Launched in March, the service has 9,000 clients, about 20% of them e-commerce companies.
Microsoft Corp. and Amazon.com Inc. are among the two leading providers in the United States of cloud computing services that offer computer power, web hosting and data storage to companies of all kinds, including online retailers. That competition is now being extended to China.
Microsoft launched its cloud service, Azure, in China in March, in partnership with Chinese company 21Vianet Group Inc. Azure’s revenue reached $6 million in the second quarter, according to 21Vianet.
“More than 9,000 companies currently use Azure, and many companies in the e-commerce industry are among them,” says Microsoft China vice president Yan Zhiqing.
Microsoft has publicly named about 20 Chinese clients, and approximately 20% of them are e-commerce companies. They include cosmetics retailer Lefeng.com, fashion e-commerce site Xiu.com and business-to-business site Cogobuy.com.
Xiu.com says it deployed Azure service in order to handle the traffic spike caused by a recent online sales event that generated sales five times the e-retailer’s daily average. Xiu.com ranks No. 54 in the Internet Retailer China 500, with 2013 online sales estimated by Internet Retailer at $180 million.
“During peak business days, our site may be hard to access for online shoppers,” says Xiu.com technology director Wu Shengxin. “Without the cloud service we would have to spend lots of money and time to install new servers, and many of them would be idle for normal days when we don’t have sales. Azure helps us save the cost of buying servers, and expands our site access capability only when we need it.”
Microsoft says it estimates the number of Azure’s clients in China will increase by 10 times in the next year.
Microsoft first introduced Azure service in 2010 in the U.S., and in the same year opened a cloud computing research institute in China. Before the commercial launch, Azure had been testing its service publicly in China since May 2013.
The road to China isn’t easy for foreign companies like Microsoft and Amazon, because the Chinese government puts limits on the Internet services that can be offered by companies based outside of China. That’s what led Microsoft to partner with 21Vianet, which licenses the Azure technology platform. 21Vianet, whose shares trade on the Nasdaq exchange in the U.S., set up a subsidiary called Shanghai Blue Cloud Technology Co. to operate the Azure service. That unit now has more than 300 employees.
Microsoft provides technology training to 21Vianet’s employees and 21Vianet helps Microsoft to localize the Azure platform, such as by adding two online payment methods popular in China, Alipay and China Unionpay.
Azure has two data centers in China, one in Beijing and another in Shanghai, according to Microsoft.
Amazon, meanwhile, also is working to introduce its Amazon Web Service to China. The U.S. e-retailer last December signed agreements with the Beijing municipal government and the government of the Ningxia Hui Autonomous Region to build a data center in Ningxia, a rural province of China, while basing AWS in Beijing, according to Amazon.
Amazon has selected Ningxia West Cloud Valley Technology Co. as its Chinese partner for the cloud computing service. Amazon has allowed a few Chinese users to test the service since early 2014, but is not yet operating it commercially in China.
Amazon.com is No. 1 in the 2014 Internet Retailer Top 500.
U.S. companies like Amazon and Microsoft face stiff competition from Chinese companies offering computing power and data storage on the web, notably Alibaba Group Holding Ltd., China's dominant e-commerce company, which is expanding its own cloud computing service. Alibaba is poised to go public on the New York Stock Exchange later this month.
By Frank Tong Senior editor, China
September 5, 2014, 5:19 PM