How Tencent Cloud is cracking ASEAN’s cloud market

The Chinese cloud supplier is playing to its strengths in platform services, media streaming and communications to grow its business in Southeast Asia

With a fast-growing digital economy, Southeast Asia is ripe with business opportunities for public cloud suppliers, many of which have been adding new datacentres in the region to capture a bigger slice of the market.

The major US hyperscalers – Amazon Web Services, Microsoft Azure and Google Cloud – have expanded their footprint in the region in recent years, alongside Chinese players such as Alibaba Cloud, Huawei Cloud and Tencent Cloud.

While all of them offer a swathe of services, they tend to tout their respective strengths in areas like machine learning, databases and industry-specific offerings in their go-to-market strategies.

Take Tencent Cloud, for example. The company was recently recognised by Gartner as a niche player in the market for cloud infrastructure and platforms, leveraging its expertise in media and communications.

In media streaming, Tencent Cloud offers application programming interfaces (APIs) that it claims will help developers build streaming applications quickly. Additionally, it provides transcoding services to help them save bandwidth and storage costs, said Poshu Yeung, senior vice-president of Tencent Cloud’s international business.

Known for its WeChat messaging app, Tencent also offers an enterprise communications platform called WeCom, which sports office automation and team collaboration capabilities. Yeung said this would enable businesses to use WeChat as an enterprise tool to manage their communications and business workflows, such as expense approvals.

While playing to its strengths in cloud platform services, which can deliver better margins than infrastructure services, Tencent Cloud is also guiding enterprises in their cloud journey.

Yeung contended that many organisations tend to use a raft of “basic” infrastructure components and databases to build their applications, adding that Tencent Cloud was working with them to identify the right cloud services to deploy based on their needs.

There are also opportunities around hybrid cloud as organisations seek to better control costs and mitigate risks with a hybrid deployment model. “This is happening quite often these days in the financial industry and other industries, which, for various reasons, want to have on-premise deployments,” Yeung said.

To that, Yeung pointed to Tencent’s private cloud offering called TStack, an OpenStack-based platform that includes virtualisation, compute and open source Kubernetes (K8s) capabilities. It works with both x86 and Arm architectures and offers open APIs for multicloud and hybrid cloud management.

There’s also Tencent Cloud Enterprise (TCE), another private cloud platform based on Tencent’s own cloud infrastructure and platform services. Yeung said the company was working with partners in and outside of China on TCE deployments to support organisations that are looking to deploy their own proprietary cloud.

Whether those capabilities will help Tencent Cloud gain an edge over rivals remains to be seen. The company remains optimistic about its growth prospects in the region, however, and has added new availability zones in Singapore, Jakarta and Bangkok in the past two years.

“Southeast Asia is our fastest-growing region where we are seeing high double- to triple-digit growth,” Yeung said. “Besides using Singapore as a hub, we also have local teams in Thailand, Indonesia and other parts of the region.”

In April 2021, Tencent Cloud opened a new datacentre in Jakarta to reduce network latency for local enterprises while providing backbone access for major Indonesian and global internet service providers through its border gateway protocol that covers the entire country.

Its Southeast Asian customers include Indonesia’s Bank Neo Commerce, a digital bank that is using the Tencent Distributed Database for its core systems, and Singapore’s NTUC Income, an insurer that is using Tencent’s facial recognition technology to facilitate know-your-customer (KYC) processes.

Tencent Cloud’s share of the global cloud market in the second quarter of 2022 stood at 3%, behind Amazon, Microsoft, Google and Alibaba, according to market data from Synergy Research.

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