Thursday, March 21, 2013

Commentary: Taiwan cloud industrial parks to face reality check


In the fourth quarter of 2012, Taiwan's government began announcing projects regarding government cloud services. In January 2013, the governments of Taipei and New Taipei City both announced plans to cooperate with international software and hardware firms to build cloud clusters and industrial parks.

The Taiwan government hopes to build cloud service industrial parks that can achieve an output value of around NT$100 billion (US$3.3 billion) each. The possibility of this is quite low. In addition, Taiwan hopes to use the concept of hardware supply chain on cloud applications. This may not be the best strategy.
Recently, the top public cloud and infrastructure as a service (IaaS) provider, Amazon Web Services (AWS), reportedly hope to enter the Taiwan market by cooperating with Taiwan-based telecom carriers. IaaS is the fastest growing business compared to other public cloud services.

Despite the fact that Amazon has yet to announce the sales figures for AWS, a report by analysts from Macquarie Capital in January forecast that Amazon Web Services may see revenues of US$3.8 billion in 2013.
AWS began serving the public in 2006 and by the end of 2011, its revenues reached approximately US$1.202 billion, about 2.5% of Amazon's total US$48.08 billion revenues. The revenues generated by AWS came from the global market.

After many years of business, the revenues of industry leader such as AWS has yet to reach US$3 billion, and therefore it is unrealistic for Taiwan's cloud industrial parks to achieve the goal of producing NT$100 billion of revenues in a short period of time.

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