ZTE aims to expand cloud overseas, challenges seen
SINGAPORE, Sept 16 (Reuters) - China's ZTE Corp , the world's 5th largest telecom equipment maker, plans to expand cloud computing abroad, though security worries could pose a challenge.
ZTE, the No.2 telecom gear player in China ranking behind Huawei Technologies Co Ltd, provides cloud solutions to China's telecom carriers, such as China Telecom, major Internet firms, oil and energy companies, a senior executive said.
Zhu said he was targeting a 10 percent contribution from cloud and enterprise business to ZTE's overall revenues in 2013, up from around 7-8 percent last year.
He declined to break down the revenue figure for cloud computing, which allows organisations to tap a network of servers on the Internet to store, manage and process data and applications.
The Shenzhen-based company, which has been profitable in the first half of the year after posting its first-ever loss for the whole 2012, took in revenues of 37.6 billion yuan ($6 billion) in the January-June period, down 11.9 percent from last year.
As it plans to expand its global footprint to other markets spanning from Indonesia to Russia, analysts have warned of security challenges following revelations by former National Security Agency contractor Edward Snowden about U.S. government surveillance.
"Nowadays, data privacy has become a hot topic. But we understand that every customer has its own requirements and characteristics and we are always monitoring developments in the industry," Zhu Jinyun, ZTE's general manager for cloud computing and IT products operations, told Reuters in a telephone interview from the Chinese city of Nanjing, where ZTE has a global cloud computing centre.
The global market for public and virtual private cloud services will grow from $30.3 billion in 2011 to more than $241 billion in 2020, with major players including Amazon.com Inc , Google Inc and Salesforce.com Inc, according to IT research firm Forrester.
In Asia-Pacific, Japan is the largest cloud market and will remain so through 2020, while China is growing rapidly, Forrester said.
Analysts said some Western markets remained suspicious of Chinese companies. For instance, ZTE and crosstown rival Huawei are not allowed to provide telecom equipment to U.S. carriers due to security concerns.
"For offering services internationally, I think there will naturally be a degree of concern about data security and in fact they will probably violate a number of legislative requirements for major markets," said Chris Morris, an Australia-based cloud analyst with IDC.