market research report : cloud computing market in china 2014 - sample

Cloud Computing Market – China

July 2014

2

Executive Summary

Market

Drivers & Challenges

Competition

Cloud Computing market in China, still in its naïve stage, is expected to grow from USD xx bn in 20-- to USD xx bn

in 20-- with a CAGR of xx% over the period 20--

Owing to its cost saving attributes, cloud service will be largely used by institutions such as government,

telecoms, education, medicine, finance, petrochemistry, and electric power distribution

Government Initiatives

Initiatives by Chinese Government

Pilot Projects Bases for Cloud Computing

Initiatives by Local Government

Drivers:

- Cost Reduction

- Speed, Flexibility and Responsiveness

- Widespread Adoption of Internet

- Rising Smartphone Usage

- Indigenous Innovation

- Scope in Micro, Small and Medium Enterprises

Trends Promising National Policy

Emerging Cloud Computing Industrial Chain

Challenges:

- Lack of Knowledge and Experience

- Lesser Use of Virtualization

- Data Security Concerns

Major Domestic Players

Player 1 Player 2 Player 3 Player 4 Player 5 Player 6

Major Foreign Players

Player 1 Player 2 Player 3 Player 5

CLOUD COMPUTING MARKET IN CHINA 2014.PPT

Raid need for Mobile Cloud Computing

Hybrid Cloud Boom

3 CLOUD COMPUTING MARKET IN CHINA 2014.PPT

•Introduction

•Market Overview

•Cloud Computing – Pros and Cons

•Initial Opportunities for Using Clouds

•Direct Investments Scenario

•Drivers and Challenges

•Government Initiatives

•Trends

•Partnerships

•Mergers and Acquisitions

•Competitive Landscape

•Strategic Recommendations

•Appendix

4

SAMPLE


Cloud computing – Introduction

Cloud computing is an Internet-based, pay-as-you-go and use only what you need, computing, whereby shared resources, software, and information are provided

to computers and other devices on demand

Cloud Computing - Definition

Key Characteristics of Cloud Computing

Sold on Demand Rapid Elasticity

• Cloud computing services are available on-demand and clients are billed as per their respective usage

• Cloud is flexible and scalable to suit ones business needs. One can easily add or remove users and resources

Broad Network Access

• Client can access data from any device wherever they are located with a simple online access point.

Internet Computing On-demand Computing Utility Computing

Cloud Computing - Synonyms

5

Traditional IT ecosystem Vs. cloud ecosystem (1/2)


Works only for a single organization

Traditional IT Ecosystem

• Text

On

Pre

mis

e

Service Providers

Network

Data Centers

Hardware Software

Application Hosting &

Development


Structure of cloud computing

Mini-Note

Mobile

Remote Desktop Database

Remote Server

Notebook

Personal Computer

Internet

“Amazon cloudFront” “Proud”

“Window Azure” “OrangeScape Cloud”

“DeskAway” “Google Apps” Software as a Service

Platform as a Service

Infrastructure as a Service

Virtual (or physical ) Server and application

Web URL for Single Entry Point


Cloud computing – Categories

• Organization outsources the devices used to support storage, hardware, servers and networking components

• Service provider owns the device and is liable for housing, running and maintaining it

• Client usually pays on a per-use basis

IaaS (Infrastructure as a Service)

PaaS (Platform as a Service)

SaaS (Software as a Service)

Major Categories of Cloud Computing

• Service provider makes the hosted software applications available to customers over Internet

• Clients rent virtualized servers and associated services like hardware, operating systems, storage and network capacity for running existing applications or developing and testing new ones

• Service provider hosts applications and makes available to customers over a network, usually the Internet

• Small and medium-sized enterprises can cut costs by software deployment over Internet

• With the maturity of web services and service-oriented architecture, SaaS becomes more prevalent

8

SAMPLE


Types of deployment of cloud computing

Deployment of Cloud

Private Cloud

• Text

Community Cloud

• Text

Public Coud

• Text

Hybrid Cloud

• Text

9

Demand and supply model of cloud services


CLOUD

Text

Text

Text

Text

Text

Text

Text

Text

Text

Text

Text

Text

Text

Text

Text

Text

De

man

d

De

man

d

Sup

ply

Su

pp

ly

Note: The list is not exhaustive

SAMPLE

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Cloud computing market in China is expected to grow at a CAGR of xx% between 20-- to --

• Cloud computing market in China is expected to reach USD xx bn in 20--

• Chinese Government has cited cloud computing as “Strategic Emerging Industry” in its 12th Five Year Plan

It has been identified as a key investment area within next generation IT for development of new digital technology and infrastructure

China Mobile had planned investments of about USD xx bn by the end of 20-- to expand its cloud offering nationwide

• Owing to high significance of Cloud computing in Information and Communications Technology (ICT), both domestic

and foreign companies are eyeing the market for a larger chunk

Foreign giants like IBM and Microsoft are entering into partnership with the domestic vendors to gain a strong foothold in the market

In the next 10 years China will become one of the biggest markets for cloud computing

Market Size and Growth

China Cloud Computing Market – Overview

d

a

c

0

b

e xx

xx

20-- 20--

xx

20--

xx

X%

20-- 20--

USD bn

xx

20--

xx

Note: ERP refers to enterprise resource planning, CRM refers to client relationship management and ICT refers to Information & Communication Technology



Cloud computing takes off among Chinese SMEs

a

g

b

f

c

d

e

• With the introduction to cloud SME’s can now access all those applications earlier which would require heavy investment if hosted in-house

• The potential for cloud computing services is huge as only 5% of Chinese SMEs now use hosted servers • SME’s can use the pay-as-you-go option which helps them to save huge expenditure that is required for managing

IT in-House

Mainland SME cloud services

reached USD xx bn in 20--

Mainland SME cloud services

adoption rose by xx% in 20--

12

SAMPLE Eastern China is emerging as the cloud computing hub of the nation

Cloud Computing Hubs of China

Text

Note: MIIT refers to Ministry of Industry & Information Technology

Cloud Computing Bases

Text

Cloud Computing Base


13

Investments in new projects in China….

Investors Investments in Projects

Text • Text

Text

• Text

Text

• Text

Text

• Text

Text

Text

Text

• Text

Note: R&D refers to research and development


SAMPLE


Beijing

Shanghai

3. Telehouse Shanghai Jinqiao

• Text

2. Equinix China Data Center

• Text

1. Aliyun Cloud data Center

• Text 1

2, 3

Cloud computing data centers – China (1/2)


Cloud computing offers numerous benefits to the client organizations…

`

Text

Text

Text

Text

Cloud Computing -

Pros

SAMPLE

16

`


Being an internet based service, cloud computing comes with its …

Text

Text

Text

Cloud Computing -

Cons

SAMPLE

17

SAMPLE


Initial opportunities for using clouds (1/2)

Value to the Enterprise

Ease

of

Imp

lem

en

tati

on

D

iffi

cult

High Value

Easy

Text

Text

Text

Text

Text

Text

Text

Text

Text

Text

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SAMPLE


Direct Investments Scenario – Summary

• The section highlights investments made by companies between the year 2000 to 2014 • The list of investments comprise both current and pending investments

Note:

• The section summarizes the total number of investments made by the company across industry sectors, so far

Total Investments – Sector-wise

• The section summarizes the total number of Information Technology investments made by the company across various geographic regions, so far

IT Investments – Geography-wise

• The section summarizes the total number of Information Technology investments made by the company across IT sub-segments, so far

IT Investments – Segment-wise

19

SAMPLE


Direct Investments – X company

X%

Y% Z%

Total Investments – Sector-wise IT Investments – Geography-wise

Sector 2

Sector 3

Sector 1

IT Investments – Segment-wise

70% 20% 10% 50% 30% 60% 0% 40% 80% 100% 90%

X% Y% Z%

Y%

X% Region 2

Region 1

Segment 1

Segment 2

Segment 3

Investment Snapshot

• The company has been investing since 20--

• Maximum number of investments were seen in the Segment 1 followed by Segment 2

A total of xx investments were made in the IT sector

• Maximum number of investments were seen in the Region 1

• In terms of the Sector 1, the company invested mostly in segment 1


Drivers & Challenges – Summary

Drivers

Cost Reduction

Speed, Flexibility and Responsiveness

Widespread Adoption of Internet

Rising Smartphone Usage

Indigenous Innovation

Scope in MSMEs

Challenges

Lack of Knowledge and Experience

Lesser Use of Virtualization

Data Security Concerns

21

SAMPLE The elimination of large capex component boosts cloud adoption by a large extent

Cost Reduction (1/3) Impact

• Cloud Computing reduces IT costs dramatically as users can replace a large up-front capital expense with a low, pay-for-use operating expense

• Public clouds provide access to advanced applications and storage with minimum costs

• Private cloud adoption can reduce a company’s total IT cost by 25 - 30%

• Cloud computing has the ability to drastically reduce the operating expenses of a company within a span of 5 years

Xiwang Group in China pays only around USD 9,000 – USD 12,000 annually for cloud services avoiding millions of dollars it would have to spent towards the maintenance of a conventional system

Cli

en

t C

ost

El

imin

atio

n Cost of servers, software

licenses, maintenance

fees, data center space,

electricity and IT labor

Cost Comparison Among Different Solutions

Scenario On-premise Approach Using Amazon EC2 Public Cloud

Hardware

• SUN E25K: 72CPU + 1 TB memory

• TimesTen In-Memory Database

• 150 virtual server

Cost Factors

•Capital cost = above USD 4 mn

• License cost = above USD 1 mn/yr

• Power cost = USD 70,000/yr

• Variable cost = USD 131,000/yr

• Power cost = 0 (Assuming 24x7x365)

Energy • 40kW/hr + 40kW/hr N.A.


22

SAMPLE Lack of expertise and knowledge among IT executives restricts the growth of cloud computing in China

• Chinese IT executives lack knowledge and experience in cloud computing than their counterparts in other nations

• Chinese executives are more skeptic about the cloud performance in the long run

Lack of Knowledge and Experience

Chinese IT executives lack IT exposure to cloud computing unlike their foreign

counterparts

Key Factors

Advanced or Expert Knowledge Level*

Chinese IT Executives Other Country’s IT Executives

21% 64%

Note: *Survey by Accenture Institute for High Performance and the Chinese Institute of Electronics’ Cloud Computing Expert Committee (CIE) on 103 IT executives and five academic researchers from major Chinese enterprises, government agencies, and universities along with some global respondents, Nov-Dec 2009

Global firms who provide wide range of cloud services in other countries are less active in China

Chinese organizations have limited options of cloud services

Immature cloud market due to limited research on cloud computing applications

Impact


23

SAMPLE Chinese government intend to invest USD 173.2 bn for the development of key domestic cloud computing hubs

Initiatives Taken by Chinese Government

Text

Text

Text

Text

Text


24

SAMPLE Local government aims to create cloud computing bases in the cities of Beijing, Shanghai, Chongqing and Harbin

Initiatives by Local Government

• Text

Text Text

Text

City Major Participants

Beijing Baidu Inc, Lenovo Group Ltd and China Mobile Ltd. will focus on cloud search and storage

Shanghai Shanda Interactive Entertainment Ltd will work on cloud computing for the cultural sector and China UnionPay will work on electronic payments and commerce

Hangzhou Alibaba Group Holding Ltd to develop technology for small and micro-sized enterprises

Southwestern Municipality of Chongqing Beijing’s City Government

Local government in Shanghai Harbin, capital of Heilongjiang Province


25

Summary – Trends


Rapid Growth of Mobile Cloud Computing Hybrid Cloud Boom

Promising

National Policy

Emerging Cloud Computing

Industrial Chain

Trends

26

SAMPLE Chinese Government is giving greater importance to the opportunities offered by cloud computing

Promising National Policy

Chinese Government is

financially supporting cloud

projects

3G, geospatial Information Industry (3S), things internet,

information security and cloud computing

New generation of information technology

Gets highest priority among China's current strategic

and emerging industries

Process of other strategic growth of new industries will be accelerated

Investors paying more attention to cloud computing companies

Use of digital, information, intelligence

Chinese national policy supports cloud computing

business

• China’s National Development and Reform Commission has established a

Cloud Computing Special Fund to invest in 15 pilot projects in Beijing,

Shanghai, Shenzhen, Hangzhou and Wuxi

• Shanghai issued 3.1 billion 3-year plan to promote 13 projects

• Beijing clouds program already started, and strived to world-class cloud

computing base


27

SAMPLE Partnerships on Cloud Computing in China during 2012-13

Investors Partnerships

Text • Text

Text • Text

Text • Text

Text • Text

Text • Text

Text • Text

Text • Text


28

SAMPLE Mergers & Acquisitions(2012-2013)


Announced Date Closed Date Target Buyer/Investors Sellers Size (USD mn)

Text Text Text Text Text Text

29

SAMPLE Porter’s Five Forces Analysis

Competitive Rivalry • Text

Bargaining Power of Buyers • Text

Threat of New Entrants • Text

Impact High

Impact High

Impact Medium

Bargaining Power of Suppliers • Text

Impact Medium to High

Threat of Substitutes • Text

Impact Low


30

SAMPLE Competitive Benchmarking (x/x)

Public Trading Comparable (FY 20--)

Player 1 Player 2 Player 3 Player 4

Market Capitalization (USD mn) xx xx xx xx

Share Price (USD) xx xx xx xx

EV/EBITDA (USD ) xx xx xx xx

EV/Revenue (USD) xx xx xx xx

PE Ratio xx xx xx xx


31

SAMPLE Key Ratios of Major 4 Companies – Operational Basis (FY 20--) (x/x)

Competitive Benchmarking (x/x)

• xxx

0

5

10

15

20

25

xx xx

Player 3 Player 1 Player 2

xx

xx

xx xx

xx xx

Player 4

Inventory Turnover Ratio Debtors Turnover Ratio

Note: Assuming all sales are credit sales


32

SAMPLE Public: Domestic Company – Player 1 (x/x)

Key People

Products and Services

Company Information Locations – China

Corporate Address

Tel No.

Fax No.

Website

Year of Incorporation

Ticker Symbol

Stock Exchange

Name Designation

Headquarters


Category Products/Services

Cloud related products

33

SAMPLE Financial Snapshot Key Ratios

Financial Summary

• The company earned a net profit of USD xx mn in FY 20--, as compared to a net profit of USD xx mn in FY 20--

• The company reported total Income of USD xx mn in FY 20--, registering an increase of xx % over FY 20--

• The company earned an operating margin of xx% in FY 20-- an increase of xx percentage points over FY 20--

• The company reported debt to equity ratio of xx in FY 20--, an increase of xx % over FY 20--

Financial Summary

Total Income Net Profit/Loss

c b

b

0 0

a a

y

x

20--

y y

Profit USD mn

x

Total Income USD mn

x

20--

y

x

20-- 20--

Indicators Value (12/05/2014) Market Capitalization (USD) xx

Total Enterprise Value (USD) xx

EPS (USD) xx

PE Ratio (Absolute) xx

Improved Decline

Particulars y-o-y change

(20--) 20-- 20-- 20-- 20--

Profitability Ratios

Operating Margin

Net Margin

Profit Before Tax Margin

Return on Equity

Return on Capital Employed

Return on Working Capital

Return on Assets

Return on Fixed Assets

Cost Ratios Operating costs (% of Sales)

Administration costs (% of Sales)

Interest costs (% of Sales)

Liquidity Ratios Current Ratio

Cash Ratio

Leverage Ratios Debt to Equity Ratio

Debt to Capital Ratio

Interest Coverage Ratio

Efficiency Ratios Fixed Asset Turnover

Asset Turnover

Current Asset Turnover

Working Capital Turnover

Capital Employed Turnover


Public: Domestic Company – Player 1 (x/x)

34

SAMPLE

A%

B%

0% Z%

Y%

20--

x

Z%

Y%

20--

x

0%

A%

B%

20--

x x

20--

Y% Y%

20--

x

Y%

Industry1 Region 1 Region 2

Key Business Segments Key Geographic Segments

Key Recent Developments

Description News

Overview

Approval

Joint Venture & Cloud news



35

SAMPLE

• Text • Text

• Text

• Text

T O

W S Strength Weakness

Opportunity Threat



36

SAMPLE

Key People

Products and Services

Company Information Locations – China

Corporate Address

Tel No.

Fax No.

Website

Year of Incorporation

Category Products/Services

Solutions

Services

Product Name Designation

Regional Offices


Private: Foreign Company – Player 2 (x/x)

37

SAMPLE Financial Snapshot Key Ratios

Financial Summary

• The company earned a net profit of USD xx mn in FY 20--, as compared to a net profit of USD xx mn in FY 20--

• The company reported total Income of USD xx mn in FY 20--, registering an increase of xx % over FY 20--

• The company earned an operating margin of xx% in FY 20-- an increase of xx percentage points over FY 20--

• The company reported debt to equity ratio of xx in FY 20--, an increase of xx % over FY 20--

Financial Summary

Total Income Net Profit/Loss

c b

0

b

0

a a

x

y

Total Income USD mn

x

y

Profit USD mn

20--

y

x x

20--

y

20-- 20--

Indicators Value (12/05/2014) Market Capitalization (USD) xx

Total Enterprise Value (USD) xx

EPS (USD) xx

PE Ratio (Absolute) xx

Improved Decline

Particulars y-o-y change

(20--) 20-- 20-- 20-- 20--

Profitability Ratios

Operating Margin

Net Margin

Profit Before Tax Margin

Return on Equity

Return on Capital Employed

Return on Working Capital

Return on Assets

Return on Fixed Assets

Cost Ratios Operating costs (% of Sales)

Administration costs (% of Sales)

Interest costs (% of Sales)

Liquidity Ratios Current Ratio

Cash Ratio

Leverage Ratios Debt to Equity Ratio

Debt to Capital Ratio

Interest Coverage Ratio

Efficiency Ratios Fixed Asset Turnover

Asset Turnover

Current Asset Turnover

Working Capital Turnover

Capital Employed Turnover



38

SAMPLE

0%

B%

A%

Z%

x

Y%

x

20--

Y%

20--

Z%

A%

0%

B%

x

20--

Y% Y%

20--

x x

Y%

20--

Industry1 Region 1 Region 2

Key Business Segments Key Geographic Segments

Key Recent Developments

Description News

Overview

Approval

Joint Venture & Cloud news



39

SAMPLE

• Text

• Text

• Text • Text

T O

W S Strength Weakness

Opportunity Threat



40

SAMPLE


Vendor Name Headquarter Address

Total Revenue (USD mn)

Net Income

(USD mn)

IaaS PaaS SaaS Others

Player 1 Text xx xx Text Text Text Text

Player 2 Text xx xx Text Text Text Text

Other leading cloud service providers in China (x/x)

41

SAMPLE Increase

Affordability and Flexibility of

Cloud Solutions

Strategy Adoption Area

Offer Different Types of Hybrid and Mobile

Cloud Solution

Regional Growth Introduce Loyalty

Programs and Increase Benefit

Awareness

Strategic Recommendations (1/2)

• Text

• Text

• Text

• Text


42

SAMPLE Strategic Recommendations (2/2)

Know Your Customer (KYC)

• Text

Awareness Creation

• Text

Right Selling

• Text

Localized Offerings

• Text


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Thank you for the attention

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