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China Cloud


Published: February 2013. 143 pages. 42 Tables, Charts and Maps








In this new report by BroadGroup, China Cloud investment and datacenter developments are identified for the first time. Based on a research programme completed over 8 months, adopting a highly qualitative research methodology with more than 100 face to face interviews and 450 pages of transcripts, and retaining original Chinese character translations for many of the important names, locations, and projects, this report provides the first original and comprehensive assessment to date of China’s Cloud strategy and datacenter deployment.

China Cloud describes a strategy to leapfrog technology dependence on foreign suppliers and generate long term economic growth for its 1.3 billion people. The Chinese government’s 12th 5-year plan has distinguished itself globally by investing significantly in creating new cloud platforms, software and applications supported by a programme of massive cloud datacenter deployment.

Cloud has captured the imagination of China’s policy makers. For reasons of national security, social stability, and economic development, China is in an aggressive catch-up and leapfrog mode for cloud computing and has provided extensive public funding and instituted policies that promote the construction of infrastructure specifically designed for cloud computing, with often mega, high-quality, energy efficient cloud datacenters which will serve as a fulcrum for new service innovation.

Beginning with the initial government plan for 5 cloud cities, the report details how this has now proliferated across at least 15 provinces with significantly funded projects. The report identifies a total of 109 projects, most of which include the construction of new cloud datacenters. The North also scores highly in terms of overall project investment, with province by province investment plans detailed in the report. The top five provinces represent more than 88% of the total investment.

The report documents profiles with SWOT analyses across the key datacenter player segments. Based on research for this report, market share by technical space (m2) unsurprisingly shows that the Big 3 occupy more than 55% as at the end of 2012 (these figures do not include projected build). Other operators comprises of a mix of government owned facilities, public and privately owned datacenters. The report distinguishes between the other players – Internet datacenters, Carrier Neutral players, and datacenters (including niche players in gaming and content distribution.

Oveseas players, local vendors and joint venture partnerships, other cloud players and fibre providers are also reviewed.

Cloud cities are detailed in the report and in a regional analysis of Cloud investments, include a taxonomy of the projects taking place in each location. Maps of the distribution of Cloud projects by Investment by RMB, by space (m2) and by number of projects provide additional illumination of the scale of Cloud China. Around 56% of all new capacity is concentrated in northern China. The north of China and eastern seaboard represent the nucleus of cloud datacenter development.

Challenges to the datacenter sector are immense. The success of China Cloud projects will ultimately depend on business models and demand, but the report explains the many political, commercial and technical hurdles already existing in the datacenter market relating to bandwidth availabilty, network access and power supply.

The report finds that power investment is now a matter of urgency. Estimates suggest power consumption by datacentres already reached in the region of 5% of national electricity output in 2011, and accelerates pressure for urgent investment in renewable energy and efficiency gains within every new cloud datacentre facility.

In a market with few Internet peering points – Beijing, Shanghai, and Guangzhou – and poor interconnection between China Telecom in the south and Unicom in the north, the notion of the Border Gateway Protocol (BGP) assumes a prominent role and outsized significance in managing and conducting a datacenter business. The report covers this topic in detail and the key challenges it presents.

Opportunities are certainly present in the market, but only government policy can unlock new business development.

Change could be in play beginning with the rules on investment in telecoms, documents in proposals made in a document from the Ministry (MIIT) in July of 2012 uniquely referencing the cloud datacenter sector. However at the time of writing this report, these changes have not yet come into effect. The report suggests however that new entrants seeking to exploit traditional datacenter business plans will find the market extremely challenging because of the enormous impact of Cloud China datacenter projects already announced.

Nevertheless, Licensing remains vague and grey, and the report discusses the debate that has taken place internally where it remains a contentious issue within policymaker circles. The report also examines at some length the internal policy debate relating to datacenters. Limited forms of Joint Venture have been tolerated, but because datacenters impact directly on the free distribution of content it remains a touchy issue. The theories that remain in circulation about what potential solutions might eventually be sanctioned are identified. It remains to be seen whether new policies will emerge following the recent change in government.

More intriguing possibilities for investment could emerge in the coming years as change unfolds, and well positioned cloud datacenter players in China stand as a key opportunity – and beneficiary.

Forecasts based on information made available during research for this report would suggest a substantial increase in capacity mainly reflecting the projects planned and detailed in the figures included. However, the planned growth relies on a wide range of variables and unknowns which are also specified.

With many China Cloud projects representing massive datacenter build, the forecast reveals an increase of around 150% in total capacity (m2) by 2016.

INTRODUCTION

EXECUTIVE SUMMARY

1. GOVERNMENT AND BUILDING THE CHINA CLOUD

1.1 Summary
1.2 The Origins of Cloud development in China
1.3 The Big 3 and Cloud
1.4 Cloud Cities proliferate
1.5 National policymaker warnings
1.6 Provincial governments pursue their own cloud city developments
1.7 Outlook for cloud city plans
1.8 Introduction of Private Capital
1.9 Recent Developments and Official Cloud value Forecast
1.9.1 Strategic and Emerging Industries (SEI)
1.9.2 Ministry of Science and Technology (MOST) and 12th 5 Year Plan for Cloud Technology in China
1.10 Future China Cloud

2. CLOUD AND DATACENTER LICENSING

2.1 Summary
2.2 Current Licensing
2.3 Examples of strategies adopted by overseas companies
2.3.1 Equinix
2.3.2 IBM
2.3.3 Microsoft
2.3.4 AT&T
2.3.5 Freudenberg IT
2.4 Joint Ventures and approach
2.5 Internal Hurdles
2.6 The Future for Foreign Licenses
2.7 Current theories on what might happen next
2.8 Continuing ambiguity on datacenter policy
2.9 The VIE Question

3. DATACENTER BUSINESS CHALLENGES

3.1 Summary
3.2 Broadband
3.3 Infrastructure and Network
3.3.1 Inter-city network
3.3.2 Network Access Points (NAPs) and Peering
3.4 China’s bandwidth market, trades, and swaps
3.4.1 Bandwidth Pricing and Datacenters
3.4.2 Impact of Bandwidth Pricing on Datacenters
3.4.3 Summary of Bandwidth Prices
3.4.4 Datacenter Pricing
3.5 Power and Cooling
3.5.1 Utilization Rates
3.5.2 Renewable Power Resources
3.5.3 Power Pricing
3.6 Border Gateway Protocol
3.6.1 Key Challenges of Border Gateway Protocol
3.6.1.1 Cost
3.6.1.2 Peering
3.6.1.3 Lengthy Approval Process
3.6.1.3 Alternatives?
3.6.2 BGP Pricing

4. DATACENTER TECHNICAL CHALLENGES

4.1 Summary
4.2 Perceptions of the technical challenge and how to respond
4.3 Attitude towards International standards
4.4 Requirements for Datacenter Transformation
4.5 Open Compute

5. CLOUD OPPORTUNITY: MARKET DRIVERS

5.1 Summary
5.2 Market Drivers

6. PLAYER PROFILES

6.1 Summary
6.2 Datacenter Market Segmentation
6.2.1 The Big 3
6.2.2 Internet Datacenter [IDC]
6.2.3 Carrier Neutral IDC
6.2.4 International Operators
6.2.5 Enterprise Datacenter [EDC]
6.2.6 Datacenter Market Share by Space (m2) by Segment at end of 2012

6.3 CHINA’S BIG 3: CHINA TELECOM, CHINA UNICOM, CHINA MOBILE

6.3.1 CHINA TELECOM

6.3.1.1 Company Snapshot
6.3.1.2 Datacenters
6.3.1.3 Tianyi Cloud Strategy
6.3.1.4 Reform and Refocus
6.3.1.5 Transitioning to Cloud
6.3.1.6 China Telecom Perspective
6.3.1.7 Observer Perspective
6.3.1.8 SWOT Analysis: China Telecom Competitive Cloud Positioning

6.3.2 CHINA UNICOM

6.3.2.1 Company Snapshot
6.3.2.2 Datacenters
6.3.2.3 Wo Cloud Strategy
6.3.2.4 Reform and Refocus
6.3.2.5 Transitioning to Cloud
6.3.1.6 SWOT Analysis: China Unicom Competitive Cloud Positioning

6.3.3 CHINA MOBILE

6.3.3.1 Company Snapshot
6.3.3.2 Datacenters
6.3.3.3 Cloud Strategy
6.3.3.4 Reform and Refocus
6.3.3.5 Feixin Service
6.3.3.6 SWOT Analysis: China Mobile Competitive Cloud Positioning

6.3.4 NEW MEGA-PLAYER: RANGE TECHNOLOGY DEVELOPMENT COMPANY

6.3.4.1 Datacenter Overview
6.3.4.2 Langfang Location and Eco-System
6.3.4.3 Cloud Strategy
6.3.4.4 SWOT Analysis: Range Technology Competitive Cloud Positioning

6.4 INTERNET DATACENTERS

6.4.1 BAIDU

6.4.1.1 Datacenter and Cloud Strategy
6.4.1.2 SWOT Analysis: Baidu Competitive Cloud Positioning

6.4.2 TENCENT

6.4.2.1 Datacenter and Cloud Strategy
6.4.2.2 SWOT Analysis: Tencent Competitive Cloud Positioning

6.5 PRINCIPAL CARRIER NEUTRAL DATACENTERS

6.5.1 ALIYUN

6.5.1.1 Company Overview
6.5.1.2 Datacenter and Cloud Strategy
6.5.1.3 HiChina
6.5.1.4 Bandwidth and Network Strategy
6.5.1.5 SWOT Analysis: Aliyun Competitive Cloud Positioning

6.5.2 21 VIANET

6.5.2.1 Company Overview
6.5.2.2 Datacenter and Cloud Strategy
6.5.2.3 Bandwidth and Network Strategy
6.5.2.4 New ventures
6.5.2.5 SWOT Analysis: 21Vianet Competitive Cloud Positioning

6.5.3 DR PENG

6.5.3.1 Company Overview
6.5.3.2 Datacenter and Cloud Strategy
6.5.3.3 Bandwidth and Network Strategy
6.5.3.4 SWOT Analysis: Dr Peng Competitive Cloud Positioning

6.5.4 CENTRIN DATA SYSTEMS

6.5.4.1 Company Overview
6.5.4.2 Datacenter and Cloud Strategy
6.5.4.3 SWOT Analysis: Centrin Competitive Cloud Positioning

6.6 DATACENTERS

6.6.1 SHANGHAI DATA SYSTEMS

6.6.1.1 Company Overview
6.6.1.2 Datacenter and Cloud Strategy
6.6.1.3 Bandwidth and Network Strategy
6.6.1.4 SWOT Analysis: SDS Competitive Cloud Positioning

6.6.2 GDS

6.6.2.1 Company Overview
6.6.2.2 Datacenter and Cloud Strategy
6.6.2.3 SWOT Analysis: GDS Competitive Cloud Positioning

6.6.3 HOGAN/EQUINIX

6.6.3.1 Company Overview
6.6.3.2 Datacenter and Cloud Strategy
6.6.3.3 SWOT Analysis: Hogan/Equinix Competitive Cloud Positioning

6.6.4 ZHEJIANG HUATONG CLOUD DATA TECHNOLOGY CO LTD

6.6.4.1 Company Overview
6.6.4.2 Datacenter and Cloud Strategy
6.6.4.3 SWOT Analysis: Zhejiang Huatong Competitive Cloud Positioning

6.6.5 Shanghai Symphony Telecommunications - SST

6.6.5.1 Company Overview
6.6.5.2 Datacenter and Cloud Strategy
6.6.5.3 SWOT Analysis: SST Competitive Cloud Positioning

6.7 CONTENT DISTRIBUTION NETWORK (CDN) PLAYERS

6.7.1 Introduction

6.7.2 CHINANETCENTER

6.7.2.1 Company Overview
6.7.2.2 Datacenter and Cloud Strategy

6.7.3 CHINACACHE

6.7.3.1 Company Overview
6.7.3.2 Datacenter and Cloud Strategy

6.8 CLOUD GAMING PLAYER

6.8.1 SHANDA

6.8.1.1 Company Overview
6.8.1.2 Datacenter and Cloud Strategy
6.8.1.3 Company Strategy
6.8.1.4 SWOT Analysis: Shanda Competitive Cloud Positioning

6.9 OVERSEAS VENDORS

6.9.1 NEUSOFT
6.9.1.1 Company Overview
6.9.1.2 Cloud Strategy

6.9.2 IBM
6.9.2.1 Company Overview
6.9.2.2 Datacenter and Cloud Strategy

6.9.3 FUJITSU
6.9.3.1 Company Overview
6.8.3.2 Datacenter and Cloud Strategy

6.9.4 DELL
6.9.4.1 Company Overview
6.9.4.2 Datacenter and Cloud Strategy

6.9.5 HP
6.9.5.1 Company Overview
6.9.5.2 Datacenter and Cloud Strategy

6.9.6 ALCATEL LUCENT

6.9.6.1 Company Overview
6.9.6.2 Datacenter and Cloud Strategy

6.9.7 LOCAL VENDORS

6.9.7.1 HUAWEI
6.9.7.1.1 Company Overview
6.9.7.1.2 Datacenter and Cloud Strategy

6.9.7.2 ZTE
6.9.7.2.1 Company Overview
6.9.7.2.2 Datacenter and Cloud Strategy

6.10 JOINT VENTURE PARTNERSHIPS

6.10.1 BT
6.10.1.1 Company Overview
6.10.1.2 Datacenter and Cloud Strategy

6.10.2 T-SYSTEMS
6.10.2.1 Company Overview
6.10.2.2 Datacenter and Cloud Strategy

6.10.3 KDDI

6.10.3.1 Company Overview
6.10.3.2 Datacenter and Cloud Strategy

6.11 CLOUD PLAYERS

6.11.2 CHINANETCLOUD

6.11.2 SKYCLOUD

6.11.3 BEIJING CLOUD VALLEY

6.11.4 EVERNOTE

7. FIBER/BGP PROVIDERS

7.1 SHANGHAI KEJIWANG

7.2 JIAOYUWANG

8. CHINA CLOUD DATACENTER CITIES

8.1 Introduction
8.2 12th 5-Year Plan 1 – Cloud Pilot Cities
8.3 China’s growing Cloud Cities
8.4 Other Reported City Developments
8.5 Regional Analysis of China Cloud Projects planned or in progress
8.5.1 North Eastern China
8.5.2 Western China
8.5.3 Inner Mongolia
8.6.4 Beijing
8.6.5 Hebei
8.6.6 Yangtse River Delta
8.6.7 Heilongjiang
8.6.8 Zhejiang
8.6.9 Southwest China
8.6.10 Shanxi
8.6.11 Tianjin
8.6.12 Fujian
8.6.13 Pearl River Delta
8.6.14 Jiangsu
8.6.15 Shandong

9. Analysis of China Cloud Projects

9.1 Summary
9.2 China Cloud Investment
9.2.1 Geography of Investment
9.2.2 Cloud Funds
9.3 Analysis of Cloud Datacenter Projects
9.3.1 Summary
9.3.2 Distribution of Cloud Datacenter projects by space (m2)
9.3.3 Analysis of Cloud Datacenter Projects by Type of Organization

10. Sizing China’s Cloud and Datacenter Market

10.1 China’s Datacenter capacity
10.2 Current Size of China Datacenter Market
10.3 Forecasting Datacenter and Cloud Datacenter to 2016
10.4 Key Assumptions
10.5 Cloud Datacenter Forecasts to 2016
10.5.1 Forecasts of capacity growth by segment to 2016
10.5.2 Capacity Share by Segment – Forecast at 2016

11. CONCLUSIONS

11.1 Datacenter Scale
11.2 The Big 3
11.3 Growth by Carrier Neutrals and IDCs
11.4 Market entry by foreign players
11.5 Potential opportunities for market entry by foreign players

LIST OF TABLES, CHARTS AND MAPS

Table 1 China Bandwidth Price Examples
Table 2 Border Gateway Protocol Pricing Examples
Table 3 Big 3: market share at end 2012 by datacenter space (m2)
Table 4 Baidu and Tencent Datacenters and Capacity
Table 5 Carrier Neutral Datacenters and Capacity
Table 6 China Cloud Project description and number
Table 7 Taxonomy of 5 Official Cloud Pilot City Projects
Table 8 Additional China Smart City, Cloud and Computer Park Projects
Table 9 North East China Cloud Projects
Table 10 Western China Cloud Projects
Table 11 Inner Mongolia Cloud Projects
Table 12 Beijing Cloud Projects
Table 13 Hebei Cloud Projects
Table 14 Yangtse River Delta Cloud Projects
Table 15 Heilongjiang Cloud Projects
Table 16 Zhejiang China Cloud Projects
Table 17 Southwest China Cloud Projects
Table 18 Shanxi Cloud Projects
Table 19 Tianjin Cloud Projects
Table 20 Fujian Cloud Projects
Table 21 Pearl River Delta Cloud Projects
Table 22 Jiangsu Cloud Projects
Table 23 Shandong Cloud Projects
Table 24 Analysis of Cloud Projects planned and in progress in China
Table 25 Total Estimated Cloud Project Investment Value by RMB by Region
Table 26 Examples of Municipal Government and Investor Cloud Funds
Table 27 Taxonomy of Cloud Datacenter Projects planned and in progress in China by Region
Table 28 China Datacenter Capacity Estimates
Table 29 Current Datacenters and capacity in China (end 2012)
Table 30 Key growth assumptions and impact on market forecasts

Chart 1 Market Share by Space (m2) at end of 2012
Chart 2 Distribution of Cloud Projects by Investment by RMB value by region in China
Chart 3 Distribution of Cloud Datacenters projects planned and in progress by number by Region
Chart 4 Distribution of Cloud Datacenter projects by space (m2) by region in China
Chart 5 Share of Cloud Datacenter capacity (m2) planned and in progress in China by Organization Type
Chart 6 Cloud Datacenter Growth Forecast 2012-2016 by m2
Chart 7 Cloud Datacenter Growth forecast 2012-2016 by m2 percentage by segment
Chart 8 Cloud Datacenter Growth forecast 2016 by m2 percentage by segment

Map 1 Map of 5 Official Cloud Cities and 12 other Cloud Cities identified in this report
Map 2 Distribution by value of Cloud investment (RMB) by region in China
Map 3 Distribution of Cloud Datacenter projects planned and in progress by number by Region
Map 4 Distribution of Cloud Datacenter projects by m2 by region in China

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