Hong Kong’s ‘cloud’ services market heats up with Tencent expansion
Chinese internet giant Tencent Holdings is expected to heat up the market for so-called cloud computing services in Hong Kong, following the launch of its own operation that targets the city’s large community of small and medium-sized enterprises.
Tencent Cloud, the fast-growing cloud services unit of Shenzhen-based Tencent, kicked off its expansion in Hong Kong last week by collaborating with the Hong Kong Science and Technology Parks Corporation to provide vital online infrastructure requirements for the start-ups under its incubation programmes.
“There should be plenty of business to go around in the local market as Hong Kong is home to a growing start-up sector,” Philbert Shih, the founder and managing director of international consulting firm Structure Research, told the South China Morning Post.
This development has made Hong Kong a strategic new battleground for the cloud businesses of rivals Tencent and e-commerce powerhouse Alibaba Group Holding, which has rapidly increased its presence in this specific market segment since last year through its Alibaba Cloud unit.
Alibaba Group is the publisher of The South China Morning Post.
Cloud computing enables companies to buy, sell, lease or distribute over the internet a range of software and other digital resources as an on-demand service, just like electricity from a power grid. These resources are managed inside data centres. “Cloud” refers to the internet as depicted in computer network diagrams.
These cloud services are hosted and managed in data centres, which are secure, temperature-controlled facilities that house large-capacity servers and data storage systems, and equipped with multiple power sources and high-bandwidth internet connections.
The market for cloud services over the public internet in Hong Kong is forecast to rise 72 per cent this year to US$196 million, up from US$114 million last year, according to Structure Research.
Welwin Kwok, the senior director for technical and product operations at Tencent’s international business group, said Tencent Cloud’s advantage in supporting the online infrastructure requirements of the city’s small businesses stems from its strong expertise in delivering digital content.
Hong Kong-listed Tencent, the world’s largest video games company by revenue, also runs WeChat, the mobile messaging service that has evolved into the mainland’s largest social network, as well as a popular online platform for payments and money transfers.
“We provide a simple and powerful way for start-up and entrepreneurs to enhance user experience, accelerate growth and transform their businesses,” said Kwok.
With a data centre in Hong Kong, Tencent Cloud’s operation caters to the requirements of online providers, such as those involved in games, live broadcast and financial services.
Jabez Tan, the US-based research director of Structure Research, said both Tencent Cloud and Alibaba Cloud are leasing data centre capacity from so-called third-party co-location providers to expand in Hong Kong.
“It is unlikely that Alibaba and Tencent will build their own data centres in Hong Kong due to the scarcity of land available for the development of these facilities in the city,” said Tan.