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Looking up

By Ji Beibei Source:Global Times Published: 2012-11-20 18:15:06

A passer-by looks at an advertisement for Alibaba Cloud Computing in Hangzhou, Zhejiang Province. Photo: CFP
A passer-by looks at an advertisement for Alibaba Cloud Computing in Hangzhou, Zhejiang Province. Photo: CFP

It might seem normal for many people to use USB flash drives and hard disks to store and transfer their personal data. But some would say these methods are behind the times.

"I use a cloud storage service, which enables me to have access to my files from any terminal - my computers at the office and at home, and my smartphone. I don't need USB drives or a portable hard disk," Liu Wenqi, a 26-year-old mobile phone engineer based in Xingtai, North China's Hebei Province, told the Global Times.

Cloud storage is a type of online service allowing people to save data in virtual facilities, generally hosted by third parties.

Hosting firms operate large data centers, and people who use them buy or lease the storage capacity. The service allows people to access their data from any Internet-capable device.

Demand set to grow

Four or five years ago, cloud storage services were just a concept. But today, it is part of everyday reality for people like Liu.

"Data and files are stored safely, even if there is a problem with your PC or mobile phone," Liu said.

It also frees people from having to bring bulky storage devices with them on business trips, and people going on holiday can have easy access to their stored movies or any other files.

2011 was the year when cloud storage services started to become widely available to Chinese, along with various forms of complementary application software.

Chinese businesses are now busy educating target clients about the service. This year and next year will be crucial for the service's popularization, Shen Sui, an industry analyst with Internet consulting firm iResearch, told the Global Times on November 15.

The number of cloud storage users, including individuals and corporate users, is expected to rise to 223 million by the end of 2013, up from 23 million in 2011, meaning a penetration rate of 36.7 percent of the Internet users in China by then, iResearch predicted.

The increasing popularity of the Internet and smartphones will drive a growing need for cloud storage, analysts believe. As well as the growing digital storage needs for individuals, companies will also boost demand as many cannot afford their own large data storage pools.

Security concerns

Despite the potentially huge demand, security concerns are still a major barrier to the growth of cloud storage services in China, industrial insiders said.

Several cases over the past few months have illustrated the risks involved. On August 6 this year, grandcloud.cn, a subsidiary of Shanda Corporation, admitted that some of its users' data had been lost as a result of problems with a local disk at its Wuxi, Jiangsu Province-based facility.

On August 7, some of Apple Inc's iCloud accounts were attacked by hackers and the information stored on these accounts was deleted, according to a report by IT news portal chinabyte.com in August.

Government departments, banking and telecom sectors are three major potential clients of cloud storage services in China.

However, these sectors also have the highest requirements for stability and access to data, Qi Dawei, a manager at Beijing PowerUnique Technologies Co, told the Global Times.

"Most businesses in the banking and telecom sectors tend to build their own platforms with virtualized pools of storage instead of entrusting their data to a third party, because of concerns for data safety and confidentiality," Qi said.

Companies are also reluctant to turn to a third party for data storage because of concerns that the third party may be able to read the data.

"It is the same as not wanting to hand over your luggage to someone whom you're not sure you can trust," Qi noted.

Compared with their foreign counterparts, Chinese businesses seem to be more cautious about using data storage services offered by third parties.

Some government departments in Australia have entrusted their data to cloud storage businesses, and banks in South Korea have also showed a willingness to use third-party cloud storage services.

But this is less likely in China due to different systems for culpability, Cao Yujie, a senior analyst with CCW Research, told the Global Times.

"Chief information officers in China are afraid of agreeing to store data in the storage pools of a third party, as they will need to shoulder the responsibility and may get fired if the data is deleted or leaked," Cao said. "But in many other countries, it is the third-party, the cloud storage service provider, who would face the music."

Is it profitable?

Currently there are around a dozen companies offering cloud storage services in China, which is home to some 500 million Internet users. 

The companies include search engine Baidu, antivirus software company Qihoo 360 and e-commerce giant Alibaba.

Alibaba Cloud Computing (AliCloud) said it is currently serving e-commerce businesses on Tmall.

Some of the vendors on Tmall, "rented our storage space during Singles' Day (on November 11), as traffic to their websites increased and they couldn't handle the surging demand for data storage," said Alicloud in a statement e-mailed to the Global Times on November 14.

On Singles' Day, many online businesses offered discounts on products, triggering a huge amount of traffic to e-commerce platforms like Tmall.

At the initial stage, users of cloud storage services can enjoy a certain amount of storage space and data traffic for free, and then they need to pay if they need more storage room, Alicloud said.

US-based e-commerce giant Amazon offers a cloud storage service called Simple Storage Service (S3) that has already become popular. The company saw the number of its S3 users double in 2011.

Many businesses in China hope to achieve the same success as Amazon, but they are trying to make the cloud storage service their core business instead of a supportive one and it will be hard for them to earn money, Cao said.

"The original intention of Amazon's S3 was to support its online bookstore and S3 has proved to be a boost for Amazon's main business," he noted.

There has already been a lot of investment in cloud storage services, both for buying servers and hiring people to run the storage pools, Qi noted.

But users in China are more used to free products than their foreign counterparts, he warned, noting that it could take five years before cloud storage firms start to make money.
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