Exclusive: Tencent’s entry lights up cloud computing segment

  • Technology
  • Saturday, 22 Aug 2020

Tencent Cloud is one of the top five global cloud services providers and its direct presence into the Malaysian market with well known local technology group Green Packet is bound to attract more attention to the sector.

Green Packet Bhd’s signing this week with global Internet giant Tencent Cloud to be the latter’s partner for cloud computing in Malaysia is likely to have fired up the race of a business that has made billions in revenue for global players like Amazon, Microsoft and Google.

After all, Tencent Cloud is one of the top five global cloud services providers and its direct presence into the Malaysian market with well known local technology group Green Packet is bound to attract more attention to the sector. Indications are also that Tencent Cloud is keen to grow its cloud business outside of China in a big way. It has a cloud market share of 6% in Asia Pacific, while Alibaba Cloud has a market share of 16%. Both firms trail behind global giants Amazon Web Services, Microsoft, Google although the market in Asia remains largely untapped.

Another indication of this business segment getting hotter is the Malaysian government’s commitment to go big on usage of cloud computing.

According to Malaysia Digital Economy Corp (MDEC), a “Cloud First” strategy was first introduced by the government back in 2017.

The Cloud First strategy, which entails data sharing and online transactions through web-based tools and applications, is aimed at increasing the nation’s productivity, operational efficiencies as well as conduciveness.

Apart from the government taking the lead in embracing digital transformation, the private sector is also facilitating the adoption of cloud.In 2018, MDEC and the Malaysian Investment Development Authority (Mida) announced the Digital Transformation Acceleration Programme (DTAP), an outcome-driven programme to encourage large corporations and mid-tier companies to embrace emerging digital technologies.

Green Packet’s CEO C.C. Puan says that the potential of the business is huge.

“At present, the adoption of cloud services in Malaysia is at its infancy stage, valued at an estimated US$2bil in revenue.

“Over the next five years, the cloud market in Malaysia is expected to grow at a compounded annual growth rate (CAGR) of 13% to 15%, ” he says.

So why is cloud services such an exciting business?

For starters, here are some eye popping numbers.

For the quarter ended June 30,2020, Microsoft posted a 30% year-on-year rise in commercial-cloud revenue at US$14.3bil.

On the other hand, Amazon Web Services (AWS)’s cloud computing unit grew 29% year-on-year to US$10.8bil.

In that same quarter, Google Cloud registered a revenue of US$3bil, which represents a 43% increase as compared to US$2.1bil in the corresponding quarter last year.

Amazon Web Services (AWS) first hosted its cloud computing services in a Singapore data centre back in 2010 to target the Southeast Asian market.

Likewise, Google built its first Southeast Asia data center in Singapore in 2011, expanding to a second building in 2015 and there are plans for a third data centre to meet rapid user growth in the region.The decision for global cloud services providers to set up data centres in Singapore makes sense, given that most Southeast Asian companies’ headquarters are based in Singapore.

But outside Singapore, the market penetration is still very small.

Cloud computing is imperative to a business’s success, given its flexibility, scalability and efficiency.

The use of remote resources also means that businesses save on the hefty expenditures on IT spending and operational costs.

In Malaysia, Alibaba Cloud was the first cloud services provider to set up a data centre here in 2017.

It was previously reported that Alibaba Cloud’s data centre in Malaysia will be another link to the chain that is weaved between the group’s operations in Hong Kong and Singapore, which will produce cross-border services for Malaysian enterprises.

It is understood that AWS is present in Malaysia via private networks, where AWS’ cloud software is utilised but hosted on its clients’ premises or third-party servers.

In the case of Green Packet and Tencent Cloud, the partnership will have their own cloud servers that are expected to go live in the first quarter of 2021, and this should give them economies of scale.

Then, there is the play with data centre owners, who are likely to see a spike in their usage.

The largest data centre owner in Malaysia is Telekom Malaysia via TM One, which has 12 data centres with a total data centre space of more than 180,000 sq ft, followed by players like Bridge Data Centres, NTT Malaysia, Strateq, AIMS (Time dotcom) and Keppel Corp.

TM One has a potential capacity of up to 40MW for two of its largest data centres, while Bridge Data Centres (backed by Bain Capital) has a total data centre space of 358,000 sq ft with a capacity of up to 20MW.

NTT Malaysia is owned by NTT Communications, a unit of Nippon Telegraph and Telephone Corp, the largest telecoms company in Japan.

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