“When customers don’t understand the advances that you get through a mature cloud offering and they want to compare you based on the lowest common denominator, it’s not a place where we want to be,” said Peter Moore, managing director for public sector in the Asia-Pacific region and Japan at Amazon Web Services (AWS).
Moore’s comment highlights the US tech giant’s confidence in the region at a time where Asian cloud vendors, including Alibaba Group Holding and Tencent Holdings, are competing for a larger share of the region’s fast-growing market, estimated to double to US$214.5 billion in the next five years, according to Research and Markets.
Today, the global cloud computing market is still dominated by US players like AWS, whose business has become the profit engine for Amazon, accounting for over 70% of its operating income.
In 2021, AWS led the global market in public cloud services with a 38.9% share, more than Microsoft’s Azure (21.1%) and Google Cloud (7.1%) combined, according to Gartner. Entering the cloud business in 2017, Huawei ranks fifth globally with just a 4.6% share.
Still, the Shenzhen-based tech giant is fast expanding its presence in Southeast Asia as a vital revenue stream after US sanctions hampered its smartphone business. In Thailand, it ranked third with a 29.4% market share in 2021, after Amazon and Microsoft, and fourth in emerging Asia-Pacific markets.
In Singapore, which is now one of Huawei’s main headquarters for cloud business, clients range from major tech companies to banks and government agencies.
Strengths of the late entrant include cheaper price points over the incumbents, according to cloud service partners in the region. Huawei is said to be more aggressive in its revenue-sharing with service partners.
While major US cloud vendors give commissions of a few percent for contracts and services, Huawei provides as much as 10 times that, giving a strong incentive for its partners to promote clients’ use of its services.
As new entrants emerge in the market, AWS has expanded its presence to eight regions with 26 proprietary data centres called “availability zones” in the Asia-Pacific region.
In December 2021, it launched a new region in Jakarta, with a planned investment of US$5 billion in the country over the next 15 years. This year, Australian and Indian regions in Melbourne and Hyderabad are set to open.
But even as AWS expands its physical presence in the region, the focus is to go beyond providing cloud services used simply as data centres and to support clients’ needs in developing digital applications in the public sector, which for AWS includes governments, education, health care and the space industry.
“We moved away from competing on infrastructure as a service a long, long time ago,” Moore stressed. “None of our advanced customers are using us for that purpose.”
He said demand has been particularly growing with the Covid-19 pandemic, which has forced governments to expand their digital capabilities. In Singapore, for example, AWS helped the city-state develop contact-tracing apps within weeks, Moore said. This year, the Malaysian and Thai governments teamed up with AWS to accelerate cloud adoptions.
Customers in the region who migrated to AWS are seeing an average of 24% reduction in IT costs compared to on-premises, and a reduction of 37% in service downtime, according to AWS.
Still, the public sector means handling massive amounts of sensitive personal data. The Japanese government, for example, is planning to urge foreign cloud vendors like AWS to partner with local peers for safety reasons on developing cloud-based systems that handle classified information.
Moore said every system that is implemented on AWS in Japan is delivered by a local partner that the government has historically worked with. “We don’t have any issues in any country with a government mandate that … for security purposes, we need to work with local companies,” he said.