The global cloud ecosystem shows a clear split, with China dominated by an almost completely different set of companies compared to the rest of the world - a divide as much due to political reasons as economic factors.

Data supplied by Synergy Research Group shows that the cloudy Big Three - Amazon, Microsoft, and Google - are runaway leaders in the worldwide market, based on revenues from Q2 this year.

The global market shares of that trio stand at 32, 23, and 12 percent respectively, accounting for two-thirds of the entire market between them. No other company in the world claims more than 4 percent, demonstrating their dominance.

To be a market kingpin requires huge scale, deep pockets, a worldwide network of hyperscale infrastructure, as well as a long-term corporate commitment, notes Synergy. These are major barriers for any challengers to the established cloud titans.

In the US, the Big Three are followed by Oracle, Salesforce, and IBM, and the same ranking holds in Europe and across most of the rest of the world.

However, slotting into fourth place on the global stage ahead of Oracle and Salesforce is Chinese cloud and e-commerce giant Alibaba.

Described as China's version of Amazon, Alibaba is the largest player in the Middle Kingdom. The cloud market rankings in this country are noticeably different, with Tencent in second place, followed by China Telecom, Huawei, China Unicom, and China Mobile.

Synergy notes that due to geopolitical and historical factors, western cloud providers are severely restricted from competing in the Chinese market, and says the ecosystem here is big enough to support multiple local companies.

Microsoft's Azure and Amazon's AWS do actually operate in China, but to comply with the government's legal and regulatory stipulations, they are required to operate through local partner companies.

In Microsoft's case, Azure is operated by a company called 21Vianet, a wholly owned subsidiary of Beijing 21Vianet Broadband Data Center Ltd, while AWS has a Beijing region run by Beijing Sinnet Technology Ltd (Sinnet), and a Ningxia region controlled by Ningxia Western Cloud Data Technology Ltd (NWCD).

Google Cloud Platform is not available in mainland China because of the requirement that overseas cloud providers partner with an approved local company. Google told us that unlike rivals, it chooses not to.

So, while the Chinese may chafe at Washington's restrictions and sanctions on its companies doing business in the US, Beijing ensures its own domestic cloud market is dominated by homegrown operators.

Synergy's data indicates that global cloud infrastructure service revenues reached $79 billion in Q2, including IaaS, PaaS, and hosted private cloud services in this figure.

The US remains by far the largest cloud market, followed some way behind by China, itself way ahead of other countries, led by Japan, UK, Germany and India. In fact, the US market is so big that it is larger than the entire APAC region, Synergy notes.

"This is quite simply a game of scale. Between them Amazon, Microsoft, and Google now have a global network of over 560 operational hyperscale datacenters," said Synergy Research Chief Analyst John Dinsdale in an statement.

"In Q2 alone, they invested over $48 billion in capex, most of which went towards building, equipping, and updating their datacenters and associated networks," he added.

However, there are still some opportunities for local companies to compete, according to Synergy, as the cloud ecosystem is a huge and growing market able to support a long tail of medium-to-small players in all regions or major countries.

"The key is to carefully focus on specific services, industry verticals, or customers, where they can demonstrate an ongoing competitive advantage relative to the industry giants," Dinsdale said. ®

https://www.theregister.com//2024/08/21/china_cloud_market/