Future of cloud computing in China

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By He Baohong

China Academy of Telecommunication Research

Ministry of Industry and Information Technology

I. Cloud computing in China

• Cloud computing brings a new wave in the information technology revolution.

Cloud computing transforms the IT industry from a "natural economy" to a "commodity economy," meaning that service providers do as much as they can to serve while customers take what they need. A significant change in business ideas and service patterns are a core part in the transition to cloud computing.

Many sectors and fields, such as energy, banking and agriculture, have already finished similar evolutionary processes during the long-term development of society. Let's look at the example of the evolutionary process of energy:

1) At first, manpower is the major source of energy, which depended on an individual and could only be used directly. The energy cannot be transmitted and is low in efficiency.

2) In the time of the waterwheel, energy came from machines and was greatly improved. Waterwheels, built along rivers, could transmit energy short distances. Users could use the energy according to their needs. But the system was complicated, so the efficiency was still very low.

3) When we entered the era of power plants, Edison's power plants made energy cheaper and endless. The commercial and social impacts brought by the popularity of electricity cannot be overstated: it directly led to the second industrial revolution.

Development of the IT and telecommunications industries follows an era of integration after a hundred years of development. Cloud computing is the result of the evolution of technology and business. Research of the development of cloud computing can be divided into many subjects, such as development and evolution of computing technology, software technology and IT products. Early IT products are just products that have computing capacity. With the evolving needs of human civilization, electronic computers first appeared, followed by large-scale and super computers. The advent of the personal computer turned computers from being used in a specific industry to something that everybody could afford. The PC greatly improved personal productivity and efficiency of corporations. In the 1990s, the Internet pulled together hundreds of millions of information islands to make a huge information network that improved the efficiency of communication, sharing and cooperation and enriched people's social and entertainment lives. In-depth development of the Internet encouraged the transformation of computing and storage technology and then of the whole IT industry. In the era of cloud computing, IT services no longer focus on hardware but on software. IT infrastructures will become public infrastructures like water and natural gas. Super data centers will become the provider of IT resources and services.

• Stages of cloud computing development in China

Cloud computing can solve storage and computing problems brought by unlimited growth of information in a low-cost, high-performance way. IT infrastructures will become public resources and users can customize their service, which will change the traditional way of using and paying for IT infrastructures. In China, 2010 has been a year for essential development after a long period of concept promotions. Though cloud computing is still being developed and tested in a private cloud, it will transform to a public cloud or external cloud. The IT application of small- and medium-sized enterprises is the major drive for the development of the public cloud.

A CWW survey shows that major obstacles for IT application of SMEs are high thresholds in capital, technology and personnel. With infrastructures provided by cloud computing, SMEs can enjoy IT services without having to purchase hardware or hire professionals. So the primary task of cloud computing is to solve major problems facing SMEs and help SMEs cross all thresholds.

The number of SMEs has reached 42 million, accounting for over 99 percent of companies in China. SMEs make great contributions to economic growth and have become a mainstay in technological innovations and employment.

According to the sample study by National Bureau of Statistics on IT application of 26,000 enterprises, most SMEs have already taken the first steps. Their needs are: 1) market information to improve sales; 2) more customers and a larger supply chain; 3) lower production costs and higher product quality; and 4) use of IT in management to monitor situations and improve work efficiency. More than 80 percent of SMEs have Internet access, but only 44.2 percent use it to process their business. Only 16.7 percent of SMEs have their own Websites, and 14 percent have own portals. The primary purpose of these Websites is to publish information. Nine percent of SMEs use their Websites to conduct e-commerce. Only 4.8 percent of SMEs use ERP.

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