Huawei is losing market share in the cloud
Huawei is losing market share in the cloud

Chinese tech giants Huawei and Tencent lost market share in cloud services in the third quarter due to fierce competition between market leader Alibaba and foreign companies.

According to data from data analytics firm Canalys, the digital transformation of Chinese companies has brought significant benefits to the Chinese cloud infrastructure services market, with revenue increasing 43% annually to $7.2 billion in the third quarter.

However, the growth rate is the lowest since the second quarter of 2019. It is also well below the rapid growth rate of 2020, when cloud spending was driven by internet switches during the coronavirus shutdown.

The cloud divisions of Huawei, Alibaba, Tencent and Baidu captured 80% of the domestic market in the third quarter.

However, the market shares of the second and third largest players Huawei Cloud and Tencent Cloud decreased from 19.3% and 18.8% in the previous quarter to 17% and 16.6%, respectively.

Alibaba leads the Chinese market with a share of 38.3%, up from 33.8% in the second quarter. Baidu ranked fourth with a market share of 8.2% after 7.8% in the previous period.

The top 4 players show high annual growth rates. Baidu leads the group with a quarterly growth rate of 64.7%. Thanks to its large customer base in various fields and industrial Internet projects.

Driven by the Internet, financial services and retail trade, Alibaba's share price rose 33.3%. During the same period, both Huawei and Tencent achieved annual growth rates of nearly 50%.

Cloud computing services enable businesses to buy, sell, lease, or distribute a variety of software and other digital assets as on-demand services over the Internet, as well as utility power.

Huawei suffers when it comes to cloud services

After the coronavirus pandemic forced work, shopping and entertainment online, the demand for cloud computing has accelerated. The Chinese government has also launched a "Digital China" program to boost economic growth.

Local cloud service providers are facing increasing competition from international competitors who want to strengthen their influence in the Chinese market.

Earlier this year, Microsoft announced a collaboration with its on-premises partner 21Vianet to double its cloud capacity.

Canalys said interest from US retailers increased slightly, in large part because China is the world's second largest market. Given its rapid digital economy, this is in line with its position as one of the fastest growing markets in the world.

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