Microsoft shifts focus to Chinese cloud market

posted in: Cloud/SAAS | 0

By:  Jamie Davies

Microsoft has announced a successful year in the Chinese market, as well as intentions to step-up its expansion plans in the region, according to China Daily.

The company claims it now has more than 65,000 corporate clients, and appetite for its Azure offering in Chinese enterprise organizations is steadily increasing. As part of the expansion plans, Microsoft lowered its prices for Chinese customers earlier this month, seemingly in an effort to undercut its global competitor AWS, as well as local powerhouses such as Alibaba Tencent.

“Though the GDP growth is slowing down, Chinese companies still need to focus on three points to remain relevant and competitive: innovation, productivity and the return of investments,” Ralph Haupter, CEO of Microsoft in China. “And cloud computing can help in all of the above three aspects. We will focus on manufacturing, retail, automotive, media and other industries to further expand market share.”

While China has proved to be one of the top priorities of the majority of the cloud players in recent years, a recent report from BSA highlighted the region was one of the poorest performers in the global IT community. Measuring each country of their cloud policies and legislation, as well as the readiness of its enterprises, China ranked 23 out of the top 24 IT nations worldwide, mainly due to poor performance in the data privacy, cybercrime, promotion of free trade and security categories, though it was one of the worst performers across every category.

Despite concerns from the BSA, Ji Yanhang, an analyst at Analysys International, believes the market has strong potential, stating “China’s national strategies, such as boosting high-end manufacturing, will increase demand for cloud services in the coming years.”

The announcement follows last weeks’ quarterly earnings call, where CEO Satya Nadella reported that Office commercial products and cloud services revenue grew 7%, Office consumer products and cloud services revenue grew 6% and Dynamics products and cloud services revenue grew 9%. Azure revenues grew 120% over the period, though this is down from 140% growth in the previous quarter.