Huawei latest company to invest $1B in public cloud

Posted by Ron Miller on Apr 13, 2017 1:35:52 PM

16103977343_3df7b9c041_k.jpgThis week, Huawei, the Chinese telecom giant that also makes cell phones, tablets and smartwatches announced it was jumping into the  public cloud computing game with the old chestnut of a billion dollar investment to jump start the business.

Oh man, that sounds familiar, doesn't it?. That's because the billion dollar investment is the number big companies seem to come up with when they decide it's time to get involved in public cloud computing.

We saw IBM invest $1.2B in updates after it acquired Softlayer in 2013, HP committed that same tidy $1 billion sum in May in May 2014, and Cisco committed a billion in September 2014.

It's worth noting that while IBM is still in the public cloud business, HP exited in Fall, 2015 and Cisco threw in the towel a year later. Perhaps Huawei is feeling the pull of Alibaba, which announced it was all in on the public cloud market in 2015.Subscribe to the Intronis blog

Whatever the reason, a billion may seem like a nice chunk of change, but in the age of hyperscale computing giants, it's really a drop in the bucket. Even in China, where Huawei is based, Alibaba holds a substantial market share lead by most estimates, and it's going to be tough for them to even break in there.

Market realities

In the US and Europe where AWS is king of the mountain with nearly 40 percent infrastructure market share, it's going to be even tougher. Just ask Microsoft, Google and IBM, who find after substantial cloud investments that their combined market shares still remains less than AWS's total.

What Huawei doesn't seem to recognize is that big companies like Cisco and HP have made similar efforts and walked away, perhaps realizing that it simply wasn't possible to catch the market leaders, and that for all intents and purposes they were throwing good money after bad.

VMware came to a similar conclusion last week when it sold its public cloud business, and decided make a deal with AWS instead. Better to partner with market leader than watch your business sputter on its own.

Now we have Huawei trying its hand in a market that while growing rapidly, requires an enormous level of scale to compete internationally and at home.  In fact Synergy Research, a firm that tracks cloud computing market share across various sectors concluded in its most recent research that without that scale, companies are going to have a hard time competing

Synergy defines hyperscale as operators typically running hundreds of thousands of servers in their data centers. They add that the largest vendors like  Amazon and Google are running millions.

That means that companies just jumping into the fray face an enormous challenge in the public cloud market at this point.

Intronis MSP Solutions State of the Industry Survey

Photo Credit: Kārlis Dambrāns on Flickr. Used under CC by 2.0 license

Topics: Cloud Trends

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