Market Research Report : Cloud computing market in china 2014 - Sample by Netscribes, Inc.

Cloud Computing Market â&#x20AC;&#x201C; China July 2014

Executive Summary Market

Drivers & Challenges

 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 Drivers:

Challenges:

- Cost Reduction

- Lack of Knowledge and Experience

- Speed, Flexibility and Responsiveness

- Lesser Use of Virtualization

- Widespread Adoption of Internet

- Data Security Concerns

- Rising Smartphone Usage - Indigenous Innovation - Scope in Micro, Small and Medium Enterprises

Trends Government Initiatives

 Promising National Policy

 Raid need for Mobile Cloud Computing

 Emerging Cloud Computing Industrial Chain

 Hybrid Cloud Boom

 Initiatives by Chinese Government  Pilot Projects Bases for Cloud Computing  Initiatives by Local Government

Major Domestic Players Player 1

Competition

Player 2

Player 3

Player 4

Player 5

Player 6

Major Foreign Players Player 1

Player 2

CLOUD COMPUTING MARKET IN CHINA 2014.PPT

Player 3

Player 5

•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 CLOUD COMPUTING MARKET IN CHINA 2014.PPT

Cloud computing – Introduction

SAMPLE

Cloud Computing - Definition 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 - Synonyms

Internet Computing

On-demand Computing

Utility Computing

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

CLOUD COMPUTING MARKET IN CHINA 2014.PPT

Broad Network Access • Client can access data from any device wherever they are located with a simple online access point.

Traditional IT ecosystem Vs. cloud ecosystem (1/2) Traditional IT Ecosystem

Network

Application Hosting & Developme nt

Service Providers

Works only for a single organization

Hardware

â&#x20AC;˘ Text

On Premise

Software

Data Centers

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Structure of cloud computing Personal Computer

Mini-Note

Notebook

Internet

Mobile

Remote Desktop

Database Remote Server

Web URL for Single Entry Point “DeskAway”

Software as a Service

“OrangeScape Cloud”

Platform as a Service

“Google Apps”

“Window Azure”

Infrastructure as a Service “Proud”

“Amazon cloudFront” Virtual (or physical ) Server and application

CLOUD COMPUTING MARKET IN CHINA 2014.PPT

Cloud computing – Categories Major Categories of Cloud Computing IaaS (Infrastructure as a Service)

PaaS (Platform as a Service)

SaaS (Software as a Service)

• Organization outsources the devices used to support storage, hardware, servers and networking components

• Service provider makes the hosted software applications available to customers over Internet

• Service provider owns the device and is liable for housing, running and maintaining it

• 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

• Client usually pays on a peruse basis

CLOUD COMPUTING MARKET IN CHINA 2014.PPT

• Small and medium-sized enterprises can cut costs by software deployment over Internet • With the maturity of web services and serviceoriented architecture, SaaS becomes more prevalent

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Types of deployment of cloud computing Private Cloud

• Text

Community Cloud

• Text

Deployment of Cloud

Public Coud

• Text

Hybrid Cloud • Text

CLOUD COMPUTING MARKET IN CHINA 2014.PPT

SAMPLE

Demand and supply model of cloud services Text

Text

Supply

Text

Demand

Text

CLOUD Text

Text

Demand

Text

Supply

Text

Note: The list is not exhaustive CLOUD COMPUTING MARKET IN CHINA 2014.PPT

Cloud computing market in China is expected to grow at a CAGR of xx% between 20-- to -China Cloud Computing Market – Overview • 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 12th 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 USD bn xx

a b

X% xx

c d e

xx xx

20--

0 20--

20--

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20--

20-10

Cloud computing takes off among Chinese SMEs b

Mainland SME cloud services adoption rose by xx% in 20--

c g

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

d f 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

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Eastern China is emerging as the cloud computing hub of the nation

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Cloud Computing Hubs of China Cloud Computing Base

Text

Cloud Computing Bases

Text

Note: MIIT refers to Ministry of Industry & Information Technology CLOUD COMPUTING MARKET IN CHINA 2014.PPT

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Investments in new projects in China…. Investors Text

Investments in Projects • Text

Text

• Text

Text

• Text

Text

• Text

Text

• Text

Note: R&D refers to research and development CLOUD COMPUTING MARKET IN CHINA 2014.PPT

Cloud computing data centers – China (1/2) 1. Aliyun Cloud data Center 1 Beijing

• Text

2,3 Shanghai

2. Equinix China Data Center

3. Telehouse Shanghai Jinqiao • Text

• Text

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Cloud computing offers numerous benefits to the client organizationsâ&#x20AC;Ś

SAMPLE

Text

Text Cloud Computing ` Pros Text

Text

CLOUD COMPUTING MARKET IN CHINA 2014.PPT

Being an internet based service, cloud computing comes with its â&#x20AC;Ś

SAMPLE

Text

Cloud Computing - ` Cons

Text

CLOUD COMPUTING MARKET IN CHINA 2014.PPT

SAMPLE

Ease of Implementation

Easy

Initial opportunities for using clouds (1/2)

Text

Text Text

Difficult

Text Text

Value to the Enterprise

High Value

Text

CLOUD COMPUTING MARKET IN CHINA 2014.PPT

SAMPLE

Direct Investments Scenario – Summary

Total Investments – Sector-wise

• The section summarizes the total number of investments made by the company across industry sectors, so far

IT Investments – Geography-wise

• The section summarizes the total number of Information Technology investments made by the company across various geographic regions, so far

IT Investments – Segment-wise

• The section summarizes the total number of Information Technology investments made by the company across IT sub-segments, so far

Note: • The section highlights investments made by companies between the year 2000 to 2014 • The list of investments comprise both current and pending investments

CLOUD COMPUTING MARKET IN CHINA 2014.PPT

Direct Investments – X company

IT Investments – Geography-wise

Total Investments – Sector-wise Y%

SAMPLE

Y% Sector 1 Sector 2 Sector 3 Region 1 X%

IT Investments – Segment-wise

Region 2

Investment Snapshot • The company has been investing since 20--

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

• 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 Segment 1

• In terms of the Sector 1, the company invested mostly in segment 1

Segment 2 Segment 3 CLOUD COMPUTING MARKET IN CHINA 2014.PPT

Drivers & Challenges â&#x20AC;&#x201C; Summary

Drivers Challenges

Cost Reduction Speed, Flexibility and Responsiveness Widespread Adoption of Internet Rising Smartphone Usage

Lack of Knowledge and Experience Lesser Use of Virtualization Data Security Concerns

Indigenous Innovation Scope in MSMEs

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The elimination of large capex component boosts cloud adoption by a large extent

SAMPLE

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

Cost Comparison Among Different Solutions 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

Client Cost Elimination

Scenario

Cost of servers, software licenses, maintenance fees, data center space, electricity and IT labor

N.A.

CLOUD COMPUTING MARKET IN CHINA 2014.PPT

Lack of expertise and knowledge among IT executives restricts the growth of cloud computing in China

SAMPLE

Lack of Knowledge and Experience

Impact

• 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 Advanced or Expert Knowledge Level* Chinese IT Executives

Other Country’s IT Executives

21%

64% Key Factors Chinese IT executives lack IT exposure to cloud computing unlike their foreign counterparts

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 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 CLOUD COMPUTING MARKET IN CHINA 2014.PPT

Chinese government intend to invest USD 173.2 bn for the development of key domestic cloud computing hubs

SAMPLE

Initiatives Taken by Chinese Government

Text

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Local government aims to create cloud computing bases in the cities of Beijing, Shanghai, Chongqing and Harbin

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Initiatives by Local Government Beijing’s City Government

Southwestern Municipality of Chongqing

 Text

• Text

Local government in Shanghai

Harbin, capital of Heilongjiang Province

 Text

City Beijing

Major Participants 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

CLOUD COMPUTING MARKET IN CHINA 2014.PPT

Summary â&#x20AC;&#x201C; Trends

Emerging Cloud Computing Industrial Chain

Promising National Policy

Trends

Rapid Growth of Mobile Cloud Computing

Hybrid Cloud Boom

CLOUD COMPUTING MARKET IN CHINA 2014.PPT

Chinese Government is giving greater importance to the opportunities offered by cloud computing

SAMPLE

Promising National Policy

New generation of information technology

Use of digital, information, intelligence

3G, geospatial Information Industry (3S), things internet, information security and cloud computing

Gets highest priority among China's current strategic and emerging industries

Chinese Government is financially supporting cloud projects

Process of other strategic growth of new industries will be accelerated

Investors paying more attention to cloud computing companies

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

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

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Mergers & Acquisitions(2012-2013) Announced Date Text

Closed Date Text

Target Text

Buyer/Investors Text

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Sellers Text

Size (USD mn) Text

Porter’s Five Forces Analysis

SAMPLE Impact High

Threat of New Entrants • Text

Impact Medium to High

Bargaining Power of Suppliers • Text

Impact Medium

Competitive Rivalry

Impact High

Bargaining Power of Buyers • Text

• Text

Impact Low Threat of Substitutes • Text

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Competitive Benchmarking (x/x)

SAMPLE

Public Trading Comparable (FY 20--) Player 1

Player 2

Player 3

Player 4

Market Capitalization (USD mn)

Share Price (USD)

EV/EBITDA (USD )

EV/Revenue (USD)

PE Ratio

CLOUD COMPUTING MARKET IN CHINA 2014.PPT

Competitive Benchmarking (x/x)

SAMPLE

Key Ratios of Major 4 Companies – Operational Basis (FY 20--) (x/x) Inventory Turnover Ratio

Debtors Turnover Ratio

25 20 15

10 5 0

xx xx

xx Player 1

Player 2

Player 3

Player 4

• xxx

Note: Assuming all sales are credit sales CLOUD COMPUTING MARKET IN CHINA 2014.PPT

SAMPLE

Public: Domestic Company – Player 1 (x/x) Company Information

Locations – China

Corporate Address Tel No. Fax No. Website Year of Incorporation Ticker Symbol

Stock Exchange

Products and Services Category

Headquarters Products/Services

Key People Cloud related products

Name

CLOUD COMPUTING MARKET IN CHINA 2014.PPT

Designation

SAMPLE

Public: Domestic Company – Player 1 (x/x) Financial Snapshot Total Income USD mn

Key Ratios

Total Income

a b 0

Net Profit/Loss

Profit USD mn

x x y

20--

Financial Summary

y 20--

20--

y-o-y change (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

• 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 Market Capitalization (USD) Total Enterprise Value (USD) EPS (USD) PE Ratio (Absolute)

c 0

• 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--

Indicators

Particulars

Value (12/05/2014) xx xx xx xx

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 Improved

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Decline

SAMPLE

Public: Domestic Company â&#x20AC;&#x201C; Player 1 (x/x) Key Business Segments

Key Geographic Segments

Industry1 x

Region 1 x A%

B% 0%

0% 20--

20--

Region 2

20--

Key Recent Developments Description

News

Overview Approval Joint Venture & Cloud news

CLOUD COMPUTING MARKET IN CHINA 2014.PPT

SAMPLE

Public: Domestic Company – Player 1 (x/x)

• Text

Strength

Weakness

Opportunity

Threat

• Text

CLOUD COMPUTING MARKET IN CHINA 2014.PPT

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Private: Foreign Company – Player 2 (x/x) Company Information

Locations – China

Corporate Address Tel No. Fax No. Website

Year of Incorporation

Products and Services Category Solutions

Services

Regional Offices

Products/Services

Key People Name

Designation

Product

CLOUD COMPUTING MARKET IN CHINA 2014.PPT

SAMPLE

Private: Foreign Company – Player 2 (x/x) Financial Snapshot Total Income USD mn

Key Ratios

Total Income

a b 0

Net Profit/Loss

Profit USD mn

x x y

20--

Financial Summary

y 20--

20--

y-o-y change (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

• The company reported debt to equity ratio of xx in FY 20--, an increase of xx % over FY 20--

Financial Summary Market Capitalization (USD) Total Enterprise Value (USD) EPS (USD) PE Ratio (Absolute)

c 0

• 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--

Indicators

Particulars

Value (12/05/2014) xx xx xx xx

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 Improved

CLOUD COMPUTING MARKET IN CHINA 2014.PPT

Decline

SAMPLE

Private: Foreign Company â&#x20AC;&#x201C; Player 2 (x/x) Key Business Segments

Key Geographic Segments

Industry1 x

Region 1 x A%

B% 0%

0% 20--

20--

Region 2

20--

Key Recent Developments Description

News

Overview Approval Joint Venture & Cloud news

CLOUD COMPUTING MARKET IN CHINA 2014.PPT

SAMPLE

Private: Foreign Company – Player 2 (x/x)

• Text

Strength

Weakness

Opportunity

Threat

• Text

CLOUD COMPUTING MARKET IN CHINA 2014.PPT

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Other leading cloud service providers in China (x/x) Vendor Name

Headquarter Address

Total Revenue (USD mn)

Net Income (USD mn)

Player 1

Text

Player 2

Text

IaaS

Text

CLOUD COMPUTING MARKET IN CHINA 2014.PPT

PaaS

SaaS

Others

Text

Strategic Recommendations (1/2) Strategy

SAMPLE Adoption Area

Increase Affordability and Flexibility of Cloud Solutions

• Text

Offer Different Types of Hybrid and Mobile Cloud Solution

• Text

Introduce Loyalty Programs and Regional Growth Increase Benefit Awareness

• Text

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Strategic Recommendations (2/2)

SAMPLE

Know Your Customer (KYC)

• Text

Awareness Creation

• Text

Localized Offerings

Right Selling

• Text

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