Chinese cloud providers prepare to take on each other and the world

Dive Brief:

Kingsoft Corp. executives say they plan to take on Alibaba Group in the fast-growing cloud computing market in China, Bloomberg News reports.
Alibaba has been the cloud leader in China so far, but Kingsoft was the fastest-growing player in cloud services in 2015, according to IDC research.
Now that U.S. companies have laid the groundwork for cloud, foreign companies like Alibaba and Kingsoft appear poised to jump into the mix in their own countries and elsewhere.

Dive Insight:

Despite the jump in cloud sales in 2015, Kingsoft saw its share prices fall 21% this year. The company posted an 807.6 million yuan loss in the June quarter. But Kingsoft Chief Executive Officer Hongjiang Zhang told Bloomberg he hopes his company’s cloud service, Kingsoft Cloud, will help the company bounce back. Zhang claims his company can compete against Alibaba and other cloud providers because it’s smaller and more agile and there is enough demand to produce multiple victors in the space.

“This is an enterprise play and in the enterprise market, there’s never one winner,” said Zhang.

Experts predict cloud services will take off in China over the next several years. Alibaba Vice Chairman Joseph Tsai recently said he believes his company has no real competitors in the cloud space.

U.S. cloud providers like Amazon Web Services and Microsoft are seeing more cloud competition from foreign companies. Last July, Alibaba announced it would invest $1 billion into its Aliyun cloud computing arm to challenge Amazon's Web Services division. Since then, Alibaba has been working to set up new Aliyun data centers in Japan, Europe, Singapore and the Middle East. Aliyun's expansion aims to challenge U.S. cloud players like AWS, Microsoft and IBM.

"Our goal is to overtake Amazon in four years, whether that's in customers, technology, or worldwide scale," said Simon Hu, the president of Aliyun. "Amazon, Microsoft and others have already laid the groundwork for us by educating the markets about cloud in the U.S. and Europe, so we have an even better opportunity to join in the competition."

Gartner predicts the worldwide market for public cloud systems will reach $204 billion in 2016.