New report sheds light on ‘burgeoning’ China edge cloud market

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A new report has explored the appetite for edge cloud technologies in China – and has cited BaishanCloud as a leader amid overall encouraging signs.

The report from EqualOcean, an investment resource for Chinese tech businesses, argues that as the Covid-19 pandemic has contributed to an acceleration of Internet usage in China, this has translated to the ‘inspiration’ of the cloud industry and, further on, edge cloud.

By the end of last year, according to national IT think tank CNNIC, China had almost one billion (989m) Internet users, representing 70% of the country’s total population. This correlates to the predicted growth of the Chinese cloud market; from $225bn (£x) at the end of 2020, to $360bn by the end of 2023.

Infrastructure as a service (IaaS), is the dominant flavour of cloud computing in China – and of that, dominated by public cloud service providers. According to Synergy Research, China is one of the only markets not dominated by the global hyperscalers. Alibaba is the top vendor, ahead of Tencent and Baidu, with Alibaba in second place, behind Amazon Web Services (AWS), for the overall Asia Pacific region.

EqualOcean outlines the theory behind China’s growing ‘edge cloud’ ecosystem, with particular regard to the strength of CDNs and exponential growth of IoT devices:

“Edge computing is at an early development phase, and pioneers in the field are mostly found to be network service providers, along with CDN vendors,” EqualOcean wrote. “Thanks to their decentralised nature, CDN companies are inherently fitted to explore edge computing practice. In the US, leading CDN players such as Cloudflare and Fastly are in the front of the edge cloud business.”

The public cloud vendors in China have a strong position on CDN; Alibaba Cloud, Tencent and Huawei, alongside traditional CDN companies such as ChinaNetCenter. This influences the roadmap for edge, noted EqualOcean.

“While AI, IoT and industrial Internet started to be adopted in China, the change in business demand prompted the emergence of edge computing and cloud companies, as these began to shape their profiles in the field,” the company wrote.

“Currently, some take edge cloud as a nice-to-have business while others choose to go all-in,” EqualOcean added. “China’s public cloud market size has been scaling rapidly and public cloud providers focus on making the ‘cake’ bigger in order to get a mouthful slice.

“Although in an early stage of development and not yet the main revenue pillar, the edge cloud market is increasingly drawing the attention of big public cloud providers and top CDN vendors. It is being treated as an essential and integral part of their cloud strategies.”

EqualOcean: What is an ideal edge cloud?

The company analysed BaishanCloud (above), a company which describes itself as the ‘world’s leading edge-cloud platform service provider’ and which CDN Planet calls ‘one of the fastest growing companies in the CDN space.’ One customer of its edge cloud offering – a state-owned energy enterprise which owns ‘most of the electricity plants in China’ exemplified the shift.

“Through full API integration across nationwide plants, the client’s data became consolidated and interoperable,” wrote EqualOcean. “Without replacing pre-existing systems, the edge services improved the compatibility within a hybrid IT environment. With BaishanCloud’s API-based iPaaS product at the edge, the client is now able to amalgamate data generated by heterogeneous systems into the central system to create business insights.”

The report presciently notes the convergence of emerging technologies and how edge computing will make them work better in concert. As IoT matures and 5G technologies develop – China is projected to deploy more than 7.6 million 5G base stations by the end of 2025 – more data will be generated at the edge. The improved latency and accessibility of edge workloads compared to the ‘legacy’ cloud, as this publication has variously explored, makes for a compelling case, the report argued. It can also ‘inspire more related innovations.’

With regard to China’s position compared to the rest of Asia Pacific in cloud, the investment may be there but the country performs poorly. The most recent report from the Asia Cloud Computing Association (ACCA), released last year, saw China retain its position of second-to-last out of 14 nations analysed, only ahead of Vietnam.

The ACCA report praised China for its progress in several categories over the most recent two years – most notably in connectivity, broadband quality and data centre risk – yet argued ‘important structural inadequacies’ remained in key areas such as cloud governance and regulation.

“The Chinese government pays close attention to cloud computing, not least to enhance public services efficiency and capability, and save administrative costs,” the report noted. “In this sense, it devotes considerable resources to the development and improvement of plans, programmes, projects, and frameworks aimed at strengthening the digital economy.”

ACCA noted part of the problem stemmed from varying degrees of digitailisation across provinces and sectors – an issue which similarly weighs India, another poor performer, down – as well as regulations and conflicts, notably with the United States.

Ultimately, EqualOcean cites BaishanCloud as a leader in the market right now. “Edge cloud services providers must consider thoroughly what clients need in the end-to-end service cycle: computing, security, interoperability, programmability, and more,” the company noted.

“The edge cloud market is almost a virgin land in China and the quality layout of its infrastructure services can spur more ideas and greater ambition in real practice.”

Photo by Macau Photo Agency on Unsplash

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