Opportunities and strategic choices for operators in the cloud-based world

[[257522]]

1. With the support of policies, the cloud computing industry ushers in a new round of development opportunities

With the acceleration of digital transformation of the whole society, "cloud migration" has become a key step in the digital transformation of all walks of life, and "cloud usage" has also become an important reference indicator for measuring the development of the digital economy in the industry. Since cloud computing was listed as a strategic emerging industry in China in 2010, the Chinese government has formulated a series of relevant policy plans to guide the development of the cloud computing industry. At present, the macro-policy system of the cloud computing industry in various aspects of industrial development, industry promotion, application foundation, and security management has basically been formed. In the past 1-2 years, from the Ministry of Industry and Information Technology to the Economic and Information Technology Commissions of Zhejiang, Jiangsu, Shandong, Hunan and other provinces have launched "enterprise cloud migration" action plans. At the target level, Zhejiang Province proposed to achieve 400,000 cloud-based enterprises in the province by 2020, and Shandong Province proposed to achieve 200,000 cloud-based enterprises in the province by 2020. In terms of specific measures, first, the number of enterprises on the cloud is included in the annual assessment tasks of local governments; second, the cloud migration plans and target tasks of enterprises are decomposed level by level, and regular monitoring and reporting are carried out; third, incentives are given through special financial subsidies and other means. It can be seen that cloud computing has ushered in a period of rapid development in terms of policy.

2. Huge potential, the cloud computing market continues to be in a period of rapid growth

In terms of customers, with the development of cloud computing technology and the acceleration of the demand for digital transformation of industries, cloud computing has begun to expand from mainly Internet users such as mobile Internet, e-commerce, and games to traditional industry users such as government, finance, energy, transportation, and manufacturing. In terms of demand, the content of "clouding" has gradually evolved from resources to management, business, data, and overall clouding. Users' willingness to invest has also continued to increase. According to a survey by the China Academy of Information and Communications Technology, 80% of companies will continue to increase their investment in public clouds and 90% of companies will continue to increase their investment in private clouds in the next three years. In terms of space, according to the calculation of the China Academy of Information and Communications Technology, the scale of my country's cloud computing market in 2018 was about 90 billion yuan, and the public cloud and private cloud markets will maintain growth rates of more than 30% and 20% respectively in the next three years. In terms of specific companies, according to the performance data released by Alibaba Group, Alibaba Cloud's revenue in fiscal 2018 will reach US$2.135 billion, a year-on-year increase of 101%. Tencent's first quarter 2018 financial report shows that driven by the growth of games, videos, e-commerce and O2O industries, Tencent Cloud service revenue increased by 100% year-on-year.

3. Competition is fierce, and operators have greater opportunities in the private cloud and industry cloud markets

The public cloud market is dominated by small and medium-sized enterprise customers, following the winner-takes-all business rule of the Internet, and the industry concentration continues to increase. At present, Alibaba Cloud is the only one in the market, occupying about 50% of the market share, Tencent Cloud is about 10%, and Kingsoft Cloud, Tianyi Cloud, Ucloud and others are closely behind, but their share is only in the single digit. The public cloud market structure has basically been formed. Alibaba Cloud's technical advantages and industrial ecological advantages are constantly expanding, and its market position is difficult to shake. Telecom operators are at a disadvantage in terms of application scenarios and technical capabilities, and it is difficult to change the overall structure. The private cloud market is basically dominated by large and medium-sized government and enterprise customers. There are also many suppliers, and each manufacturer has its own technical characteristics and advantages. The competition pattern is diversified. Taking the government cloud as an example, H3C, Huawei, Inspur, Alibaba, Tencent and the three major operators all have a certain market share. At the same time, due to the attributes of central enterprises and the requirements of local government, financial and other customers that data should not leave the province, and the suppliers need to have local operation and maintenance capabilities, operators have a certain competitiveness in the private cloud market. Still taking the government cloud as an example, data from the Chinese government procurement website shows that since 2017, the three major operators have occupied more than half of the government cloud procurement projects of local governments. On the other hand, industry cloud is becoming a new development trend in China's cloud computing market. The industry customer base accumulated earlier by telecom operators and the bilateral capabilities of To C and To B have become new advantages in expanding various industry clouds, especially in the financial, medical, education and other industries.

4. Ecosystem co-creation is a common expansion model chosen by domestic and foreign operators

At present, telecom operators do not have a competitive advantage in the technology research and development and application innovation of cloud computing. Therefore, the cooperation and co-creation of technology and industry has become the key for operators to quickly acquire the core capabilities of cloud services. Take AT&T and Verizon in the United States as an example. Although they have given up directly operating cloud computing businesses, they still cooperate with cloud computing partners such as AWS, Microsoft Azure, and IBM through joint operations, bundled sales, and system integration. After China Unicom carried out mixed reform with Alibaba and Tencent, it also vigorously introduced their technical capabilities and integrated them into Unicom's "Wo Cloud" business. In terms of public cloud, Alibaba and Tencent opened up public cloud service capabilities including computing, storage, security, big data, and artificial intelligence to Unicom, and then expanded them with the brand of "Wo Cloud Computing" relying on Unicom's operation and maintenance and customer advantages. At the same time, Unicom also formed a joint expansion team and support system with the above-mentioned cloud service providers to form a strongly coupled development model.

5. Cloud-network integration: operators need to build new advantages in the development of cloud computing

Cloud computing products are becoming more and more homogeneous. The quality of network connections and ease of use for accessing the cloud are increasingly becoming key indicators that affect the user perception of IaaS cloud products. Cloud service providers including Amazon and BAT have begun to pay close attention to the quality of cloud network access and user experience, and are also actively cooperating with telecom operators. From the perspective of telecom operators, the deployment of SDN networks in data centers is being accelerated, and on-demand network capabilities are gradually being acquired. After SDN is widely deployed in cloud resource pools and intelligent scheduling of metropolitan area networks and backbone network traffic is achieved, the ability to integrate cloud and network will become a new competitive advantage for operators. Operators can connect applications, cloud computing, pipelines and customers through the "cloud-network integration" solution to provide end-to-end, complete, flexible and scalable solutions. By building a "network + cloud" infrastructure that collaborates with "cloud, pipe and terminal", the network is provided to customers as a configurable, on-demand service.

VI. Summary

At present, the pipeline business of telecom operators is gradually becoming saturated, and the digitalization of the industry is gradually moving from connection to cloud and upper-layer applications. At present, the trend of enterprises moving to the cloud is accelerating, and there are many competitors in this field. The time window is fleeting. Telecom operators need to seize the new opportunities of cloud-based everything, combine their own advantages, take advantage of the situation, focus on private cloud, expand industry cloud, and continuously improve their capabilities in cloud platform and cloud computing operation and maintenance, seize the time window, quickly form a market pattern, and then open up new business space and revenue growth points.