Amazon brings its cloud computing to China

AWS may seem new to China, but it has already counted "thousands" of Chinese companies, including Xiaomi Corp, Qihoo 360 Technology Co Ltd and TCL Corp, as its clients. They have already used the company's cloud-computing service when doing business outside China.

"These companies, which have the experience of using Amazon's cloud services outside China, can be easily won over by AWS so long as its pricing strategy in China is reasonable," said Liang Xiao, a senior analyst with CCID Consulting.

Tan Xiaosheng, vice-president of technical operations with Qihoo 360, a leading Chinese Internet service provider focusing on security products, echoed Liang, saying that after using AWS, Qihoo 360 improved its overseas user experience, lowering content delivery networking costs by 30 percent and achieving 10 times growth in traffic with just three times growth in overall costs.

"I'd be happy to test the cost performance of Amazon's cloud offerings in China. If it meets our requirement, we'd be happy to become a China client of AWS," said Tan.

It may be a challenge for Amazon to get more Chinese clients because most Chinese companies that use cloud-computing services are cost-sensitive smaller companies.

However, Gartner's Zeng is not worried about the competitiveness of the price of AWS. AWS claims hundreds of thousands of customers globally. The sizable group of customers enables AWS to reduce its cost several times a year, he said.

According to Zeng, Chinese cloud-computing providers are not in the same league as Amazon. "Most Chinese cloud vendors are only able to provide such services to small companies or startup companies with up to 20 employees," he said.

"AWS is able to serve large enterprises or government organizations because its solutions are more stable and transparent."

Other analysts hold different opinions. Some pointed out that the PRISM scandal last year has cast a shadow on foreign IT companies. The scandal is an ongoing controversy surrounding the US National Security Agency's data-mining operation of millions of customers from major telecommunications providers in the United States, as well as its clandestine electronic surveillance program.

"Plus, localization is also a big challenge for any newcomers to the Chinese market. How to utilize AWS' experience and advantages in China while at the same time following the rules and regulations in the country is not easy at all," said Charlie Chen, a market analyst with IDC China Services Research.

Amazon is clearly aware of its startup position in China. At the recent news conference in Beijing, the company announced its AWS operation in the country will be rolled out in partnership with Chinese local players ChinaNetCenter Co Ltd and Beijing Sinnet Technology Co Ltd. The two companies will be providing data centers and Internet service providers' services such as infrastructure, bandwidth and network capabilities.

There are also consultants and other partners, including Shenzhen Cloudgo Technology Co Ltd, Bamboo Cloud, Bamboo Technologies Ltd, ChinaNetCloud and Hitachi Consulting China.

In addition, Amazon also signed a memorandum of understanding with the Beijing and the Ningxia Hui autonomous region governments to jointly develop cloud-computing services "to help foster development of a robust IT sector in western China, empowered through cloud computing, that enables more Chinese customers to innovate and grow existing and new businesses", the company said in a statement.

Through teaming up with the government, AWS has already got its first government client in China. The government of the Ningxia Hui autonomous region, where Amazon's China data center is expected to be located, has announced its intention to use AWS cloud services to power its public service applications in an effort to fully utilize the benefits of cloud computing to improve the efficiency and user experiences of its public services.

It's too early to tell who will get a bigger share of the pie. But insiders all agree on the same thing: The cloud-computing sector in China will never be the same once AWS arrives.

Zeng pointed out there is a bigger picture regarding AWS' moving its cloud business to China. "Not only will a large number of cloud-computing suppliers follow AWS to China, but the healthy competition will drive down the prices of cloud offerings, which will attract more customers into the sector," he said.