Microsoft Corporation and Chinese tech giant, Huawei recently announced forming a strategic partnership that will bring more of Microsoft’s enterprise applications to the Huawei cloud ecosystem. The announcement has sent ripples across the technology space, as it potentially signifies a new breed of techno-symbiosis. What will be the outcome of this partnership, only time will tell. To discuss the scenarios likely to ensue, is Atlantic.Net’s CEO, Manoj Puranik.

• Q: What does the Huawei partnership with Microsoft mean for the cloud industry?

A: In the past, it’s been difficult for hardware manufacturers to get into the cloud space. Huawei is a hardware maker that competed with Cisco, which once tried to create a similar initiative called ‘intercloud.’ The project had failed. Other hardware makers such as HP also tried rolling out a public cloud and didn’t make it, so it seems that traditional hardware companies have not had success in pulling this off. Running a public cloud requires a different set of skills than manufacturing hardware, and the skills don’t translate. It will be interesting to see whether the partnership between Huawei and Microsoft succeeds. Huawei has a big footprint in China, which gives Microsoft instant penetration inside a huge market with its ‘great firewall.’ This could be a great win for Microsoft, allowing it to reach a significant number of enterprise level customers in China.

• Q. What impact will the partnership have on the ongoing cloud war between cloud giants like Amazon and Google?

A: After joining forces with Microsoft, Huawei has announced its goal to become a top five global cloud computing company. Given the clout of AWS, Microsoft and Google as well as Alibaba and Tencent in China, the target is ambitious, pitting Huawei to compete against global giants. These companies have the additional advantage of having their big digital businesses — be it shopping or search — drive their cloud business. As a result, Huawei has a lot of catching up to do. But I think there’s an opportunity for them to do so, in part by relying on their telecom customers, entering a growing market and having infrastructure as a service (IAAS) as the backbone of its business. Gartner forecasts the global public cloud market will grow 18 per cent this year to $246.8bn, with IAAS racking up the biggest increase at 36.8 per cent to $34.6bn. However, since there is a pricing war going on between Amazon, Google and other companies trying to claim the biggest market share, Huawei will have to keep up with that as well, if it wants to earn its place in the boxing ring.

• Q. Because of the uniqueness of this partnership, do you anticipate similar future partnerships to further alter the changing landscape of the cloud industry?

A: The partnership exposed Huawei to a sector in China that is at great risk of losing money as storage companies rush to sign up customers. Propelled in part by a new cyber security law that came into effect on June 1 of this year and requires citizen data and other sensitive information to be stored onshore, new companies have been aggressively expanding their storage capacity fighting for a share of the market. The law has rattled multinational corporations now worried about the security of their data held in China. And then, there is the above mentioned, ongoing pricing war. Alibaba, for instance, the dominant domestic player, has been slashing its prices, leading to a loss of $4 for every $100 in sales. Although Huawei is counting on the scale of its business to cushion its risk, it is already suffering from wafer-thin margins in its smartphone division, after having poured marketing money to edge out Apple and Samsung. Given all of the above, I’m not too confident in the success of this partnership. Having said that, the outcome will likely set the stage for similar initiatives in the future. If Huawei fails to meet its goal, it would likely deter other companies from making a similar mistake. If it succeeds, we could expect others to join the party.

• Q. What do you envision the cloud computing space to look like in the next five years?

A: With the market‘s gears steadily turning and more players entering the space, we are likely to see the continued downward pricing trend. At the same time, we should expect the emergence of new, innovative service models such as Amazon’s Lambda, which are priced in time intervals versus following the virtual machine model. Also, it’s important to be aware of the growing complexity of environments that host applications. With the rise of Distributed Denial of Service attacks (DDoS), ransomware, and increased abuse of online devices, specifically those connected to the Internet of Things (IoT), hosting companies are facing new difficulties. These difficulties, however, can be turned into opportunities if cloud providers rise to the challenge of engineering more secure infrastructures of tomorrow without compromising the advantages of connectivity.