Spending on cloud infrastructure services in mainland China reached $9.2 billion USD (£7.29bn) in Q3 2023, accounting for 12% of global cloud expenditure, as reported by analyst firm Canalys.
The top three vendors in China – Alibaba, Huawei, and Tencent – represent 73% of the market and customer spending. Alibaba Cloud holds the largest market share at 39%, followed by Huawei Cloud (19%) and Tencent Cloud (15%).
Canalys emphasized the importance of nurturing and prioritizing partner ecosystems, as a quarter of cloud infrastructure services spending in Q3 2023 was through the channel. This is especially crucial for AI development and deployment, as both cloud providers and AI companies rely on each other. Cloud providers need innovation from AI companies, while AI companies require the compute power of cloud providers.
This can be seen in recent market developments, with both Alibaba Cloud and Huawei Cloud introducing AI model development platforms to integrate third-party open source AI models.
Canalys points out that this relative openness goes against the conservative nature of the Chinese cloud services market, which heavily depends on government and state-owned enterprises for growth. However, vendors in the country remain focused on AI innovation and investments.
“Achieving widespread deployment of AI technology is nearly impossible without a range of partners,” said Yi Zhang, an analyst at Canalys. “An AI ecosystem consisting of developers, ISVs, and experts is vital to deliver value at scale.”
Zhang added, “Partnerships, such as those between Salesforce and Databricks with cloud hyperscalers like AWS and Google, indicate that cooperation among cloud vendors and service providers is a strategic necessity. Combining technical offerings and expertise is crucial for seizing market growth opportunities and driving value.”
Alibaba’s Cloud Intelligence Group reported revenues of $3.79 billion in the latest quarter, showing a 2% year-on-year increase. The company is the world’s third-largest IaaS provider by revenue for the fifth consecutive year. In the AI space, Alibaba launched the Bailian platform in October, which serves as a comprehensive AI foundation model development platform.
At a provincial level, the Department of Industry and Information Technology at Hebei Province highlighted the significance of cloud investment. Hebei, China’s sixth-most populous province, ranked first in cloud technology adoption for the second consecutive year, with over 90,000 enterprises and 21.2% of industrial equipment utilizing cloud technologies.
Photo by aboodi vesakaran
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