Hong Kong plays catch-up on cloud computing

The city is gradually making headway in a technology that is changing the way business is done around the world

PUBLISHED : Monday, 30 November, 2015, 4:30am
UPDATED : Monday, 30 November, 2015, 4:30am

We all use the cloud. Every time you download an app or upload a photo to Facebook, Instagram or Weibo, you’re connecting to a network of servers. Perhaps you’re one of the 60 million who stream movies from Netflix, the 300 million users of file-sync company Dropbox, or part of the Facebook empire of 1.2 billion users.

However, smartphones are just the beginning; the cloud – or rather, cloud computing – is rapidly changing how business is done. The cloud may be the biggest transformative technology of our times, and Hong Kong itself is gradually making headway in becoming a cloud city.

The reason this city has been slower than some regions to embrace the cloud is partly because of the size of its finance industry – generally the most risk-averse – but mostly it’s down to availability.

“All organisations experience some level of nervousness when starting with public cloud,” says Michael Warrilow, research director at Gartner in Sydney, Australia.

Gartner’s recent survey of chief information officers in Hong Kong found that they rank the cloud a lower priority than the global average, much lower than in Southeast Asia, Australia/New Zealand and India.

There’s nothing shocking about how the cloud works if all you want to do is store files online. But now the cloud is about computing power and superfast data analysis, too.

For smartphone apps that offer real-time information, that’s critical. Ask Siri or Google Now what the weather will be like today – as 700 million people do every day – and they respond in seconds, but where is that information coming from?

The source is The Weather Channel, which has massively increased the accuracy of its predictions by using the cloud not only to store its data, but to perform all of its calculations and processing.

“The Weather Channel was able to take data from its meteorology instruments to predict the weather for three million [data] points,” says Matt Wood at Amazon Web Services (AWS), which rents remote computing and storage to other companies.

“But since it’s moved to AWS it has increased the resolution [of satellite mapping] to three billion.”

Not only can it now collect more raw data, but it can make better, faster predictions, too; that forecast you get on your phone now changes every 15 minutes rather than each hour. The processing power behind the scenes is truly massive.

“The Weather Channel runs 20,000 cores on AWS, and has several hundred terabytes of shared memory across the cluster,” says Wood. Big data has a big new home – and it’s big news.

The ultimate aim is a world where you can buy information technology just like you buy electricity. It’s where anyone can create an app – and grow it to global popularity – without ever having to think about hardware or software. You just lease it, as and when it’s needed, and pay as you go for bandwidth.

There are hundreds of examples of household name apps that do just that: Airbnb, Pinterest, Foursquare, Tinder, Periscope and Expedia, to name a few.

Since a so-called “public cloud” company can not only remotely store data, but use software to analyse it, automate it, and apply computing power to it, none of those apps need a server or a data centre.

The likes of IBM, Microsoft and Google all offer to host as much or as little data as a business wants it to, but it is AWS that’s running away with the new public cloud market.

Its staggering growth tells you all you need to know about how integral the cloud tech is becoming to modern life; with year-on-year growth of more than 80 per cent and US$7 billion earnings, the company is valued at US$50 billion.

“This is breakneck pace for an organisation that now claims over one million active customers,” says William Fellows, cloud expert at 451 Research.

“This pace of growth is possible because AWS pioneered the commercial success of cloud computing, starting with infrastructure and building out from there,” he says, adding that AWS had made the experience of buying and selling of IT resources much more like shopping for gadgets.

Warrilow at Gartner says that AWS may be the largest public cloud globally but “the situation in Hong Kong is a little different – there are ‘availability zones’ in Beijing, Tokyo and Singapore, but not in Hong Kong, which reduces demand somewhat.”

That affects the speed of the network, although Hong Kong is now an “edge location” for AWS, which helps apps offer much faster interactive content, and live and on-demand streaming video and music.

For digital businesses with apps and streaming services, there can be no delay. Companies in Hong Kong using AWS include English anime movie streaming service Gogoanimie, mobile games developer Animoca Brands and insurance company AIA.

“A lot of them are start-ups focused on a global market, so the reach and breadth and depth of our services makes a big difference,” says Shane Owenby, managing director for Asia-Pacific, AWS.

It’s not all about AWS. Microsoft has just teamed-up with Hong Kong’s telecommunications network operator HKT to offer a cloud version of its Office software, while start-up incubator Hong Kong Science and Technology Parks Corporation (HKSTP) is the only partner of Google Cloud Platform in town.

“Public cloud services have become a recent trend, and it is continuing to expand,” says Peter Mok, head of incubation programmes at HKSTP, which helps start-ups involved in web and mobile technology, biotechnology and technology.

“About 60 per cent of our incubatees on apps development are using public cloud services,” he says.

HKSTP’s strategic partners include AWS, CITIC Telecom, Google Cloud Service, Microsoft and Softlayer. It’s a competitive market, and with good reason; research company IDC thinks that the total spending on cloud services in Hong Kong will reach US$685 million by 2017.

The cloud is quickly being embraced by larger companies, too. Part of the reason is that storing data is not always a choice; the Hong Kong Personal Data Privacy Ordinance protects individuals’ right to privacy by regulating the handling of personal data. For many companies, that means keeping data.

“There are companies that contractually have no choice but to keep data for some number of years,” says Owenby, who says that this archival market includes call centres, governments and financial services that must keep customer records for many years.

Perhaps the best two examples of how the public cloud is not only dominating, but innovating are Netflix and Nasa.

Eight million people are pressing play every second to stream movies from Netflix, which accounts for 37 per cent of the internet in the US at peak times.

If that’s mind-boggling, what Nasa is doing with the cloud is staggering. The space agency now has an automated cloud system that takes raw one-megapixel photos from its rovers on Mars, and its satellites and at Saturn and Pluto, and puts them straight into the AWS cloud the moment they hit antennas on Earth.

Those photos are then processed, automatically stitched together, and then uploaded to Nasa’s websites, delivered via its smartphone apps, and put into databases for its scientists to examine.

It all happens instantly and simultaneously; the world got to see the first-ever images from Pluto earlier this year at the exact same time as Nasa’s staff. Nasa even operates the Mars rover using the cloud.

“The cloud used to be somewhere where people stored their music,” says Tom Soderstrom, chief technology officer at Nasa’s Jet Propulsion Laboratory. “But today’s toy is tomorrow’s tool.”

Some think the cloud is changing the world, but it’s having an effect on other worlds, too.