Following the launch of my recent report, The Dynamics Of China’s Private Cloud Market, I’ve been getting briefing requests from vendors and inquiries from end users. My report addresses most of their concerns, such as the vendor landscape, business scenarios, and industry practices. However, following my discussions with many Chinese private cloud end users, I also thought it would be helpful to share with you the top developing trends among Chinese organizations using private cloud. They:
Are starting to expand private cloud scenarios for production applications.Initially, many Chinese organizations deployed private cloud solutions for development and testing scenarios. These organizations are now starting to transfer their business-critical workloads, such as CRM, databases, and other unique applications, to private cloud environments. Why? Because Chinese organizations have started to virtualize their critical workloads.For example, China Telecom set up a self-service private cloud platform for its eight province-level branch operators in 2011; in 2014, China Telecom started to gradually transfer its business and operations support systems (BSS/OSS) to the private cloud.
The cloud market in China is changing fast. The official launch of the commercial operations of Microsoft Azure (Azure) earlier this year started a new chapter (as detailed in my March blog post), while last weekend’s Amazon Web Services (AWS) summit was held in China for the first time and announced the third episode of this war. AWS is speeding up building its ecosystem and starting to challenge both Microsoft’s early-mover advantage and the market share of other global and local players.
To help CIOs and enterprise architects set up their hybrid cloud strategy in the region, we’ve put together a brief comparison of the Azure and AWS offerings and ecosystems in China:
Operations.Microsoft made Azure available for preview in China on June 6, 2013 and announced its commercial launch on March 25, 2014, stating that it would be operated by 21ViaNet and have a service-level agreement (SLA) of 99.95%. It has two dedicated data centers in Beijing and Shanghai. AWS announced the availability of its “Beijing region” in China on December 18, 2013, but it still hasn’t announced its official commercial launch, other than a partnership with Cloud Valley. Currently, AWS has only one data center in Ningxia province.
Offerings.Azure offerings cover services for compute (VM, websites, cloud services, etc.); data (storage, SQL database, HDInsight, backup, etc.); applications (service bus, Active Directory, CDN, media services, notification services, etc.); and networking (virtual network, Traffic Manager, etc.). Azure also provides other solutions, such as infrastructure services, data management, and application development and deployment.
On December 8, Alipay celebrated its 10th anniversary by launching the latest version of its digital wallet. What makes this upgrade different and notable is its “10-year statement diary” feature. The statement diary contains data like when a user first made a purchase on Taobao, opened a Yu’ebao account, created an Alipay wallet, hailed a cab using Kuaidi Taxi, and followed a service window. Not only do these 10-year statements record every Alipay customer’s consumption experience, but put together they also trace the rapid development of online payments in China.
There is always a tendency to regard the major players in large markets as being a static background against which the froth of smaller companies and the rapid dance of customer innovation plays out. But if we turn our lens toward the major server vendors (who are now also storage and networking as well as software vendors), we see that the relatively flat industry revenues hide almost continuous churn. Turn back the clock slightly more than five years ago, and the market was dominated by three vendors, HP, Dell and IBM. In slightly more than five years, IBM has divested itself of highest velocity portion of its server business, Dell is no longer a public company, Lenovo is now a major player in servers, Cisco has come out of nowhere to mount a serious challenge in the x86 server segment, and HP has announced that it intends to split itself into two companies.
And it hasn’t stopped. Two recent events, the fracturing of the VCE consortium and the formerly unthinkable hook-up of IBM and Cisco illustrate the urgency with which existing players are seeking differential advantage, and reinforce our contention that the whole segment of converged and integrated infrastructure remains one of the active and profitable segments of the industry.
EMC’s recent acquisition of Cisco’s interest in VCE effectively acknowledged what most customers have been telling us for a long time – that VCE had become essentially an EMC-driven sales vehicle to sell storage, supported by VMware (owned by EMC) and Cisco as a systems platform. EMC’s purchase of Cisco’s interest also tacitly acknowledges two underlying tensions in the converged infrastructure space:
Digital transformation will drive technology spending growth of 4.9%.Always-connected, technology-empowered customers are redefining sources of competitive advantage for AP organizations. In fact, 79% of business and technology decision-makers that Forrester surveyed indicated that improving the experience of technology-empowered customers will be a high or critical priority for their business in 2015. Similarly, 57% said that meeting consumers’ rising expectations was one of the reasons that they would spend more money on technology next year — the top reported reason for increased technology spending
For the past 20 years, China’s retail industry has benefited from the country’s booming economy to fuel its high-speed development; local and global retail brands alike have grown tremendously in this golden age. However, the slowing macroeconomy and the impact of eCommerce have begun to put the brakes on traditional retail businesses. In contrast, China’s online retail market has continued to grow strongly over the past four years and is expected to top $440 billion by the end of 2014 (including both B2C and C2C). What accounts for this success? The fact that it’s largely driven by the following key elements:
Rapid adoption of online shopping due to a highly fragmented retail industry. The traditional retail market in China is underdeveloped and scattered; consumers in lower-tier cities and remote regions have a very limited access to variety of brands and products. Few retailers have a nationwide logistics network or array of physical stores; there’s no Chinese version of Wal-Mart or Macy’s that can be found across all of the country’s geographic regions or from top-tier cities all the way through to smaller towns. This makes online shopping a better way to meet ever-growing consumer demand.
A rapid increase in online penetration. The Chinese online population (users of both the traditional Internet and the mobile Internet) has been growing rapidly. According to the China Internet Network Information Center (CNNIC), the total online population reached 632 million by June 2014, and total number of mobile Internet users hit 527 million. Improved Internet infrastructure across the country provides an unprecedented opportunity for eCommerce development.
It's never been as challenging for global companies in China as it is right now. First, we've seen a continuous stream of news about the Chinese government requiring greater regulatory governance, starting with the cybersecurity vetting of IT products that relate to national security and public interests in May. Second, leading Chinese Internet companies equipped with emerging technology, such as Alibaba, Baidu, and Tencent, are engaging consumers with enriched products and services, expanding into the enterprise business via innovative business models, and extending their reach from tier-one and tier-two cities to tier-three to tier-six ones.
To gain extensive geographic and vertical coverage in the huge market that is China, vendors have had to engage with partner ecosystems for business operations. Now, it’s even more critical for multinational corporations to enable their local alliances to overcome these disruptions and achieve mutually beneficial strategic business growth. Some vendors have already started doing so, with IBM being a leading example. Its initiatives include:
Launching a strategic partnership with Yonyou. On September 13, 2014, IBM announced the start of its strategic cooperation with Yonyou during the latter's 2014 user conference. IBM will optimize DB2 with BLU Acceleration for various Yonyou products, such as NC (Yonyou’s ERP offering) and its supply chain management, customer relationship management, and human resources management products. In return, Yonyou will offer NC on top of DB2 with BLU acceleration to its customers, based on its evaluation of IBM’s product in June 2013.
On April 23, IBM rolled out the long-awaited POWER8 CPU, the successor to POWER7+, and given the extensive pre-announcement speculation, the hardware itself was no big surprise (the details are fascinating, but not suitable for this venue), offering an estimated 30 - 50% improvement in application performance over the latest POWER7+, with potential for order of magnitude improvements with selected big data and analytics workloads. While the technology is interesting, we are pretty numb to the “bigger, better, faster” messaging that inevitably accompanies new hardware announcements, and the real impact of this announcement lies in its utility for current AIX users and IBM’s increased focus on Linux and its support of the OpenPOWER initiative.
OK, so we’re numb, but it’s still interesting. POWER8 is an entirely new processor generation implemented in 22 nm CMOS (the same geometry as Intel’s high-end CPUs). The processor features up to 12 cores, each with up to 8 threads, and a focus on not only throughput but high performance per thread and per core for low-thread-count applications. Added to the mix is up to 1 TB of memory per socket, massive PCIe 3 I/O connectivity and Coherent Accelerator Processor Interface (CAPI), IBM’s technology to deliver memory-controller-based access for accelerators and flash memory in POWER systems. CAPI figures prominently in IBM’s positioning of POWER as the ultimate analytics engine, with the announcement profiling the performance of a configuration using 40 TB of CAPI-attached flash for huge in-memory analytics at a fraction of the cost of a non-CAPI configuration.[i]
A Slam-dunk for AIX users and a new play for Linux
For the past two weeks, I’ve been on the other side of the planet, spending a few days each in four very different cities: Sydney, Singapore, Beijing, and Shanghai. While Sydney was much like I remembered it — an exotic version of San Francisco but with better weather — the Singapore skyline had changed drastically and now appears to be a science-fiction version of the seaport I remembered. (If you think I’m kidding, just do a search on “Marina Bay Sands Hotel.”)
In contrast to Sydney and Singapore, I hadn’t been to either Beijing or Shanghai before. I was blown away by how vibrant those cities are and how much prosperity is on display: If the Chinese economy is truly slowing down, you wouldn’t know it from all the luxury cars on the road.
Despite all the diversity I saw on my trip, for me, there was one constant across all four cities: the high level of interest in customer experience.
In Sydney, I gave talks about customer experience to three different groups of 20 to 40 people each. Even though the attendees came from very diverse companies — like insurers, quick-serve restaurants, technology vendors, and giant professional services firms — all three groups asked questions that showed this wasn’t their first CX rodeo.
I also gave a speech to the digital team at a major bank, and as a bonus, I got to see the company’s chief experience officer give a talk. Frankly, there are a lot of US and European banks that could learn from that large, enthusiastic, clued-in group.
My time in Singapore started out with a customer experience ecosystem mapping workshop for around 35 people. This was also a diverse group, with varying levels of customer experience expertise, even among attendees from the same company. They all picked up on the concepts, though, and generated an impressive amount of insight.