However, Zhou adds, the infrastructure market, which requires servers and equipment from cloud computing operators, will have more room for growth, given foreign companies' strength in data storage technology.

As early as August last year, IBM launched its cloud business unit in China.

"For IBM, basically, we can provide our clients with servers, equipment and service support," says the unit's director, Wang Shenghang. "However, our strategy is more than that.

"Our slogan is 'Rethink IT, reinvent the business model.' We are not only seeking to optimize the IT process of our clients but also to offer a combination of IT solution and business model, which will help clients transfer and redefine their business structure and upgrade their business process."

With cloud technology, Wang says, companies can reduce their IT infrastructure costs, simplify their IT process and improve efficiency.

For example, IBM is working on a healthcare project to provide a set of cloud computing solutions, including a platform on which the elderly, children, community clinics, hospitals, and their doctors can store, share and synchronize patients' profiles.

Wang says it is a typical example of combining industrial knowledge together with cloud computing to provide a customized service for the public.

Cloud computing has become a core part of IBM's strategy for the next three years, with 80 percent of Fortune 500 companies using its service, Wang says. The company estimates revenue of $7 billion from this segment by 2015.

"Many local companies still have a low utility rate for their IT resources, lower than 25 percent," he says. "They prefer to rent servers. The change from renting to seeking computing services provides a great market."

Cisco Systems, a network equipment maker in the US, also recognizes the potential. It set up its first cloud computing experience center in Shanghai in March to help clients and partners construct and utilize the technology.

The center also offers feasibility trials of cloud services and products to companies beforehand.

Cloud computing is now ripe for development, and will become the engine that helps industries change and transform, says a Cisco spokesman, predicting it will become the next stage in the Internet revolution.

Last year it launched the Cisco Partner Presales project globally to promote cloud technology for expanding business. Its partners in the field include the Massachusetts-based data-storage provider EMC Corp, US-based information technology company VMware Inc and chip maker Intel.

As well as opening the Shanghai center in March, the company introduced Cisco CloudVerse to China, a framework that combines the foundational elements needed by organizations to build, manage and connect public, private and hybrid cloud computing services.

Those key elements include unified data, intelligent networks, and application programs and services.

In its latest research report, Cisco predicts that by 2015 global cloud computing traffic will grow 12-fold, and that more than 50 percent of computing operations in data centers will be cloud-based by 2014.

In June, Microsoft, which pools billions of dollars each year into cloud computing and has nearly 70 percent of its technical staff working in the field, launched a service platform in the Chongqing Economic and Technological Development in Southwest China catering for more than 300 enterprises and 20 government units.

"The Chinese government is paying great attention and investing heavily in cloud computing," says He Jingxiang, general manager of Intel Asia.

"It regards cloud computing as a way of integrating information, upgrading industry and encouraging innovation. This will help to form the industrial regulations and technology innovation and is a great opportunity for Chinese local companies and multinational ones."

Intel has been working with leading local server vendors such as Inspur, Lenovo and Huawei on research and development, and marketing.

Besides a lucrative consumer market, multinational companies also treat China as an R&D center. IBM has built 14 cloud-computing centers in the world, including one in China with 200 researchers.

"The Chinese government sees cloud computing as an infrastructure, which is quite different from Western countries, which have been focused on efficiency and cost reduction," Zarrella of KPMG says. "In the near future, every one can have access to cloud computing and it will generate many innovations in this country."

Zarrella says that there is no gap at present between China and the US in terms of cloud technology.

"In the next five years, China and the US will lead the way in cloud technology," he says, citing a recent KPMG global survey on innovation. "And finally, in 10 years, I believe China will surpass the US."

Contact the writers at linjingcd@chinadaily.com.cn and suzhou@chinadaily.com.cn

(China Daily 08/31/2012 page12)