China ‘growth opportunities’ put Microsoft on cloud nine

Microsoft told China Daily in June it plans to double its cloud capacity in China to be able to serve nearly 200,000 enterprise customers locally in 2018.

Microsoft’s updated plan appears to indicate a stronger growth momentum in China, one of the world’s largest IT markets.

“China is one of the most dynamic markets, where enterprises are aggressively pushing forward digital transformation, creating abundant growth opportunities,” Nadella said at a forum, without disclosing specific investment figures.

At the Microsoft Tech Summit, Nadella also announced Azure Stack hybrid cloud solutions developed in collaboration with hardware makers such as Huawei Technologies Co Ltd and Lenovo Group Ltd will be unveiled in the first half of 2018. The new cloud service is designed to meet enterprises’ growing demand for local data centres with more flexible computing capability.

Microsoft said earlier it is aiming for triple-digit growth in Azure cloud services in China this year as well. It posted triple-digit growth in 2016.

The company’s local cloud customers include startups such as bike-sharing company Mobike Technology Co Ltd and big companies such as Shanghai Zhenhua Heavy Industries Co Ltd.

Although locked in an intense race with Amazon.com Inc in the booming cloud computing sector, the Redmond, Washington-based company managed rapid growth not only in China but globally.

In the July-September quarter, Microsoft beat profit estimates on gains from cloud services, which pushed its market valuation above the $600-billion mark for the first time since the dotcom boom in January, 2000.

According to market research company Gartner, Microsoft had about 7 percent market share in the public cloud service segment in 2016, a distant second to Amazon that had more than 44 percent market share.

But still, Microsoft leads other competitors even as it faces rising pressure from Alibaba Group Holding Ltd in China.

The country’s cloud computing industry is forecast to be worth 430 billion yuan ($63.3 billion) in 2019, up from 150 billion yuan in 2015, according to Ministry of Industry and Information Technology data.

Charlie Dai, head analyst at Forrester Research Inc, said China’s cloud market is get-ting increasingly crowded, with domestic and foreign companies slugging it out.

David Ku, corporate vice-president for AI Core group at Microsoft, said the company is working hard to integrate artificial intelligence technology into its products.