? Five driving forces for cloud computing in China

Starting in 2009, cloud computing entered the substantive stage of development with driving forces including: transnational equipment manufactures such as IBM, EMC and Intel (now cloud computing solution providers); cloud computing centers built by local governments in Shanghai, Beijing, Tianjin, Wuxi and Dongying that offer public clouds for government departments and SMEs with a purpose of luring investment; domestic internet companies represented by Sina, Tencent, Alibaba and 21ViaNet, which revamped their own IT infrastructures and provided computing services to reduce costs; short-term goals of telecom carriers China Mobile and China Telecom to build a private cloud for Operating Support System (OSS) that integrates internal resources, save energy, reduce consumption and utilize current equipments and prepare for transition; software companies Kingdee and eAbax that provide SaaS even before the concept of cloud computing, so they are not quite enthusiastic about promoting the concept of cloud computing.

Now the central government has begun to pay attention to development of cloud computing.

? Development of three cloud computing models in China

Cloud computing itself is a combination of technology and commercial factors, so the industry chain is a very complicated ecosystem. Every business model has its own patterns and rules. Development of three models is uneven in China. SaaS as an industry is the most successful one, but IaaS is the current focus.

1) IaaS is still in the initial stage of marketization. It is the most basic business model of cloud computing. The basics for IaaS are super-large-scale data centers using virtualization technology to integrate resources. At the same time, IaaS providers should be able to do operational auditing, ensure safety and provide standardized service. Some IaaS commercial products such as CloudEx by 21ViaNet and e-Cloud by China Telecom are either small in scale or lack a mix of products.

2) PaaS is still undergoing testing. The purpose of PaaS is to provide development and operating platforms for Internet business developers. Its function is like a current operating system. It is a basic platform for future Internet innovations and a key link to new Internet business models. Some powerful Internet companies are now seeking to transfer to platform providers. Sina built up the Sina Application Engine laboratory platform, but it is still in the testing stage and far from commercial use.

3) A vague definition of SaaS leads to chaos. SaaS is a business model that provides users with software services through Internet. But because of this vague definition, it is very hard to set out criteria for services. Many software and middleware providers claim that they offer SaaS products such as online CRM, HR and cloud virus scanning. Statistics show that the market size of SaaS has reached 35 billion yuan in 2009. In the absence of unified certification and criteria for SaaS, it is inevitable that some companies are just copying others or not providing real SaaS products. Internet-based software products need more support despite some overstatements in the industry.

II. Challenges facing the development of cloud computing industry in China

Cloud computing is an Internet-based business pattern, so the development of the Internet and network quality are key to the development of cloud computing. At the same time, cloud computing demands a transformation of the industry model from providing products to providing services, which means users' ideas have to change. More importantly, there needs to be a cooperative relationship between providers and customers based on laws and mutual trust. There are still many changes facing the development of cloud computing in China.

First, construction of a broadband network should be accelerated.

Most cloud computing business are based on the Internet requiring high bandwidth, so the development of cloud computing relies heavily on the Internet, especially the development of broadband networks.

After several decades of development, China's Internet scale has become first in the world and is still maintaining high growth. As of July 2010, China had 420 million Internet users, including 360 million users accessing it through broadband networks. Broadband subscribers have reached 110 million.

Although the number of broadband network users is huge, the rate of penetration just reached the global average of 7.7 percent. Statistics show China's broadband network penetration rate was 7.5 percent in 2009. In comparison, Korea recorded 32.9 percent, the U.S. reached 28.9 percent and Japan was 24.3 percent. Even Turkey and Mexico has surpassed 9 percent.

Bandwidth is still not so "wide" despite the rapid growth of Internet users. According to a 2009 report by Akamai, China's average rate of data transfer is just 857 kbps. In contrast, the average Internet speed in OECD countries is 9.2 Mbps, 10 times faster than China's.

The development of cloud computing in China is greatly restrained by the low popularity rate of the broadband network, low access rate and bad connection between networks of different carriers, as well as unbalanced development of networks in different areas. As a result, the cloud computing industry needs government support to solve the bandwidth problem. Western countries have already worked out state-level development strategies for broadband networks, but China is still lacking in national strategies.