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Tencent eyes cloud computing with $1.57bn investment

18/09/2015 by Sharon Shahzad


It has been reported that Tencent is to follow a similar strategy to Baidu and Alibaba in heavily expanding its cloud computing solutions. In a bid to compete and take a slice of the industry from Amazon and Microsoft, the online social and gaming company will expand its cloud computing initiative across China, Hong Kong and the US in the coming five years, ploughing an estimated $1.57bn (£1.01bn) into the scheme.

In recent times both Baidu and Alibaba have revealed that they are to commence significant growth plans in cloud computing strategies; for example, Alibaba’s cloud computing division, Aliyun, has made strong gains outside China. Aliyun's first US-based data centre was launched in March, while a strategic centre opened in Singapore last month as the company seeks to procure a larger global presence. Kingsoft, one of the oldest software firms in China, meanwhile revealed that it was investing $1bn into extending cloud services outside the country over the coming five years; however, it seems these organisations have another player in their midst, with Tencent now saying it will also invest a large amount of cash in expansion.

The recent flurry of some of China’s largest software companies signals that many are keen to do battle with current market and world leaders Amazon Web Services and Microsoft Azure ‒ two firms that have monopolised the cloud computing sector. Both companies already have a strong presence in China, with Microsoft Asia-Pacific Technology Company Ltd set up specifically to manage local cloud operations in the nation.

It is not only large firms that are making plans to expand, however, with smaller organisations also showing signs of strategising; for example, Qiniu managed to gain an undisclosed funding sum from a collection of prominent investors in August. The cloud service firm was founded by a number of former Kingsoft researchers. Ex-Tencent executives who formed UCloud meanwhile gained $100m funding in April led by Legend Capital.

As part of Tencent’s most recent cloud service growth, the company has focussed on the largely profitable commercial sector; however, it has moved into the consumer cloud space, with the personal cloud storage platform Weiyun (Micro Cloud) being launched last January. This highly modified version of the original has now been integrated into its current social platform.

With cloud computing set to gain in popularity, it is unsurprising to see companies expanding their efforts; however, it remains to be seen if any can successful compete with the current dominant leaders.

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