China holds a lot of potential. Mirantis announces a partnership to unlock it.
China is seen as a massive opportunity for cloud computing vendors, but with that massive opportunity comes huge difficulties. China is a protected market, cultural barriers are rife, and it has often been put in the basset labelled “awesome, but just too hard.” Many cloud vendors have announced China operations, only to have the details of actual market success quietly disappear.
Given all this context, it is interesting to reflect on the announcement today that Mirantis, the high-flying OpenStack vendor, has partnered with UCloud, China’s largest independent public cloud provider, to push OpenStack-powered clouds into large Chinese organizations. To give an idea of the size of the market opportunity in China, here are some recent stats:
- Investment in cloud computing infrastructure in China is estimated by consultancy Bain & Company to be growing faster than overall IT spending and projected to reach $20 billion by 2020, a compound annual growth rate of 40% to 45%.
- Cloud computing is a national strategic policy and the government included it in the nation’s 12th Five-Year Plan.
- In December 2014, the Ministry of Industry and Information (MIIT) officially declared its intention to support OpenStack ecosystems and encourage state-owned enterprises to use OpenStack-based cloud products.
Founded in 2012 by former Tencent executives, UCloud is the No. 1 independent public cloud service provider in China, specializing in hosting and cloud services for clients in various industries such as e-commerce, gaming, mobile internet, and SaaS, among others. The company has data centers in China, Hong Kong, and the United States, and is focused on not just the domestic opportunity, but more broadly on helping Chinese clients support their operations globally. The company announced a $100 million Series C financing round this spring, with $160 million raised to date.
The joint venture with Mirantis, imaginatively called UMCloud, is being led by UCloud CEO and founder Xinhua Ji from headquarters in Shanghai. Alongside the announcement, the two are proudly trumpeting that the Shenzhen Stock Exchange is among a handful of early customers for the new joint venture. The Shenzhen Stock Exchange began to explore OpenStack as the infrastructure for its new planned “Financial Cloud” late in 2014. While the exchange was already providing backend outsourced computing services to many of its customers, the new initiative aimed to drive incremental new revenues.
Other recent Mirantis customer wins in China include Jiesai, a leading Chinese provider of telecommunications hardware and software; Huawei, one of the world’s largest networking equipment providers with 2014 revenues of more than $46.5 billion; and ZTE Corporation, China’s largest listed telecoms equipment company.
“As the world’s number one OpenStack pure-play vendor, Mirantis is the open cloud technology leader with deep and rich OpenStack deployment success over many years in many different enterprise production environments,” said Xinhua Ji, CEO of UCloud and CEO of the new joint venture with Mirantis, UMCloud. “As the largest independent public cloud service provider in China, UCloud deeply understands customer requirements for cloud computing in China. Our combined strength will allow UMCloud to become the foundational technology provider for China’s Internet Plus Initiative, providing the most reliable, secured, and stable OpenStack-powered cloud service to China enterprises.”
Having seen a number of previous Chinese cloud computing announcements led on a road to nowhere, all eyes will be on how effective this partnership actually is. So long as the interests are properly aligned, and the regulatory hurdles are cleared, this is one deal that cloud pay real dividends.
