Canalys estimates Huawei had 20% of the Q1 $6B China Cloud market. That’s behind Alibaba but ahead of Tencent and Baidu. If growth continues, Huawei’s China Cloud revenues will be $1.5-2.5 billion yearend and likely over $10 billion in 2022.
Huawei is also expanding rapidly in South Africa, Singapore, Mexico, Brazil, and across the global South. A $5 billion/quarter run rate is plausible by the end of 2022. Canalys sees Huawei as particularly strong in government and automotive markets, both growing rapidly.
Huawei’s research budget of ~$20 billion is as much as the total spent by Alibaba, Tencent, and Baidu. It is comparable to the spending by Amazon, Google, or Microsoft. Huawei has almost 100,000 R & D employees, with a focus on Artificial Intelligence, efficient software design, and large-scale computing. These are crucial technologies for Cloud, a $330 billion market worldwide.
Google is losing $billions on a quarterly run rate of $4 billion. The investment in increasingly advanced software is huge. Huawei doesn’t release a net income figure for cloud, but it probably needs annual sales of at least $20 billion to make any money.
From Canalys and Gartner releases
Cloud infrastructure services spend in China jumped 55% in Q1 2021, reaching US$6.0 billion. Total expenditure increased US$2.1 billion compared with Q1 2020 and over US$200 million on the previous quarter according to the latest Canalys data. The dollar-for-dollar annual expansion slowed on a sequential basis, highlighting some disruption to the Chinese cloud service providers’ businesses. But cloud infrastructure services growth in China continued to outpace the rest of the world, supported by the government making it a top strategic priority. Key factors fueling investment included rapid economic growth and an increased focus on digital transformation following the COVID-19 pandemic. Overall, China was the second largest market after the US, accounting for 14% of global investment, up from 12% in Q1 2020. The top four cloud service providers were Alibaba Cloud, Huawei Cloud, Tencent Cloud and Baidu AI Cloud, which together accounted for over 80% of total expenditure.
“Digital services, including everything from digital payments and content to customer and social engagement and remote learning, are key drivers behind the demand for cloud infrastructure services in China,” said Canalys Analyst Blake Murray. One year on from the start of the COVID-19 pandemic, cloud service providers in the country have enabled the acceleration of the government’s and other organizations’ digital agendas, while compressing multiple years of transformation plans into much shorter timeframes. They were able to build critical relationships with customers early in the pandemic to support rapid digital transformation. Now they are investing heavily to increase their capacity, develop cloud-based databases, storage and compute capabilities to replace on-premises IT infrastructure, enable a broad developer ecosystem for cloud-native development, and extend cloud and AI to all industries.
… Huawei Cloud made the most gains during the quarter, growing 116% to take a 20% market share. It grew strongly thanks to Internet customers and government projects, as well as key wins in the automotive sector. It is currently building its largest data center facility in Gui’an to provide services in Southwest China.
“2021 will be a growth year for cloud services in China due to the continued expansion of online services, digitalization of processes and operations, and investment across industries, enterprises and government sectors. This will increase use cases and heighten the value proposition of cloud services,” said Chief Analyst Matthew Ball. Chinese providers will also extend their reach beyond the domestic market and export their cloud services worldwide to accelerate digital transformation in other parts of the Asia Pacific region, and Europe, the Middle East and Africa.
Gartner Forecasts Worldwide Public Cloud End-User Spending to Grow 23% in 2021
Cloud Spending Driven by Emerging Technologies Becoming Mainstream
Worldwide end-user spending on public cloud services is forecast to grow 23.1% in 2021 to total $332.3 billion, up from $270 billion in 2020, according to the latest forecast from Gartner, Inc.
“The events of last year allowed CIOs to overcome any reluctance of moving mission critical workloads from on-premises to the cloud,” said Sid Nag, research vice president at Gartner. “Even absent the pandemic there would still be a loss of appetite for data centers.
“Emerging technologies such as containerization, virtualization and edge computing are becoming more mainstream and driving additional cloud spending. Simply put, the pandemic served as a multiplier for CIOs’ interest in the cloud.”
Despite macroeconomic headwinds, offerings that support or deliver public cloud services are experiencing tremendous growth. Software as a service (SaaS) remains the largest market segment and is forecast to reach $122.6 billion in 2021 as the demand for composable applications requires a different type of SaaS experience (see Table 1). Infrastructure-as-a-service (IaaS) and desktop-as-a-service (DaaS) will see the highest growth in 2021, 38.5% and 67.7% respectively, as CIOs face continued pressures to scale infrastructure that supports moving complex workloads to the cloud and the demands of a hybrid workforce.
Table 1. Worldwide Public Cloud Services End-User Spending Forecast (Millions of U.S. Dollars)
|Cloud Business Process Services (BPaaS)||46,131||50,165||53,121|
|Cloud Application Infrastructure Services (PaaS)||46,335||59,451||71,525|
|Cloud Application Services (SaaS)||102,798||122,633||145,377|
|Cloud Management and Security Services||14,323||16,029||18,006|
|Cloud System Infrastructure Services (IaaS)||59,225||82,023||106,800|
|Desktop as a Service (DaaS)||1,220||2,046||2,667|
BPaaS = business process as a service; IaaS = infrastructure as a service; PaaS = platform as a service; SaaS = software as a service
Note: Totals may not add up due to rounding.
Source: Gartner (April 2021)