China’s Largest Internet Co. to Invest $1.57B in Cloud Computing

tencentchinacloudTencent, one of China’s largest internet companies, announced Tuesday that it will invest 10 billion Yuan, or $1.57 billion USD in its cloud computing business over the course of the next ten years.

The company, whose annual revenue was 78.9 billion Yuan in 2014, runs a variety of technology and web-based businesses, including WeChat, China’s most popular messaging application.

Starting in 2016, Tencent will invest a yearly two billion yuan in cloud computing for the next five years. That investment will go towards hiring, operations, marketing, and infrastructure, including the construction of data centers in China, Hong Kong, and North America.

 

Tencent’s incentives for this move are clear—according to research from IDC, global spending on public cloud infrastructure will grow 25% to $21 billion and this year. Likewise, tech research and analyst firm Gartner predicts a 32% annual growth of cloud infrastructure as a service (IaaS) spending.

However, the global cloud computing market is fiercely competitive, and Tencent will be up against established cloud vendors such as Amazon Web Services, Microsoft Azure, and Google Cloud Platform.

Most notably, Tencent’s move to the cloud will once again pit the company against it’s familiar domestic rival, Alibaba.

Over the past year, Alibaba has made several large investments in its cloud computing subsidiary, Aliyun. Those investments include a data center in Silicon Valley, and more recently, a “cloud partnership program” aimed at fostering global expansion.   As of June 1st, 2015, Aliyun already boasts over 1.4 million customers.

Jeff Edwards
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