As the interest of Chinese organizations to adopt cloud solutions for business transformation is increasing, OpenStack-based cloud solutions have become the hot topic in the China market in 2014. I believe that 2015 will be the key year for OpenStack and it will rapidly develop in China. Here’s why:
Government policy support. The Ministry of Industry and Information Technology (MIIT) of China held the first China Open Source & Cloud Computing Summit (COSCCS) on December 11. At this event, the Chinese government for the first time officially declared its intention to support OpenStack ecosystems and encourage state-owned enterprises (SOE) to use OpenStack-based cloud products: “…through OpenStack, we can contribute to a good business model…” said the deputy minister of MIIT. Forrester believes that there will be more and more Chinese SOEs and local governments that will invest in OpenStack-based cloud project in 2015.
OpenStack is mature as a private cloud solution. With the launch of the Juno version in October 2014, OpenStack addressed many upgrade concerns, making it easier to roll back a failed deployment and ensure thorough cleanup. It also added a record 3,219 bug fixes and enterprise features, such as storage policies, provisioning of Hadoop and Spark, as well as network functions virtualization (NFV). Another specific advantage is that Chinese organizations are not facing the challenge to upgrade from early releases of OpenStack because the China market started deployment of OpenStack mostly from 2014 onwards.
I recently attended VMware’s vForum 2014 event in Beijing. The vendor has established a local ecosystem for the three pillars of its business: the software-defined data center (SDDC), cloud services, and end user computing. VMware is working with:
Huawei to refine SDDC technologies.VMware is leveraging Huawei’s technology capability to improve its product feature. VMware integrated Huawei Agile Controller into NSX and vCenter to operate and manage network automation and quickly migrate virtual machines online. Huawei provides the technology to unify the management of virtual and physical networks based on VMware’s virtualization platform. This partnership can help VMware optimize its existing software features and improve the customer experience.
Early next month, Forrester will publish a report on the dynamics of China’s private cloud market. This research demonstrates that Chinese I&O pros have started to leverage the benefits of private cloud — including highly standardized and automated virtual pooling and metered pay-per-use chargeback — to support the digital transformation of traditional business. By using private cloud, Chinese I&O pros not only support their business units’ digital transformation, but also provide the cost transparency that the CFO’s office demands. In practical business terms, Chinese organizations use private cloud to:
Improve business agility. There is fierce market competition to give Chinese consumers more choices. To do this, Chinese organizations must shift their business operations to increase their product portfolio to win new customers and provide a better customer experience to serve and retain existing customers. Chinese I&O pros need to provide a cloud platform that also supports business units’ requirement to lower their capital and operating expenditures.
Avoid disruption by Internet companies. Chinese web-based companies have started to use high-quality service to disrupt traditional businesses. Chinese I&O pros need to provide more flexible computing to help the application development team to improve the development cycle and respond to customers more quickly, flexibly, and effectively.
Develop new business without adding redundancy. Chinese organizations want to scale up new business to offset declines in revenue. However, the existing IT infrastructure at these firms often cannot support new business models — and can even take a toll. Chinese I&O pros need to find a new way — such as private cloud — to support business development and reuse existing infrastructure.
Several events over the past few months in China will affect both the IT procurement strategy of Chinese organizations and the market position and development of local and foreign IT vendors, including:
A government-led push away from foreign IT vendors. Amid security concerns, the Chinese government has issued policies to discourage the use of technology from foreign IT vendors. As a result, many IT and business decision-makers at state-owned enterprises (SOEs) and government agencies have put their IT infrastructure plans — most of which involved products and solutions from foreign IT vendors — on hold. They’ve also begun to consider replacing some of their existing technology, such as servers and storage, with equivalents from domestic vendors. This is significant given that government agencies and SOEs are the key IT spenders in China.
A trend to get rid of IBM, Oracle, and EMC. Alibaba was an early mover, replacing its IBM Unix servers, Oracle databases, and EMC storage with x86 servers, open source databases like MySQL and MongoDB, and PCIe flash storage. This has evolved into replacing these foreign products and solutions with ones from local Chinese vendors. For example, Inspur launched the I2I project to stimulate customers to drop IBM Unix servers in favor of Inspur Linux servers to support business development. The Postal Savings Bank of China, China Construction Bank, and many city commercial banks have started deploying Inspur servers in their data centers. However, this only affects the x86 server and storage product market: While domestic vendors can provide x86 servers and storage, they still have no databases to replace Oracle’s.
Last month I attended Huawei’s annual Global Analyst Summit, for the requisite several days of mass presentations, executive meetings and tours that typically constitute such an event. Underneath my veneer of blasé cynicism, I was actually quite intrigued, since I really knew very little about Huawei. And what I did know was tainted by popular and persistent negatives – they were the ones who supposedly copied Cisco’s IP to get into the network business, and, until we got better acquainted with our own Federal Government’s little shenanigans, Huawei was the big bad boogie man who was going to spy on us with every piece of network equipment they installed.
Reality was quite a bit different. Ancient disputes about IP aside, I found a $40B technology powerhouse who is probably the least-known and understood company of its size in the world, and one which appears poised to pose major challenges to incumbents in several areas, including mainstream enterprise IT.
So you don’t know Huawei
First, some basics. Huawei’s 2013 revenue was $39.5 Billion, which puts it right up there with some much better-known names such as Lenovo, Oracle, Dell and Cisco.
Microsoft’s cloud-based productivity suite, Office 365, is now generally available in China through a partnership with 21Vianet, China’s largest carrier-neutral Internet data center service provider. This announcement follows the recent launches of Microsoft Azure and SQL Server 2014.
Local teams ensure timely responses. 21Vianet has 300 engineers to provide hardware and software service and support for Microsoft Azure and Office 365. For emerging technologies, large Chinese organizations and government agencies like to have local engineers available to quickly solve their problems rather than using a service hotline or remote support.
Chinese customers can choose the services they want.Companies and government agencies wishing to purchase Office 365 have a range of tiered pricing options with different functionality, including only buying one Office 365 service — say, SharePoint, Exchange Online, or Lync. As Chinese organizations normally run collaboration applications on-premises, they won’t give up legacy infrastructure, preferring to test public cloud services on a small scale first. For example, TCL uses on-premises email and Office software, so it’s only buying Lync and SharePoint services to improve efficiency instead of completely migrating to a public platform.
Chinese media outlets recently published a speech given by Huawei CEO Ren Zhengfei in which he addressed Huawei’s enterprise business. This speech was not only represents the first public enterprise business overview since Huawei entered the market three years ago, but it also details the firm’s enterprise business development strategy for 2014.
First note that Huawei recorded US$2.5 billion in enterprise revenue in 2013, representing year-on-year growth of 33% — which did not meet the company’s expectations. Mr. Ren’s speech shows how Huawei is further fine-tuning its enterprise strategy and what that means for end users. He said that Huawei:
Has an enterprise solution to support your big data strategy. Organizations need to translate huge amounts of data into business outcomes. While Huawei’s big data hardware solution didn’t address business requirements by industry and region, it plans to build complete big data solutions using FusionCube, its converged infrastructure product.
Will centralize its resources in key products and regions. This is a good strategy for Huawei’s enterprise business, which focuses mainly on Asia Pacific and Europe. By concentrating on key countries like China, Japan, and India, Huawei can improve its local service capabilities, including maintenance, tech support, and ecosystem development, via ISVs and SIs.