Internet & E-Commerce

China's Internet Data Center (IDC) revenues in 1H 2008 reached 3.51 billion Yuan, and CCID Consulting projects revenues at the end of 2008 to reach 5.76 billion Yuan. Seeking developmental standards was the theme in 1H08.

source: ccid consulting, July 2008

Small and medium sized IDC service providers were the clear majority in China. IDC service providers with revenues 4 million Yuan and below accounted for 62.1% of all providers, while those with revenues between 4 and 8 million Yuan accounted for 28.3%.

source: ccid consulting, July 2008

Proper IDC licensing required.

13 of China's ministries, including the Ministry of Public Security and MIIT, jointly announced that they will be cracking down on unlicensed IDC service providers. CCID Consulting expects a number of service providers to close down.

China's telecom restructuring should improve IDC services.

China's telecom restructuring is designed to have three telecom operators with similar scale and resources to compete. More competition would mean better support for IDC providers, which in turn would provide better services themselves. Also, the former entities of China Telecom, China Netcom, and their interconnection would have restricted IDC industry development. The intended result is that IDCs will become more service-oriented.
 

More sophisticated applications and demand will drive IDC development.
 

China's explosion of Internet website proliferation has been closely followed by IDC service providers. China's small and medium enterprises (SMEs) now demand more than just hosted email services, but also website and e-commerce capabilities. Enterprises will the major clients of IDC service providers. With the trend of IT outsourcing in China to large enterprises, IDC providers may play a role in outsourcing as well.

Another important factor is the emergence of content delivery networks (CDN). China's network demands for Web2.0, streaming media, e-commerce, and online gaming, for example, will drive CDN development in 2008. Examples in China include ChinaCache, ChinaNetCenter, and Dnion Technology, which will compete with telecom operators.

Value-added services become the competitive focus.

Given that IDC are services providers, they will look to value-added services to compete, such as service-oriented communications (SOC) which may bundled various security authentication and other services, software (and hardware).

For example, HiChina has received certification from China's National Information Security Services, which is hosted by China Information Security Certification Center and the National Computer Network Emergency Response Center. Moreover, with these kinds of certification programs, IDC service providers will be helping to increase China's network security and integrity.

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Unless otherwise specified, all information provided is sourced from CCID Consulting.

Ó 2008 CCID Consulting Co., Ltd.