Not any company can start cloud computing business, just like not anyone can become a real estate tycoon, most people can only become owners of a certain house or Ziroom.
Heavy assets, heavy technology, and huge money burning can be said to be the three major characteristics of the cloud computing industry. Compared with cloud computing companies such as Alibaba Cloud , Huawei Cloud , etc., which have transformed from the Internet or traditional IT equipment manufacturers, startups such as UCloud (UCloud Technology Co., Ltd.) have great shortcomings in business resources and funds. They are not rich second generations with a wealth of wealth, but more like young men who started from scratch.
Because of this, in order to gain a place in the fierce competition for cloud computing, they must seize every opportunity to grow and grow, transform, take sides, raise funds... to grow wildly in the cracks.
htmlOn April 1, UCloud's application for initial public offering of shares and listing on the Science and Technology Innovation Board was officially accepted by the Shanghai Stock Exchange, and will soon usher in the largest single financing in the history of entrepreneurship - 4.748 billion yuan. A young man who has been in business for 7 years became rich overnight.As the first Science and Technology Innovation Board company with public cloud, private cloud , and hybrid cloud as its main business, can UCloud adapt to the capital market? Can cloud computing, as a business, stand the test of investors? These may all be left to the future to give answers.
makes up for the shortcomings of funds and log in to the Science and Technology Innovation Board to prosper the future business
Science and Technology Innovation Board is a training ground for technology innovation companies. On this platform, technology innovation companies that urgently need funds to develop their businesses and have limited profitability in the short term will have more opportunities to show their talents. For UCloud, being able to enter the Science and Technology Innovation Board is equivalent to seizing cash flow.
It is understood that UCloud's listing on the Science and Technology Innovation Board is expected to raise about 4.748 billion yuan. In terms of amount alone, 4.748 billion yuan is quite considerable for a cloud computing startup. In terms of domestic similar industries, only Kingsoft Cloud, supported by Kingsoft Software, received a total of US$720 million in several rounds of financing in 2018, which can be said to be the largest financing in the cloud computing industry. According to the current exchange rate, it is equivalent to RMB 4.8 billion. UCloud's 4.748 billion is comparable to that.
(planned to invest in the purpose of fundraising. Data source: prospectus)
UCloud funds raised are mainly used for the use of four major projects, including the multimedia cloud platform project, the application data security circulation platform project under the network environment, the new generation of artificial intelligence service cloud platform project, and the Ulanqab data center project in Inner Mongolia. Judging from the purpose of the funds, this will not change UCloud's existing main business structure, but multimedia cloud platform, artificial intelligence platform, and network security may become UCloud's next potential trigger points.
If UCloud entered the Science and Technology Innovation Board and made up for its financial shortcomings, then its cooperation with China Mobile will help the issue of "resources".
seeks resource protection, and join hands with China Mobile's "national team"
. Cloud computing service providers rely solely on their own capabilities to develop and grow. Effectively connecting with government resources and obtaining government support is an important supply.
According to UCloud's prospectus, after listing, UCloud will be independent directors of the company by Huang Chengqing and He Baohong. Huang Chengqing is the vice chairman of the China Internet Association, a member of the Standing Committee of the Science and Technology Committee of the Ministry of Industry and Information Technology, and a member of the China Securities Regulatory Expert Advisory Committee; He Baohong is the director of the Institute of Cloud Computing and Big Data of the China Academy of Information and Communications Technology. Two independent directors with government backgrounds may be of some help to UCloud's brand building and connecting with more government resources.
This is not the first time UCloud is trying to rely on government resources. In July 2018, UCloud announced a strategic cooperation with China Mobile. UCloud received a round E investment from China Mobile Capital. After the investment was completed, China Mobile Capital held 4.9462% of UCloud's shares and is the 7th largest shareholder of UCloud. It is understood that China Mobile Capital is a 100% holding subsidiary of China Mobile and is a veritable state-owned shareholder. Although it is the seventh largest shareholder, China Mobile is the only company among many shareholders that can export cloud computing power and industry resources to UCloud.
(before and after logging on to the Science and Technology Innovation Board, the top ten shareholders holding UCloud shares. Data source: prospectus)
took the national team, and most of the identity of UCloud's grassroots entrepreneurs has faded. Zhang Juyan, vice president of strategy at UCloud, once said that UCloud and China Mobile will jointly carry out research, development and standard formulation of new technologies such as cloud computing, big data, Internet of Things, edge computing, 5G, etc., and promote the use of reasonable technical means to improve the online speed of UCloud business on China Mobile Network. In addition, the two parties will also work with third-party SaaS partners to provide cloud IT infrastructure rapid deployment services and SaaS application services to small and medium-sized enterprises. Most importantly, China Mobile and UCloud will carry out joint marketing collaboration and promote UCloud's products or services with the support of China Mobile's basic resources, operation and maintenance system and sales channels.
Just half a year after the two parties announced their cooperation, UCloud not only attended the China Mobile Partner Conference and confirmed cooperation with China Mobile's Internet of Things open platform OneNET, but also became the only trial company of China Mobile's first NCP submarine cable dedicated line (new trans-Pacific submarine cable system).
In the future, UCloud, which is a shareholder of "China Mobile", will give us more room for imagination, but the reason why the cloud computing market can leave opportunities for startups is that the overall situation is undecided, and transcending and being surpassed at least seems normal now.
Uncertainty: Revenue growth slowed down, market share declined
UCloud's latest transformation was in 2016 - private cloud service provider UMCloud (Shanghai Youming Cloud), and UCloud invested 40.1343 million yuan to control 80% of UMCloud's shares, announcing its official entry into private cloud. Subsequently, in December 2017, UCloud made a wholly-owned acquisition of another 20% of UMCloud's shares. In April 2018, the subsidiary UMCloud merged PaaS container cloud manufacturer "Shu Ren Cloud".
Therefore, UCloud embarked on the growth path of expanding its cloud computing business from public cloud to private cloud and hybrid cloud, and from IaaS to PaaS.
(the proportion of UCloud hybrid cloud is increasing year by year. Data source: UCloud prospectus)
In fact, UCloud is trying its best to achieve the role of a single public cloud service provider to a manufacturer with both public cloud, private cloud and hybrid cloud capabilities. There are great variables and uncertainties in the Chinese public cloud market.
(UCloud downstream segment operating income and customer count data source: prospectus)
According to the data disclosed in the prospectus, UCloud's operating income growth rate is mainly in the three categories of mobile Internet, enterprise services, and traditional industries, but the revenue growth rate of these three categories slowed down sharply in 2018, causing its overall revenue growth rate to decline from 63% to 41%. Other categories of operating income are the only areas to achieve a breakthrough in growth rates, growing from 52% in 2017 to 91% in 2018. As for which industries the "others" mainly includes, UCloud does not explicitly state it in its prospectus.
In addition to the decline in operating income growth rate, UCloud's public cloud market share that has accumulated for 6 years is also being tied or even surpassed by other players.
From IDC's two reports on China's public cloud market share from 2017 to 2018, the proportion of China's public cloud market share has undergone a major ranking change in less than a year. UCloud retreated from fifth place in 2017 to sixth place, with its share dropping from 5.5% to 4.4%. Similar results for
have also occurred in other cloud computing manufacturers. Kingsoft Cloud ranked third from 2017, but was surpassed by China Telecom and AWS in 2018, ranking fifth, with a share dropping from 6.5% to 4.5%. Even Alibaba Cloud, which ranks first, has its share dropped from 47.6% in 2017 to 43%. On the other hand, in addition to the increase in Tencent Cloud's share, Baidu Cloud, Microsoft Azure, and Huawei Cloud also jumped to the front desk from the "Other" list in 2017.
For UCloud, Microsoft Azure, Baidu Cloud and Huawei Cloud, which are following closely, are all strong enemies. It is hard to say whether it can ensure that the public cloud market share will not continue to decline in 2019. However, UCloud has found new development space in the fiercely competitive public cloud and further explores "other" sub-sectors with great revenue growth potential, which is a new breakthrough in transformation.
Potential opportunities: Services, strategies and overseas markets
The biggest difference between cloud computing startups and giants is that large cloud computing companies are better at providing standardized products, while in order to improve customer stickiness and retention, entrepreneurial cloud computing companies are often better at providing customized solutions for their customers.
Another aspect, the important reason why startup cloud computing companies such as UCloud can survive is strategic flexibility. Since its establishment in 2012, UCloud has always been keeping a close eye on market changes and ready to attack new areas from serving games and e-commerce customers in the first place to serve games and e-commerce customers, to the financial field, traditional industries, and even later entered the private cloud hybrid cloud.
Overseas market is an explorable gold land. Recently, the US market research firm Synergy Research Group announced the global cloud service market rankings in 2018. Amazon AWS, Microsoft Azure, and Google Cloud account for 57% of the global market share, the global cloud service market has been divided by giants, and other manufacturers account for 28.3%. The overall scale of the global cloud computing market exceeded US$80 billion in 2018, a significant increase of 46.5% from US$55 billion in 2017.
(2018 global cloud service market ranking)
(2017Q1~2018Q4 Asia Pacific cloud infrastructure service market share)
Global cloud computing market competition is fierce, but the Asia Pacific market still has opportunities for China's cloud. The ranking of cloud service market share in the Asia-Pacific region announced by Synergy has been adjusted compared with the global share ranking. Alibaba Cloud, a Chinese cloud computing manufacturer, has entered second place from fourth in the global share ranking, and has taken over 15.9% of the Asia-Pacific market after international giant Amazon AWS. In addition, other cloud computing manufacturers account for 38.3%, which is close to the total share of Amazon AWS and Alibaba Cloud. Whether startups such as UCloud can rely on the geographical advantages of the Asia-Pacific market to gain more share in the Asia-Pacific market in the future is worth looking forward to.
Science and Technology Innovation Board gives UCloud the opportunity to drive fast on the fiercely competitive cloud computing track. However, whether UCloud can achieve a breakthrough in revenue growth through the front and back attacks of Internet giants and traditional IT giants and find new pulses and trends depends on its performance in its driving skills. (This article was first published on Titanium Media, author/Qin Conghui, editor/Zhao Yuhang)
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