Second, the size and service quality of data centers need to be improved

Internet Data Center, or IDC, is the basic platform of cloud computing. Every cloud computing business model needs large scale, energy-saving IDC to provide large-scale, highly reliable and competitive service.

Most IDCs are still in its infancy, featuring small-scale, high-energy consumption and low quality of service. The IDC market size was 6.39 billion yuan in 2009, accounting for 5 percent of the Asian market. The overall scale is quite unsuited with China's huge number of Internet users. In general, the domestic IDC industry is like a reversed pyramid, which means standard large-scale IDCs are very rare and 90 percent are small-scale IDCs fewer than 400 square meters. They serve 90 percent of Websites in China.

Telecommunications operators make up 60 percent of the IDC market, claiming an average Power Usage Effectiveness between 2.2 to 3.0, far below international PUE levels of 1.1 to 1.5.

In addition, most IDCs provide basic services such as rack rental. Profits of IDCs mainly come from the rental of network broadband instead of high value-added services. They are far from what cloud computing providers want them to be.

As a result, the development of cloud computing industry in China relies on breakthroughs in technology and service of either IDCs owned by companies or public IDCs.

Third, transformation of the IT industry from product-focused to service-focused has a long way to go.

China's IT industry is still in its primary stage of transforming from self-sufficient "natural economy" to professional service-based "commodity economy." Telecommunications operators and Internet service providers are seeking to provide high-quality IT services through cloud computing technology and platform to expand the potential market but face obstacles in developing cloud platform-based products and solutions.

Current IT products, such as servers, storage and conversion equipment, are designed for common users and cannot satisfy service providers' needs for building a cloud computing platform because of the product form and design. In such cases, some ISPs develop or customize equipments for their cloud computing platforms, but for traditional telecommunications operators, they want to buy products directly from the market that can satisfy their needs.

Cloud computing-related operations, support and maintenance are imperfect. As a public service, cloud computing needs an advanced operating and maintenance system to allocate, maintain and manage the system, as well as realize functions of charging and auditing. Current cloud computing solutions (such as virtualized machine management system) are private, designed for use within businesses and are unable to satisfy the comprehensive computing needs of public clouds.

Furthermore, lag in the standardization of cloud computing also impedes the construction of cloud platforms. Cloud computing providers hope to purchase equipment from several manufacturers instead of one to avoid being restrained by a single manufacturer. Because port and management are not standardized, equipment by different manufacturers cannot be connected and integrated with the platform. As a result, cloud computing providers are driven to a dilemma of either delaying service or exposing their clients to manufacturers.

Four, further efforts should be done to cultivate the customer market.

Cloud computing has great market potential because China has 42 million SMEs with low level of IT application. But having potential doesn't mean the market will grow by itself. We should try to change users' habits and at the same time regulate the market to create a better development environment.

To let SME users to change their habits from buying physical products to buying services, one has to convince them to change the traditional concept of "seeing is believing." More efforts to improve finance and audit assets will cause more state-owned enterprises or government departments to accept cloud computing services.

A cooperative relationship between providers and users established on mutual trust should be a precondition because users have to input data or business to providers' infrastructures. This trust or fiduciary relation is similar to that in traditional service industries, like the financial industry, which is regulated by law and a supervision system. Under current circumstances, it is an urgent need to improve user data and privacy protection laws and legally define rights and responsibilities of users and providers of cloud computing and other network businesses. Supervision measures like quality certification or technological means should be adopted to regulate providers' qualification and behavior.