Huawei is among the top five largest cloud infrastructure (IaaS) providers in the world for the first time, according to a recent report by Gartner. Huawei probably would not have jumped into this field without the US government’s sanctions, because they have focused on mobile network infrastructure and terminals.

Huawei's smartphone business was hit by sanctions imposed under the administration of former US President Donald Trump, forcing this corporation to find new business directions. In the context of the Covid-19 pandemic and massive digital transformation, the Chinese technology group has taken advantage of the opportunity to rise in the cloud computing segment.

Another Chinese business that also appears in the top five is Alibaba, ranked above Google.

The similarities in context, market and business environment between China and Vietnam can be a model for Vietnamese businesses to follow.

Exploit the domestic market

According to research firm Fortune Business Insights (India), the entire world cloud computing market valued 219 billion USD in 2020. Meanwhile, IDC (USA) is more optimistic, saying that the public cloud segment alone (accounting for the largest share in cloud computing) reached 312 billion USD.

The major segments in the cloud computing industry in 2020 included: software (SaaS) - accounting for 47% of the market share, infrastructure (IaaS) with 21.5%, platform (PaaS) 15.2%, and System Infrastructure Software with 15.7%.

In all of the above areas, American companies occupied the most important positions. Leading the overall market was Amazon Web Services (AWS), followed by Microsoft, Google, Oracle, IBM, Salesforce...with their own strengths.

Among non-US suppliers, only SAP (Germany) and Alibaba (China) were named. With Huawei added in the IaaS segment, it is clear that the position of Chinese companies in the cloud computing market has begun to be noticed.

In the smartphone market, three out of five companies with the largest global market share currently belong to China. Only 5-6 years ago, no one would have thought that Xiaomi, Oppo, Vivo or Huawei would enter this top 5, knocking out world famous brands like Sony, Motorola, LG. If Huawei hadn't been punished by the US government, it might have held the runner-up position in the global smartphone market.

According to a recent report by Gartner, the global cloud infrastructure (IaaS) segment in 2020 was worth $64.3 billion, up 40.7% year-on-year. This is the fastest growing segment of the cloud business.

Top five providers in order include AWS, Microsoft, Alibaba, Google, and Huawei. Huawei increased its revenue most impressively, up to 200%, accounting for 4.2% of the global market share, entering the top 5 for the first time. In 2019 it held only 1.9% market share.

Huawei had the strongest growth rate in the top five.

In fact, most of Alibaba and Huawei's revenue came from China. Due to the large market, just dominating the domestic market has made these two businesses jump into the global top. However, the growth of these two businesses cannot be denied, making them representatives in the playground that has only American and Chinese players.

The lessons for Vietnam

The cloud computing market in Vietnam in 2020 was about 133 million USD. Vietnamese enterprises only exploited about 20% of the market, mainly in the infrastructure segment. In the segments of services, platforms, and systems, Vietnamese firms still lose to foreign competitors.

Vietnamese enterprises are still young and domestic demand is not high. Meanwhile, giants like Amazon, Google, Microsoft, IBM, and Oracle have had global experience, providing a large ecosystem, meeting a variety of industries and business sizes.

The same situation happens in many countries. Not only in Asia, but even in European markets, American companies still have an advantage. However, looking at Huawei or the Chinese market, we can see part of the direction of the "Make in Vietnam" cloud computing.

Firstly, Huawei and Alibaba choose to do business in the infrastructure segment, which is their strength, targeting strong domestic demand for infrastructure development, instead of competing with foreign enterprises in the software or service sector. As a result, two corporations entered the global top five in this segment. Vietnamese enterprises that are strong in infrastructure can make full use of this segment.

In IDC's 2020 report, in the SaaS segment - the biggest piece of cloud computing - both Alibaba and Huawei could not compete with US businesses.

Secondly, Huawei and Chinese businesses focus mainly on the domestic market. In addition, the development needs of Chinese enterprises and the government are huge. They prioritize using domestic products, creating demand to help local cloud companies thrive (this policy is similar to the smartphone business and other fields).

According to Canalys, the annual growth of cloud service infrastructure in China is up to 55%, and it may reach 6 billion USD in 2021. China is second only to the US in terms of spending on this segment, and accounts for up to 14% of global spending.

Included on the list of the largest suppliers in China, in addition to Alibaba and Huawei as leaders, Tencent and Baidu rank in the following positions. The remaining suppliers only account for 19.7%, including foreign enterprises.

The cloud service infrastructure segment in China is held by domestic companies.

Vietnam has identified the cloud as the main infrastructure of digital transformation. Tong Manh Cuong, Product Manager of VNPT IT Company, said that in terms of policy, the Vietnamese government should have policies to promote businesses, people, and state agencies to perform digital transformation. Once demand is created, local suppliers will get involved.

Vietnamese businesses also need to prepare themselves to participate in other segments of the cloud computing industry. Huawei, for example, has actively invested in the fields of SaaS, PaaS.

According to the company's report, Huawei Cloud currently has more than 220 cloud services, more than 210 solutions, winning more than 80 security certificates globally. They also have a big team of programmers of more than 10,000 people, writing more than 4,000 applications on the app market.

This is exactly how this group used to do in the smartphone field. It strongly invested in research and development, human resources, global certifications to enter the US and European market. It surpassed Apple to be the second largest smartphone provider in the world before falling because of the US ban.

The Covid-19 epidemic has strongly promoted digital transformation in Vietnam and globally, creating huge opportunities for cloud computing businesses. E-government and smart cities will have huge budgets for technology in general and cloud computing in particular.

A large number of over 700,000 small and medium enterprises are ready for digital transformation. It is important for Vietnamese businesses to prepare resources and diversify services, and take advantage of the home market to exploit the domestic market before it is taken over by foreign rivals.

Hai Dang

How can businesses use edge computing effectively?

Edge computing is an important key to enterprises’ IT infrastructure strategies and the digital economy.

DigiEx and MegazoneCloud cooperate to accelerate cloud adoption & digital transformation in VN

DigiEx Group Vietnam announces that it has entered into an agreement with Seoul-based Megazone Cloud Corporation to provide advanced Cloud Managed Service, Cloud Migration and bring best practice Korean technology to businesses in Vietnam.