Public cloud is the ultimate form, there will be 5-7 giant manufacturers in the future

Cloud computing is love analysis (WeChat subscription number: love analysis ifenxi) focuses on the track. From infrastructure to industry applications, cloud computing is reshaping the entire IT industry. In the past two years, the overall penetration rate of cloud computing has been continuously improved, and the turning point of the industry has arrived. Love Analytics divides the cloud computing market into basic cloud services and application cloud services, and will launch various segmentation track reports one after another.

This report focuses on the basics of the basic cloud service. It will explain the current trend of the entire basic cloud market, the future trends of the sub-segment of public and private clouds, and the growth space from top to bottom. In the next section, we will analyze the leading and potential companies in each segment.

Core view

Policy, artificial intelligence and the Internet of Things are important drivers of the future. In terms of policies, departments at all levels have clearly stated that the business of government departments, banks and other financial institutions will gradually migrate to the cloud, which will bring a large number of orders to private cloud manufacturers; technically, the artificial intelligence and the Internet of Things industry will generate strong data calculation and storage. Demand, this is a major positive for public cloud vendors.

Hybrid cloud is the transitional phase, and public cloud is the ultimate form of basic cloud services. Hybrid cloud is a product of compromise between enterprises and vendors. There are problems with public-private conversion technology, and it is difficult to truly realize the low-cost advantage of cloud computing. From the perspective of foreign development, the public cloud growth rate and penetration rate exceed the private cloud. When cloud computing covers the entire IT infrastructure around 2025, the public cloud will gradually replace the private cloud.

There will be 5-7 giants in the public cloud market. Since the public cloud has high scale and technical requirements and higher market concentration, the head company can establish a high scale barrier and generate an industrial chain for the upstream and downstream of the industry. Therefore, the public cloud vendor business scope will be expanded to the whole. IT industry. The big track, high concentration, love analysis that there will be 5-7 giants in the public cloud market.

Private cloud market startups have limited space for development. Affected by policies and other factors, the private cloud market will remain mainstream in the next five years. At the same time, under the impact of the "IOE" wave and open source technologies such as OpenStack and Docker, traditional IT vendors will give up part of the market share, and it is easy for startups to enter the market. However, it is difficult to establish scale barriers like public clouds. Therefore, the private cloud market will still be as extremely fragmented as the traditional IT market. Most startups are difficult to grow up, and mergers and acquisitions are a better way to exit.

One of the cloud computing series: public cloud is the ultimate form, there will be 5-7 giant manufacturers in the future

Since August 2006, AWS has provided Amazon Elastic Cloud to the outside world. The global cloud computing market has gone through eleven years. The domestic market, if calculated from the 2010 Alibaba Cloud public beta, has grown to the eighth year.

After nearly a decade of development, the cloud computing market has passed the early education customer stage. Shangyun has become the consensus of most enterprises. The focus of debate has become the choice of technology architecture, which cloud vendors to purchase, and the entire market is entering an explosive phase.

From the policy point of view, in April this year, the Ministry of Industry and Information Technology issued the "Three-Year Action Plan for Cloud Computing Development (2017-2019)", which proposed that the cloud computing industry will reach 430 billion in 2019. Cloud computing has become an important strategy for the development of the new generation of information industry in the country. .

From the perspective of market participants, both domestic and foreign markets have ran out of super unicorn-level companies. AWS in foreign countries exceeded $12 billion in revenue in 2016, and its operating profit exceeded US$3 billion. Domestic Alibaba Cloud (see Research Report: Alibaba Cloud's expected net profit of 2020 million in 2020, crushing 99% of A-share companies) revenue in 2016 It is worth 5.5 billion yuan. Although it is still in a loss state, the loss has narrowed significantly. It is expected to achieve profit in 2017.

Surprisingly, the two cloud service providers are still maintaining rapid growth, especially Alibaba Cloud. The revenue growth rate in 2016 is 137%, showing strong growth momentum, indicating that the domestic cloud computing market is a very high ceiling track. Long-term concern.

Industry Status

The crowds compete, the public cloud is only one-third of the size of the private cloud market.

One of the cloud computing series: public cloud is the ultimate form, there will be 5-7 giant manufacturers in the future

To study the cloud computing industry, we must first divide the industry. The general division standard is to divide the cloud computing market into: IaaS (infrastructure as a service), PaaS (platform as a service) and SaaS (software as a service).

The IaaS layer mainly contains the underlying resources such as computing, storage, and network. The SaaS layer is mainly used for end-user applications. The two parts are clearly defined, but the PaaS layer is very vague, and the database, middleware, application development components, and even cloud communication. Basic applications such as push and push are attributed to the PaaS layer. This makes many manufacturers with different product and business models differently known as PaaS vendors.

Therefore, Love Analytics reclassifies the entire cloud computing market, and the vendors that provide the underlying resources and application development components are called basic cloud service providers, and will mainly provide various applications, including vendors of basic applications such as databases, cloud communications, and push. Called an application cloud service provider.

The basic cloud services mainly include public cloud IaaS vendors, private cloud IaaS vendors, container technology vendors, and cloud management vendors. The basic cloud services are divided into public cloud and private cloud, including public cloud IaaS vendors, private cloud IaaS vendors, and container technologies. Vendors, cloud management vendors, etc.

There are currently six types of players in the public cloud market, namely large Internet companies, startup companies, traditional equipment manufacturers, traditional IDC manufacturers, telecom operators and foreign manufacturers. According to IDC and Gartner data, the public cloud market in 2016 is 15 billion yuan. about. These companies rarely do only the underlying resource services, and have gradually expanded their business to provide application development platforms and various basic applications.

In addition to the above categories of players, the private cloud market also includes traditional software vendors such as UF and Kingdee. The private cloud market has lower technical requirements than the public cloud market, and there are various open source technologies. The number of competitive vendors is significantly higher than that of public clouds. In terms of market size, the private cloud market in 2016 was between 40 and 50 billion, and the public cloud was only one-third of the private cloud.

From the perspective of China's entire IT investment, the government, central enterprises, state-owned enterprises and large-scale private enterprises occupy a major share, and these companies are all trying to use new technologies to improve productivity, but they are temporarily unable to develop into public cloud customers. Therefore, in the next few years, the private cloud business will still occupy the majority of the market.

Drivers: Open source technology lowers entry barriers, mobile Internet, "Internet +" drives demand outbreaks

One of the cloud computing series: public cloud is the ultimate form, there will be 5-7 giant manufacturers in the future

The birth of the cloud computing industry is inseparable from technological breakthroughs, but the vigorous development of cloud computing is determined by demand.

The virtualization and distributed architecture matured to enable the birth of cloud computing, and open source technology lowered the entry barrier. Virtualization technology emerged very early, but initially it was mainly used for mainframes. In 1999, VMware launched commercial virtualization software on X86 servers, laying the foundation for the birth of cloud computing. More importantly, Google released three papers around 2004, releasing distributed architecture technology to the world. Amazon has borrowed these papers and developed its own cloud computing products. Domestic Alibaba and Tencent's early technical architecture have also been referenced.

Despite Google's three papers, early cloud computing is still a high-tech industry, including computer room, network construction, server, storage, network and other aspects of virtualization, etc., it is difficult for general startups to form a complete technology. team. Therefore, early cloud computing was mainly the direction of the big companies, and a few startups tried to cut in, most of them ended in failure, and few survived.

The rise of open source technologies such as OpenStack and Docker has greatly reduced the entry threshold and promoted the development of the cloud computing market. Part of the research and development work has been completed by the community, and the startup company can develop corresponding cloud computing products based on open source technology.

However, there are problems in the stability, compatibility, and security of open source technologies. The amount of bearer services is relatively limited, and managing tens of thousands of servers is very difficult. Therefore, these technologies are currently mainly used in the private cloud market, and the server scale of a single computer room of an enterprise-level customer is rarely more than several hundred, which is an affordable range.

It is worth noting that cloud computing is not just a simple technical iteration, but a radical change in the way companies purchase IT resources. Enterprises can adjust the procurement of IT resources in real time according to business changes, and basically do not need to have dedicated operation and maintenance personnel to manage the equipment room. As a result, the relationship between enterprises and cloud service providers has become closer and customers are more sticky.

"Internet +" relays the mobile Internet and becomes the driving force of current demand. At the beginning, cloud computing mainly served as a personal webmaster. Before and after 2010, smartphones were widely popularized. With the rise of mobile Internet, many startups wanted to occupy a place in the new entrance of mobile phones. These companies are characterized by small scale, but the business is growing at an extremely fast pace. They hope to invest more resources in product development and marketing, but the underlying IT resources need to meet the needs of rapid business growth. The low-cost and flexible services of cloud computing are just right for their needs.

Therefore, the mobile Internet has become the first driving force for the development of the cloud computing market. In 2013, the mobile game industry, the O2O industry in 2014, and the live broadcast industry in 2015, these rumors of the mobile Internet era not only gave birth to the unicorn company, but also allowed cloud computing vendors to enter the fast lane of development.

However, as the growth rate of smartphone shipments slowed down, the penetration rate of Chinese netizens continued to increase, and the growth rate of mobile Internet slowed down noticeably. It is very difficult to continue to have a big gust to promote the development of the cloud computing market.

On the other hand, domestic Internet companies have two characteristics: First, the survival time of most enterprises is very short, the business model is falsified, the capital chain is broken, etc., which will lead to sudden death of the company. Second, once the early explosive growth is passed, the business enters. At the maturity stage, most will choose to build their own computer rooms and no longer use cloud service providers.

The difficulty of acquiring new customers has become greater, and the original customers have been losing for various reasons, and cloud service vendors are turning their attention to traditional enterprises. When cloud computing was just emerging, traditional enterprises were skeptical about cloud computing and did not consider the business cloud. But after years of market education, traditional companies are willing to try cloud computing. At the same time, such enterprises are greatly affected by the Internet and are developing Internet products. At this time, traditional IT architectures are difficult to meet the business needs of high concurrency.

Therefore, the transformation of traditional enterprise “Internet +” has become another driving factor in the cloud computing market. From the point of view of the customer's willingness to pay and the ability to pay, the traditional enterprise is obviously higher than the Internet enterprise, but at the same time, the cloud service provider's customer ability and service capability are higher, and the business model becomes heavier.

Future trend

Policy, artificial intelligence and the Internet of Things are important drivers of the future

One of the cloud computing series: public cloud is the ultimate form, there will be 5-7 giant manufacturers in the future

The policy accelerates the cloudization of industries such as finance and government affairs, and private cloud vendors benefit. The wave of “Internet +” in traditional enterprises is still going on, and it will have a huge impact on the entire cloud computing market in the next few years. In addition, large central enterprises, government agencies and institutions are still on the sidelines. The motivation of such customers in their own business is not very strong, and more needs to rely on policies.

According to the Ministry of Industry and Information Technology's "Three-Year Action Plan for Cloud Computing", the scale of the cloud computing industry reached 430 billion in 2019. If this goal is to be achieved, local governments and regulatory authorities will need to provide policy support. The China Banking Regulatory Commission and the Beijing Municipal Government have issued relevant policies on the cloud of enterprises and departmental information systems.

In July 2016, the China Banking Regulatory Commission issued the “Guidelines for the Supervision and Development of the 13th Five-Year Plan for China's Banking Information Technology”, stating that by 2020, all important information systems for the Internet scenario will be migrated to the cloud computing architecture platform. Less than 60%.

In April this year, the Beijing Municipal Government issued the “Beijing Municipal Government Cloud Management Measures”, proposing the principle of “Shangyun is the norm, not the cloud as the exception”. The information systems of various departments will gradually migrate to the cloud and stop purchasing servers and storage.

In the past few years, the development of the cloud computing market has largely come from the transformation of corporate demand, which is a purely self-issued market. In the next few years, the role of policies in the development of the cloud computing market will become more and more important, but the policies mainly affect government ministries, central enterprises and large state-owned enterprises. These three types of customers have low acceptance of public clouds, mainly with private clouds. Business-oriented.

The rise of AI and the Internet of Things industry is good for public cloud vendors. Cloud computing as an infrastructure is itself to solve problems such as data computing and storage. In the future, the areas where data storage and computing are extremely demanding are undoubtedly artificial intelligence and the Internet of Things. From the second half of 2016, the rise of the AI field has already played a role in promoting cloud vendors. Conversely, it is precisely because of the massive computing power provided by cloud vendors that AI technology has ushered in rapid development.

The same is true for the Internet of Things. The data collected by the sensors needs to be aggregated together through cloud computing for analysis and processing to generate value. According to Gartner's forecast, there will be 8.4 billion IoT devices in the world in 2017 and more than 26 billion in 2020. As the coverage of sensors continues to increase, the demand for cloud computing in the Internet of Things will increase.

Whether it is AI or the Internet of Things, it puts very high demands on data storage, processing and computing. It is difficult to bear such business pressure by relying on private cloud and other means to build infrastructure. Therefore, new technologies and technologies such as AI and Internet of Things The new demand derived from the combination with the industry is mainly a positive factor for public cloud manufacturers.

Hybrid cloud is a transitional phase, and most of the business will run on public clouds in the future.

One of the cloud computing series: public cloud is the ultimate form, there will be 5-7 giant manufacturers in the future

Hybrid cloud is essentially a private cloud, and technology and cost issues are difficult to solve. In the past few years, the battle between public and private clouds, the industry finally gave the answer is a hybrid cloud, but the reality is not as good as imagined.

First of all, enterprises have great differences in the demand for public and private clouds. The advantage of public clouds is that they are cheap and convenient. Enterprises basically do not need their own operation and maintenance. The advantage of private clouds is management and control. Enterprises can modify them at any time.

Therefore, the most perfect solution is that the business can switch freely on the public cloud and the private cloud. However, in fact, except for a few vendors such as Qingyun, the cloud vendor's underlying architecture design of the public cloud and the private cloud is different, so the public-private switchover is in progress. There are many problems.

Secondly, most of the hybrid cloud is still dominated by private clouds, extending to the public cloud. In essence, it is still a private cloud. Customers still need to pay a lot of money for the IT infrastructure, which is actually contrary to the original meaning of cloud computing. The advantages have not been fully realized.

Both public and private cloud vendors are now offering hybrid cloud services, but each has major problems. Public cloud vendors such as Alibaba Cloud and Tencent Cloud are lacking in the ability to serve large customers, especially in the field of providing support services. However, the technology accumulation of private cloud vendors to build public cloud services is lacking. Therefore, public cloud vendors and private cloud vendors have established strategic alliances.