China may take global lead in IT by its sheer size

Updated: 2014-12-03 12:12

By Paul Welitzkin in New York(China Daily USA)

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China will be at the forefront of the global push to mobile computing, cloud services, big data/analytics, and social networking in 2015, and will account for almost half the total spending in those areas, according to a report from a technology consulting firm.

International Data Corporation (IDC) on Tuesday released its top 10 predictions for the worldwide information and telecommunications technology (ICT) sector next year. While global ICT spending will grow 3.8 percent in 2015 to more than $3.8 trillion, China will spend over $465 billion, 11 percent higher than this year and account for 43 percent of all industry growth.

One reason why China will be a main driver of ICT spending growth next year, according to Frank Gens, IDC's chief analyst, is the sheer size of China's market: over 680 million online users next year, or about two-and-a-half times the number users in the US.

"Chinese manufacturers are leading the world in driving down the cost of devices likes smartphones," Gens told China Daily in an interview. "As the devices become less expensive they become accessible to a greater number of people."

Robert Atkinson, president of the Information Technology & Innovation Foundation in Washington, said China needs to spend more to get on the same playing field as other developed economies.

"China is playing catch-up and there is so much `low-hanging IT fruit' to adopt. Other nations like the US and Japan have adopted much more of the existing technologies and for many businesses and consumers they are in the occasional upgrade mode, rather than (the) buy for the first time mode," he told China Daily in an e-mail.

As in the rest of the world, cloud computing is growing quickly in China. Cloud services provide greater mobility and the ability to perform tasks on smartphones and mobile devices. China's overall cloud-computing value chain is expected to be worth at least $122 billion by 2015, according to the China Software Industry Association.

Atkinson said governments in China are investing in and subsidizing cloud computing. "For example, (in) 2011 the NDRC (National Development and Reform Commission), MIIT (Ministry of Industry and Information Technology), and the Ministry of Finance allocated $236 million to support Chinese cloud providers. In addition, many local governments, such as Chongqing, Ningxia, and Beijing, have targeted cloud computing, providing subsidies to attract providers to their jurisdiction," he said.

Gens said the one area where China lags behind the West is cloud computing on the corporate or enterprise level.

"Corporate spending on cloud computing in China is behind the curve. China is only ninth in corporate spending. They are behind the Netherlands - a country with about 17 million people," he said.

Atkinson said there are some unique challenges holding back cloud computing in China.

"Cloud depends on broadband networks and China's broadband is nowhere near as developed as most developed nations like the US and Japan with penetration of around 15 percent of households," he said. "In addition, users in China appear more suspicious of using the cloud than users in other nations. But this will of course change over time."

Companies like online retailer Inc and search engine Google Inc are spearheading the development and sale of cloud computing services in the US. "I think you could see the same thing in China. Companies like Alibaba (online retailing), Baidu (China's leading internet search engine), and Tencent, (social networking) could become the major computing service providers," he said.

China's biggest technology challenge in the future will be to provide an environment that that inspires more innovation, according to Gens.

"China needs to evolve and become not just a consumer of technology, but also a developer of technology. In the next 20 years China should strive to create an environment that develops new products and services in areas like big data and analytics."