Does Jinshan Cloud, Alibaba and Tencent really have a chance to seize the public cloud market?
On December 12, Jinshan Cloud officially announced in Beijing that it had completed the D-round financing of 300 million US dollars, with a post investment valuation of 1.9 billion US dollars. In this round of financing, Jinshan Cloud will issue 353.5 million D-series preferred shares, of which Liyue investors and Minsheng investors will subscribe for D-series preferred shares with 50 million US dollars and 100 million US dollars respectively as the leading investors. After the financing is completed, Jinshan Software Minsheng investors and Liyue investors hold 51.93%, 5.26% and 2.63% shares respectively
Previously, Jinshan Cloud obtained round A financing of $20 million in August 2013, round B financing of $66.66 million in March 2015, and round C financing of $100 million in 2016. The financing was disclosed in the announcement of Jinshan Cloud in October. The third quarter financial report of 2017 released by Jinshan Software on November 21 also predicted that the financing was "actively advancing". This conference officially announced that the D-round financing had been completed.
Wang Yulin, CEO of Jinshan Cloud at the scene, said that one of the important reasons why Jinshan Cloud can develop rapidly is that it focuses on providing cloud services in vertical industries. After the completion of this financing, Jinshan Cloud will increase its investment in artificial intelligence. "Artificial intelligence will be the most important thing for Jinshan Cloud".
Jinshan Cloud has launched IaaS PaaS、SaaS、 The artificial intelligence cloud KAP for industry solutions, including heterogeneous supercomputing platform KHSP, deep learning platform KDL, Jinshan cloud intelligent brain KBrain and Jinshan cloud industry intelligent service KAS, will continue to expand in the future, using AI+image enhancement technology, Jinshan cloud golden eye and intelligent marketing platform KIR to provide services for customers.
In addition, Jinshan Cloud will continue to layout vertical industries and consolidate video and game businesses. At the same time, in areas such as government affairs, manufacturing, finance, and medical care, Jinshan Cloud will continue to promote the combination of AI, big data and other technologies with vertical industries.
Wang Yulin announced on the spot that in the next three years, Jinshan Cloud will strive to occupy 30% of China's public cloud IaaS market share and achieve revenue of more than 10 billion. After this press conference, Jinshan Cloud will announce the price reduction of all products, The price of CDN will be reduced by 50%, the price of cloud database Redis will be reduced by 60%, the maximum price of cloud service will be reduced by more than 30%, and the target storage products will also be reduced by 10%. As for the price reduction behavior, Wang Yulin believes that the price reduction of cloud service is not just a price war, but under the scale effect of cloud service, service providers will provide better services to customers through the reduction of costs and prices.
The third quarter financial report of Jinshan Software showed that the revenue of Jinshan Cloud was 358 million yuan, accounting for 28% of the group's revenue, while online games, office software and other revenues accounted for 57% and 15% respectively. The revenue of cloud services in the third quarter increased by 80% compared with the same period in 2016, of which the revenue of Jinshan Cloud services in the first quarter of 2017 was 268 million yuan, and the revenue in the second quarter was 304 million yuan. The revenue kept growing in 2017, It is estimated that the annual cloud service revenue will exceed 1 billion yuan.
Compared with the financial report of Jinshan Software in 2016, the annual revenue of Jinshan Software in 2016 was 8.282 billion yuan, with a net loss of 270 million yuan, of which the revenue of Cheetah Mobile and cloud services was 4.449 billion yuan, accounting for 53% of the overall revenue. Looking at the revenue of Cheetah Mobile, the revenue of Jinshan Cloud in 2017 has made great progress compared with the previous year, and Jinshan Software is still stepping up efforts to promote Jinshan Cloud as an important fulcrum for the future development of the Group.
Jinshan Cloud is not the only one that points to the public cloud market, including Alibaba Cloud, Tencent Cloud UCloud、 Qingyun and other manufacturers are also actively expanding the Chinese market. According to Gartner's adjustment of the growth forecast of the global public cloud service market, public cloud services are expected to grow by 18.5% to $266.2 billion in 2017, higher than $219.6 billion in 2016. IaaS accounts for the largest increase, and is expected to grow by 36.6% to $34.7 billion in 2017.
According to IDC's prediction, in 2017, China will include IaaS The scale of the public cloud market such as PaaS will exceed 15 billion yuan. According to the research results on the market share of China's public cloud IaaS in the first half of 2017 released by IDC in November, Alibaba Cloud's revenue of IaaS in the first half of 2017 was 500 million dollars, accounting for 47.6% of China's market share; Tencent Cloud's revenue is about US $100 million, accounting for 9.6%; Jinshan Cloud ranked third with a revenue of US $68.39 million, accounting for 6.5% of the Chinese market.
Although facing a promising market, the development of public cloud is not easy. Lei Jun also said in a public speech that he would invest 1 billion yuan in cloud services. The "All In Cloud Services" strategy is a long-term process of three to five years. Jinshan Cloud's continuous investment is still the theme of the future in the context of strong enemies and huge market opportunities.
On the other hand, Jinshan Cloud strives to go beyond its own differentiation in business segmentation. In 2017, Kingsoft Cloud focused on the medical cloud, government cloud and AI cloud, where game cloud and video cloud were gradually realizing the "upward movement" of business and began to provide PaaS layer services. Game cloud, video cloud and other cloud services constituted the three major revenue of Kingsoft Cloud. In terms of income sources, Wang Yulin said in an interview with Love Analytics that, referring to most public cloud service providers, they are satisfied with internal services first, and the income from Xiaomi has "dropped from the initial 90% to 25% in 2016". Jinshan Cloud will continue to do large-scale work and further reduce costs.
For Jinshan Cloud, challenges and opportunities coexist, and the biggest challenge comes from the speed and nodes to meet the future expectations of the market. In May 2017, WPS, a "peer" of Jinshan Cloud, submitted an A-share GEM listing application. As for whether Jinshan Cloud will be separately IPO in the future, Wu Yuqiang, the on-site CFO of Jinshan Cloud, said that, IPO is not a goal, but a step for better development of Jinshan Cloud. At present, there is no clear IPO time point.
In view of the low gross profit and profitability, Wu Yuqiang said to Yiou that Jinshan Cloud believes that the cloud market is the market in the next ten or twenty years. In the industrial layout, cloud services are highly concentrated, and there is a great opportunity for oligarchs to emerge in the market. Jinshan Cloud is determined to become an oligarch company in the future, so it does not excessively pursue gross profit margin within the company; Wu Yuqiang also mentioned that profit is often mentioned inside Jinshan Cloud, but Jinshan Cloud has not set short-term profit goals and is willing to make more investment in the future.
In an interview with the Daily Economic News, Wang Yulin, CEO of Kingsoft Cloud, said that the cloud computing business has not yet achieved profitability. At the media communication meeting, Wang Yulin and Wu Yuqiang also said to Yiou that Kingsoft Cloud has been discussing the break even point, but the specific time plan is not convenient to disclose.
In general, Jinshan Cloud's "ambition" in the future can be summarized as: faster development speed, more industry expansion, and heavy investment in artificial intelligence. In Yiou's view, AI, as the engine of the future industry, needs more integration with the industry. Pure AI technology can no longer meet the needs of industrial development. In the cloud computing market, how AI binds with industrial applications horizontally and vertically will determine the service capabilities of service providers in this field.
