Growth in the number of small and medium-sized enterprises (SMEs) on the mainland, together with wider internet access, will fuel the growth of the "cloud-computing" market serving SMEs there, a market research report says. Cloud computing, often referred to as simply "the cloud" is the delivery of on-demand computing applications as well as storage of data via the internet. Driven by increasing demand from SME users for the communication, collaboration, and business applications delivered via the cloud computing market, the mainland SME cloud services market will reach 16.7 billion yuan (HK$21.11 billion) this year, representing a 54 per cent increase from 10.8 billion yuan in 2012. It could increase to 33.6 billion yuan in 2016, according to research released last week by Parallels, a hosting and cloud services enablement provider. Cloud computing is a virtual host computer system that enables enterprises to buy, lease, sell, or distribute software and other digital resources over the internet as an on-demand service, said Hong Bo, founder of mainland information technology website Donews. It no longer depends on a server or a number of machines that physically exist, since it is a "virtual" system. "The requirement of each client is different, and the services provided by the cloud are tailored to the different needs of clients, rather than being based on a large number of machines as in the traditional hosting model," Hong said. David Jacob Dzienciol, vice-president and general manager (Asia Pacific) of Parallels, said demand from SMEs was shifting from traditional hosting toward new cloud services. Parallels' research found that two-thirds of SMEs prefer to buy applications in bundles, so service providers who can meet this demand will put themselves in a good competitive position. The potential for cloud computing services is huge, Parallels said. Just five per cent of Chinese SMEs now use hosted servers, a small share that is growing fast and rose by 31 per cent last year. Of the 16.7 billion yuan SME cloud spending on the mainland this year, Parallels estimates that applications account for the largest share, at 7.1 billion yuan, and infrastructure service products contribute 5.9 billion yuan.