For Chinese cloud providers firms, the coronavirus outbreak has change into a rainmaker, bringing in new enterprise far and vast as companies shift work on-line and authorities develop apps and programs to assist comprise outbreaks and handle social restrictions.
For Tencent Holdings specifically, it has additionally change into the proper time to flex new muscle mass because it seeks to meet up with Alibaba Group Holding, its arch-rival and the dominant participant within the nation’s cloud market by far.
Tencent started to show a brand new stage of aggressiveness after positioning its cloud enterprise as a serious space of development in September 2018, and that has solely amped up amid the pandemic, workers say.
“The competition with Alibaba is so fierce right now, the sales teams are fighting them for every deal,” stated a supply in Tencent’s cloud division who was not authorised to talk on the matter and declined to be recognized.
This yr alone, Tencent has employed greater than 3,000 workers for its cloud division. And as China went into lockdown and demand for company video bandwidth surged in February, it added 100,000 cloud servers in eight days to assist a two-month previous product, Tencent Conference – a feat the corporate says is unprecedented in Chinese cloud computing historical past.
It has expanded use of cloud servers designed in-house, pledged to hurry up building of a digital trade centre in Wuhan to deal with cloud and sensible metropolis tasks in central China and joined a central authorities initiative to assist pandemic-hit small companies with free cloud providers.
The social media and gaming behemoth additionally introduced in May it can make investments CNY 500 billion (roughly Rs. 5.28 lakh crores) over 5 years in know-how infrastructure together with cloud computing – simply weeks after Alibaba stated it will make investments CNY 200 billion (roughly Rs. 2.11 lakh crores) in its cloud infrastructure over three years.
Poshu Yeung, vp of Tencent’s worldwide enterprise group, notes large curiosity in shifting additional into the cloud from companies and for on-line schooling.
“We actually see more demands, requests coming in,” he advised Reuters in an interview in April. “It’s a good wakening call for a lot of businesses.”
During the primary quarter, China’s cloud infrastructure providers market grew a formidable 67 % from a yr earlier to $3.9 billion (roughly Rs. 29,122 crores), information from analysis agency Canalys reveals.
Alibaba commanded 44.5 % of the market whereas Tencent, which began its cloud enterprise in 2013, 4 years after Alibaba, had simply 14 %. Huawei Technologies additionally had 14 %.
“Although Tencent came to the space later than Alibaba, I believe the company is willing to endure a relatively long period of investment cycle for this business, hoping to catch up or one day becoming the No. 1 player in this field,” stated Alex Liu, tech analyst at China Renaissance.
Tencent’s cloud division accounted for greater than 4.5 % of its annual income final yr whereas Alibaba’s cloud computing division accounted for eight % of its total income.
Seeking B2B savvy
Tencent workers have advised Reuters the corporate is working laborious to change into more proficient in business-to-business gross sales the place merchandise are sometimes designed from the bottom up for one shopper, in addition to in authorities relations. Those are areas the place Alibaba excels whereas Tencent’s energy lies extra with consumer-centric merchandise and design.
“Tencent has great genes in business-to-consumer, but in business-to-business, we either didn’t have product managers or we just hired folks with a business-to-consumer background so it took a bit of time to convert their thinking,” stated a second Tencent supply within the firm’s cloud enterprise.
Tencent declined to touch upon employees observations about its cloud enterprise to Reuters.
One space the place Tencent has gained floor lately is authorities contracts – a comparatively small a part of the market in income phrases however one which brings status and helps appeal to private-sector purchasers.
Underscoring its willpower to win tenders, Tencent in 2017 supplied to finish a Fujian province authorities info platform mission for CNI 0.01 (roughly Rs. 0.10).
From 2016 to 2017, Alibaba scored 28 cloud-related contracts for presidency entities, state-owned enterprises, and educational establishments, whereas Tencent landed simply seven, authorities procurement data present.
But in 2018, they secured 28 every earlier than Alibaba took the lead once more final yr with 49 in comparison with Tencent’s 46.
© Thomson Reuters 2020
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