China's public cloud service to hit $1B

Public cloud services grew 73 percent to generate over US$561 million in revenue last year, and this market is expected to hit US$1.01 billion in 2013.

China's public cloud service market was worth 3.5 billion yuan (US$561.6 million) in 2012, up by 73 percent from the year before, according to a report released Wednesday by China Information Industry Net (CNII), which is operated by the Ministry of Industry and IT.

Yu Xiaohui, chief engineer of the ministry's research academy, the market expanded at a rate which was much faster than the global average of 25 percent. Yu also estimated that the market value would grow to 6.3 billion yuan (US$1.01 billion) by 2013. Even then, China would account for only 0.43 percent of the world's public cloud services revenue which is projected to hit US$131 billion this year, according to a Gartner's report.

According to CNII, although China's infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS) sectors represented 84 percent of overall public cloud user base, they contributed only 19.9 percent of overall revenue at 511 million yuan (US$81.99 million) and 184 million yuan (US$29.52 million), respectively. Software-as-a-service (SaaS) accounted for 80.1 percent of overall revenue, or 2.8 billion yuan (US$449.26 million), despite representing only 16 percent of user adoption.

China's cloud service industry is still in its early days, said Wu Jichuan, who was a former director with the ministry, during a cloud computing development conference held on April 16. He said various conditions need to be addressed before the market's full potential can fulfiled, such as ensuring there is sufficient bandwidth to support service delivery.

According to the CNII report issued after the conference, 90 percent of cloud users would choose a foreign cloud service provider for stability, safety, and quality of service.