud resources near the physical location of the data or the workload cuts latency effectively,’ said Song Guohuan, cloud product director at China Unicom’s digital technology arm. ‘A distributed cloud continuum of public, edge and private clouds from several providers optimises scheduling and lowers operating cost. Operators are investing in edge and distributed cloud because the decentralising trend becomes more obvious inside this project.’
All three operators treat cloud-network convergence as core strategy, with edge computing as the key link. China Mobile’s cloud unit has said that distributed cloud on a converged cloud-network base is its advantage and its future. China Telecom’s upgraded Tianyi Cloud 4.0 moved fully to distributed cloud, offering services at local, edge, customer and on-site nodes. China Unicom launched seven scenario clouds including 5G edge cloud and has built more than 1,000 standardised edge nodes covering over 300 cities.
The internet companies are moving down from centralised public cloud to distributed regional cloud. Alibaba Cloud uses its Apsara operating system as the management core and an edge OS to sink capacity to the edge and lift device capacity upward, with coverage across more than 300 edge nodes in over 30 provinces. Tencent Cloud announced a distributed cloud strategy around its Orca cloud-native OS, folding WeChat’s terminal scenarios into the mix. Huawei Cloud released a full distributed cloud product line and extends cloud-native infrastructure to wherever the workload sits.
Consensus is forming. Analysts expect decentralised cloud to grow faster than centralised cloud over the next five years, and see the two coexisting rather than one replacing the other.
Who leads the next decade
In cloud’s first half, consumer internet delivered the dividends and the internet giants led: Alibaba Cloud, Tencent Cloud, Huawei Cloud and Baidu Cloud took most of the domestic market, with Alibaba alone holding nearly half. The industrial internet era gives the rest a fresh opening, and on current form the operators are the likeliest to break through.
IDC’s tracker for Q3 2021 puts Alibaba Cloud at 39.01% of the public cloud market, Tencent Cloud at 10.92%, Huawei Cloud at 10.74% and Tianyi Cloud at 8.98% — nearly 70% between four players. Mobile Cloud grew revenue 135% and climbed to seventh; Unicom Cloud ranked first on both share growth and revenue growth, at 167.67% and 296.35%.
‘Operators bring three bases to cloud: a hardware base of nationwide cloud pools and network, a service base of sales and support covering almost every administrative unit, and a software base of platform operations fused with industry,’ said Song Guohuan. ‘But they need breakthroughs in data intelligence and a self-operated application ecosystem. The biggest opportunity here is the further fusion of the 5G and cloud supply chains. Over the next decade the operators could become the locomotive.’
Others are more cautious. ‘International experience says operators find cloud hard,’ said Yang Guang, a senior analyst at Strategy Analytics. ‘They hold the resources, but software and application development has always been their weak point, everywhere in the world. It comes down to product and service capability.’
Private cloud may be the wider opportunity. ‘Public cloud is capital-heavy and long-cycle, scale effects dominate, and the leaders’ head start has settled the landscape,’ said Yao Xuechao. ‘Private cloud differs by industry and firm, so no one wins it all — cloud vendors, operators, integrators, hardware makers and private-cloud specialists can all compete on their own strengths.’
‘Every generation of communications technology upgrades the computing platform. 1G to 4G catalysed mainframes, servers, the internet and mobile internet, and produced informatisation, digitalisation and e-commerce. China now leads on 5G, and 5G and 6G will transform the next cloud platform, with ecosystem-scale business models arriving behind it. The domestic market structure will be reshaped within a few years,’ Song Guohuan argues.
‘For the industry as a whole this is a rare opening,’ said Zhang Yi. ‘Operators and internet companies are on the same starting line again. How the new cloud ecosystem gets built is the real test — whoever positions best holds the advantage.’
Republished for information. The original text has not been independently verified and does not necessarily reflect our views.
Want to talk through what you just read?
We work end to end, from product design to launch. Tell us about your scenario and we can start there.
Shenzhen XZS Technology Co., Ltd. · Tel 0755-82494862 · 13760424861