ZTE plans expansion in European cloud computing market

Despite widespread security worries, the Chinese firm is pushing ahead with plans to tap into cloud computing markets based in Europe.
Written by Charlie Osborne, Contributing Writer

ZTE has pushed back against Western suspicions over the security of its products, and says it will go ahead with plans to expand cloud computing in Europe.


The telecoms equipment maker, behind only Huawei as an equipment provider in China, is already providing cloud computing services to a number of carriers including China Telecom -- as well as energy companies and Internet providers. However, Zhu Jinyun, ZTE's general manager for cloud computing and IT products operations, says that overseas markets are waiting to be tapped.

Speaking to Reuters, Zhu told the news agency that he was targeting a 10 percent contribution from the cloud and enterprise market to the the Shenzhen-based company's overall revenue this fiscal year. Last year, the figure was close to seven or eight percent.

Zhu said:

"Nowadays, data privacy has become a hot topic. But we understand that every customer has its own requirements and characteristics and we are always monitoring developments in the industry."

While declining to break down this figure in terms specific to cloud computing, the ZTE executive said that reaching this target should not be impacted by security worries. Zhu commented:

"We have been in overseas markets for about 20 years and if there is a problem, we would have been discovered."

ZTE, the fifth largest telecoms equipment manufacturer in the world, says it has relevant security certificated to allay any fears European businesses may have over its systems. ZTE is also willing to provide source code if necessary. However, following the NSA scandal and problems that both ZTE and Huawei have had trying to sway the U.S. market, Huawei said it was "not interested" in the U.S. market anymore, shifting its focus to Europe -- and ZTE has followed suit.

Rival Huawei is also exploring alternative profit drivers to the volatile telecoms industry, and so is pouring funds in to the research and development of enterprise products. The company hopes that the enterprise market will generate over $10 billion a year for the company. Huawei senior executive William Xu said that the Chinese firm aims to increase revenue in the enterprise segment to $2.7 billion this year, an increase of 40 percent from $1.9 billion last year.

ZTE has forecast a net profit of 500-750 million yuan ($81-$121 million) for the first nine months ending September this year, which would be a turnaround from a net loss of around $277.6 million in the same period last year.

The global market for public and private cloud services is expected to grow exponentially in the next five years. According to Forrester Research, the market will grow from $40.7 billion in 2011 to reach $241 billion by 2020.

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