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(News Focus) Competition heats up for growing cloud computing market

2016/12/02 11:56

By Kim Deok-hyun

SEOUL, Dec. 2 (Yonhap) -- Competition is intensifying among foreign and local technology firms in South Korea's market for cloud computing as the market is expected to grow at double digit annual rates in coming years.

Cloud computing is an Internet-based computing service that rents data storage and computing power to individual users or corporate customers.

It allows users to save and process their data using a remote server, instead of using their local server or personal computers.

According to a recent study by the National IT Industry Promotion Agency (NIPA), the Korean market for cloud computing jumped 46.3 percent on year to 766.4 billion won (US$657.1 million) last year.

This photo shows a center in Busan for cloud computing services, supported by Amazon. (Photo courtesy of Busan City)  This photo shows a center in Busan for cloud computing services, supported by Amazon. (Photo courtesy of Busan City)

The market is expected to grow to 1 trillion won this year, the report showed.

Last year, only 6.4 percent of Korean firms used cloud computing services, according to the report. This year, about 10 percent of local firms are expected to use the service and as many as 30 percent of local firms are forecast to use the service in two or three years.

Cloud computer services have become one of the core infrastructures for Internet of Things technology, big data and other new Internet technologies, experts said.

U.S. technology giants, including Amazon, Microsoft and IBM, have become front-runners in the Korean market for cloud computing services.

As Korean laws mandate that certain data, such as security-related materials or health records, can't leave Korea, the U.S. firms have built their data centers in Korea.

Amazon opened its new data center in Seoul earlier this year, marking its fifth such center in the Asian region.

Microsoft plans to begin operations at two new data centers in Seoul and Busan in the first quarter of next year for its Azure cloud computing service for corporate customers.

IBM and SK C&C, a Korean computing service firm, jointly built a cluster of data centers in Pangyo, south of Seoul, in August this year.

Oracle has been also stepping up its push for cloud computing services in Korea, by holding a large-scale technology fair in January this year.

Still, Korean customers prefer to use foreign cloud computing services because of the higher performance and quality. The NIPA study showed 51.8 percent of civilian institutions and 88.9 percent of public institutions have used foreign equipment in their cloud computing services. In the case of software, 47.4 percent of private institutions and 69.5 percent of public institutions have used foreign products, according to the study.

After Korea implemented a law promoting cloud computing in September last year, demand from the public sector has been on a steep rise.

KT Corp. officials at the company's data center in Mokdong, western Seoul. (Yonhap file photo provided by KT) KT Corp. officials at the company's data center in Mokdong, western Seoul. (Yonhap file photo provided by KT)

KT Corp., the nation's top broadband Internet operator, has been operating data centers for cloud computing for years. Samsung Electronics Co.'s mobile-payment service, Samsung Pay, uses KT's cloud computing service. LG CNS has built data centers in Seoul, Incheon and Busan. SK Telecom and Naver, the nation's dominant Internet portal, are seeking to attract customers for their own cloud computing services.

KT Corp. officials inspect the company's data center facilities. (Courtesy of KT Corp.) KT Corp. officials inspect the company's data center facilities. (Courtesy of KT Corp.)

A local software firm, Infraware, is making inroads into the global market with its Polaris Office, a cloud-based office suite of applications for smartphones. About 90 percent of some 40 million subscribers for the Polaris Office software are foreign users, according to the company.

Lee Min-woo, head of cloud computing industry promotion team at the NIPA, urged the government to help nurture cloud-based software firms.

"Cloud computing service will become more important because it is a basic infrastructure for the Internet of Things, big data and artificial intelligence," Lee said.

(END)

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