Domestic analysts expect the cloud computing market to be a key driver of future growth for Chinese tech giants Alibaba and Tencent.
Data from market analysis firm IDC indicates that China’s is currently the world’s second biggest market for public cloud computing after the US.
Spending on China’s public cloud market is expected to hit USD$10.5 billion in 2019, while growth prospects for the sector will remain strong in future given that Beijing’s push for economic digitization is heavily dependent upon cloud computing.
This will create an immense bonanza for domestic tech giants given that security restrictions bar Western companies from entry.
Alibaba is currently the undisputed leader of the Chinese cloud computing sector after achieving a first mover-advantage. Chief rival Tencent remains far behind yet continues to make rapid strides.
Alibaba Cloud claimed a 43% share of the highly important infrastructure-as-a-service market in China last year, while Tencent’s share stood at 11.5%, as compared to 7.4% in 2016.
Despite this huge gap some analysts believe Tencent can close in on Alibaba by shoring up its technical knowledge and leveraging its edge in the gaming and video streaming sectors.
“I think Tencent can be a competitor [for Alibaba] in the market,” said Elinor Leung, head of telecom and internet research at brokerage CLSA, to the Nikkei Asian Review.
Despite the immense promise of the Chinese cloud market Alibaba and Tencent are still losing money in the sector, with Alibaba’s cloud business posting losses of over 1 billion yuan in the first quarter of 2019 alone.