Microsoft eyes bigger China presence

Tech giant's cloud computing capacity in nation surges 12 times since 2014

Microsoft Corp is ratcheting up its efforts to tap into the burgeoning Chinese cloud computing market as the United States-based technology firm is scheduled to unveil new hybrid cloud capabilities in China in the second half.

In cloud computing, public cloud is delivered via the internet and shared across organizations. Private cloud is cloud computing that is dedicated solely to one organization. Hybrid cloud is a solution that uses both public and private clouds.

Microsoft's new hybrid cloud move comes after the company brought a new data center region online in China in March, which means its cloud computing capacity in the nation has been boosted twelvefold since 2014 amid rapid growth.

Li Ming, Azure China strategy lead and director of product marketing at Microsoft, said the company is dedicated to using its digital technologies to help both multinationals come to China and Chinese companies to go global, driving their digital transformation strategies.

Microsoft said its new hybrid cloud capabilities are based in part on existing Azure cloud services such as Azure Arc－an important component of Microsoft's hybrid cloud strategy. Introduced in 2019, the service enables administrators to manage on-premises servers through the same interface that they use to orchestrate infrastructure resources in Microsoft's public cloud. For administrators, performing infrastructure maintenance tasks in a single, centralized interface can be more efficient than the traditional approach of using multiple tools.

Chris Tao, Azure business group leader at Microsoft China, said the hybrid cloud market in China has maintained a vigorous and rapid development trajectory.

Tao said the popularity of private cloud and hybrid cloud has always been an important feature in the Chinese market, which is quite different from other markets.

Most other regions around the world are dominated by public cloud and only supplemented by private cloud, but the consensus Microsoft has seen in the Chinese market is that, the government, enterprise industries, corporate customers and foreign companies are all very interested in the hybrid cloud strategy, Tao said.

To better meet local demand, Microsoft is bringing more hybrid cloud technologies to China. This is part of the US tech heavyweight's broader, long-term commitment to the Chinese market. Having been here for 30 years, Microsoft aims to better ride the next wave of the nation's digital development.

Joe Bao, president of Microsoft China, said in an interview with China Daily earlier this year that the new data center Microsoft launched in March in North China is the biggest one it has in the China market so far.

Currently, about 40 percent of Microsoft's China cloud computing business comes from helping multinationals set up such operations in the nation, 40 percent from helping Chinese companies go global, and about 20 percent from delivering specific industry expertise within China, Bao said.

He said Microsoft now has hundreds of thousands of developers, partners and customers on its cloud in the China market, and its local cloud business has been outpacing the average industry performance and its internal targets.

"We are seeing on average over 50 percent year-on-year growth in areas like helping multinationals land in China," Bao added.

Amid the accelerated digital transformation in the world's second-largest economy, Microsoft is prioritizing local solutions for automotive, healthcare, retail, manufacturing and low-carbon development, the senior executive said.

Market research firm Canalys said Microsoft held a 21 percent market share in global cloud infrastructure services spending in the first quarter, making it the second-largest cloud services provider after Amazon Web Services.

"Cloud has continued to be a hot market, and transformation strategies are emphasizing digital resiliency to face the market challenges of today and tomorrow," said Blake Murray, research analyst at Canalys. "To be effective in resiliency planning, customers are turning to channel partners with the technical and consulting skills to help them effectively embrace hyper-scale cloud services."

In the first quarter, China continued to be the leading growth market for cloud infrastructure services expenditure. Such spending on the Chinese mainland hit $7.3 billion in the first three months, up 21 percent from a year ago and accounting for 13 percent of the global total, Canalys said.

Charlie Dai, principal analyst at Forrester, a business consultancy, said as the first global vendor to commercialize its public cloud operations in China, Microsoft Azure has gained the trust of enterprises and sustained local business expansion through progressive localization of its services, ecosystem synergy between enterprise collaboration tools, digital operation platforms and Azure solutions.

The strategic local partnerships Microsoft Azure has built with its leading position in the global public cloud market also help drive its rapid growth in China, Dai added.

But challenges also exist, including fierce competition from players such as Alibaba Group Holding Ltd, Tencent Holdings Ltd and Huawei Technologies Co.

"Healthy competition makes us all better. Microsoft's unique advantage lies in our global footprint, including more than 200 physical data centers across 34 markets, technology innovation, as well as our commitments to security and compliance," Bao added.