How does UCloud go in the second half of cloud computing in the coming seven years?
The science and technology innovation board will usher in the first cloud computing listed enterprise. The popular science and technology innovation board will hit the popular cloud computing, which will create a different spark.
On April 1, the application of the public cloud service provider Youkede Technology Co., Ltd. (UCloud for short) for IPO and listing on the Science and Technology Innovation Board was officially accepted by the Shanghai Stock Exchange.
UCloud plans to raise 4.748 billion yuan this time, mainly for the Youkede data center project and the multimedia cloud platform project in Jining District, Ulanqab City, Inner Mongolia, as well as the new generation artificial intelligence service platform project and the application data security circulation platform project in the network environment. The Ulanqab Data Center is operated by Inner Mongolia Youkede, which was founded on April 24, 2018, and will support the company's business needs in North China and provide an important guarantee for future business expansion.
Ji Xinhua, the founder of UCloud, once stressed that listing is a means rather than a goal, and UCloud will follow the established schedule.
Welcome to the market at the end of seven years
In March 2012, Ji Xinhua, who left Shanda, founded UCloud with his friends Mo Xianfeng and Hua Kun, and entered the cloud computing market that was not clear at that time.
There will always be competition in entrepreneurship. Qingyun QingCloud was founded on April Fool's Day the same year, and giants will not wait for others. Alibaba Cloud, which now holds the leading market share of the domestic public cloud market, proposed to form a team from 2007 to 2008. In 2009, it purchased Wanwang with 590 million yuan in cash. In 2012, it had taken shape technically, and Tencent Cloud was also founded in 2010.
Since 2013, Amazon's AWS and Microsoft's Azure have started to enter China, like a catalyst into the Chinese cloud computing market, and gradually become warmer.
UCloud has a clear development path, focusing on public cloud, then expanding to private cloud, from IaaS to PaaS to application supermarket, from cloud to "CBD" intelligent trinity. In January 2016, UMCloud, a joint venture subsidiary of Openstack service provider Mirantis, entered the private cloud market. In March 2017, the "CBA" (Cloud, BigData, AI) development strategy was determined, the AI basic service platform was officially launched, and the "Yunhan" solution system was launched.
Of course, to compete with giants, we need to play differently and keep up with the trend. In terms of customers, UCloud has expanded from its main game field in 2013 to online education and e-commerce in 2014, set foot in Internet finance and pan entertainment in 2015, made live broadcast, new retail in 2016, and later manufacturing and other traditional enterprises. At present, the company has provided cloud service support for tens of thousands of enterprise customers in the global business, and the number of indirect service end users has reached hundreds of millions. The company's customers include Internet enterprises such as interactive entertainment, mobile Internet, enterprise services, as well as enterprises in traditional industries such as finance, educational institutions, new retail, and intelligent manufacturing.
In addition, UCloud is also based on local development overseas. As of December 31, 2018, the company has 29 global availability zones, covering 23 regions around the world, including mainland China, Hong Kong, Macao and Taiwan, Europe, America and Southeast Asia. The number of available CDN nodes exceeds 500, and the number of global cross regional special lines reaches 28.
In addition to the company's own technology management and environmental situation, the development behind this cannot be separated from the help of capital.
Ucloud obtained six rounds of financing in the six years from 2013 to 2018, and China Mobile's participation is also considered as the entrance of the national team. In January 2013, BAI and DCM China obtained a round A financing of tens of millions of dollars; In June 2014, Junlian Capital, BAI and DCM China obtained a round B financing of 50 million US dollars; In April 2015, Junlian Capital, BAI, DCM China, Guangxin Capital, and Chow Tai Fook received round C financing of US $100 million or more; In March 2017, it was reported that Yuanhe Holding and CICC Jiazi had won a round D financing of RMB 960 million; In 2018, it obtained China Mobile's E-round financing.
The issue of UCloud's listing has been repeatedly mentioned by the media. Just as Ji Xinhua stressed that listing is a means rather than a goal, UCloud will follow the established schedule.
The timetable naturally includes listing. At the end of 2015, the company decided to dismantle the VIE architecture and finished it early in 2016. Later, Ji Xinhua talked about the reason why UCloud dismantled the VIE architecture earlier in an interview with the media, because the data on cloud computing is very sensitive if it involves financial policies. However, at that time, the media speculated that it was preparing for the A-share listing.
In the end, UCloud chose the Science and Technology Innovation Board. Since the first World Expo, the national leaders announced that they would set up the Science and Technology Innovation Board in Shanghai, this highly expected Chinese version of "NASDAQ" is very eye-catching in every move. When cloud computing meets the Science and Technology Innovation Board, it is worth looking forward to.
How about UCloud's performance?
Profitable but revenue depends on public cloud
This is also the first time UCloud has disclosed the company's performance. According to the prospectus, between 2016 and 2018, the revenue was 516 million yuan, 840 million yuan and 1187 million yuan respectively, and the net profit attributable to the parent company was - 197 million yuan, 76.8346 million yuan and 80.3233 million yuan respectively.
UCloud has achieved profitability in 2017. Cloud computing is known as the "hydropower and coal" in the future digital and intelligent era, but it is a full field of heavy assets. It has invested heavily and burned money in the early stage. Even Alibaba Cloud has not achieved a break even point.
It is not easy to make profits. The prospectus points out that since the company has invested heavily in the initial stage of development and has achieved profits for a short time, there is still accumulated uncovered losses at the end of May 2018. The growth rate of the company's revenue in 2017 and 2018 reached 62.60% and 41.39% respectively. As of the end of 2018, the company's book had no outstanding losses. During the reporting period, the company's business scale expanded rapidly and its profitability continued to increase.
According to the report released by IDC, UCloud accounted for 4.8% of China's public cloud IaaS market in the first half of 2018, ranking sixth after Alibaba Cloud, Tencent Cloud, China Telecom, AWS and Jinshan Cloud.
However, UCloud faces the risk that its revenue depends on the public cloud. Public cloud was the main revenue source of the company during the reporting period. In 2016, 2017 and 2018, the company's public cloud business revenue was 472 million yuan, 764 million yuan and 1011 million yuan, respectively, contributing 91.43%, 90.97% and 85.15% of the operating revenue. Although the company continued to expand private cloud, hybrid cloud and other businesses, including big data and artificial intelligence, during the reporting period, if the company's public cloud business is impacted by factors such as technological innovation, industry competition, or changes in industrial policies in the future, and the business in other sectors has not yet formed scale, it may have a major adverse impact on the company's operation.
According to the prospectus, the main revenue of the company is mainly concentrated in the Internet field at present. The intensified competition in the Internet industry and the impact of policy regulation on Internet enterprises have had a certain impact on the stability of the company's downstream customers.
Moreover, the cloud computing industry is destined to face the competition of giants. Especially in 2018, BAT has adjusted its organizational structure to power the industrial Internet. Cloud has become the receiver of its business expansion and ecological creation, and its importance is further highlighted. Entrepreneurs in this field are hungry.
The prospectus points out that the current domestic cloud computing industry is highly competitive. Due to the characteristics of the industry, some large enterprises in the early stage of cloud computing industry have shared most of the market share. Their marginal cost of business operation has been significantly reduced and their bargaining power has been significantly enhanced by virtue of their own scale effect. Based on years of operation, their own product lines are also relatively rich, which has great appeal to customers. Therefore, small and medium-sized enterprises in the industry have greater pressure to survive and develop in the rapid development of the industry and fierce market competition.
However, behind the fierce competition is a huge market. According to Gartner's prediction, the global cloud computing market size will reach US $411.4 billion by 2020, and the compound growth rate of the global cloud computing market size from 2016 to 2020 will be 16.99%.
Domestic cloud computing has also reached the second half of the race, a new stage of Internet+enterprise cloud.
How to go in the second half of cloud computing?
Interesting changes have taken place in the cloud computing market in the past two years. Huawei Cloud, which has been working in the private cloud field, announced its entry into the public cloud market in March 2017 and established Huawei Cloud BU. In August, Huawei Cloud BU was announced to be upgraded to a tier one department, on a par with the original three business groups (BG) of Huawei, namely, operator BG, consumer BG and enterprise BG. On the other hand, AWS, the world's first brother of public cloud, announced at the 2018 AWS re: incident conference held last year that it would launch AWS Outposts services in 2019 to enter private cloud. You should know that AWS is a fan of public cloud, and even thinks that private cloud is not "cloud". In 2010, AWS CTO Werner Vogels said that the so-called private cloud is just a sales pitch, which is a word designed by IT manufacturers to keep customers in the dark.
It seems that one goes to the left and the other goes to the right, but in fact, they reach the same goal by different routes. The future will be a mixed cloud world.
Specifically, in China, the development of the public cloud market started relatively late compared with North America, Europe and other regions, with a small base, so the development speed is fast and the development potential is great. In 2018, the scale of the domestic public cloud market reached 7.185 billion US dollars, with a year-on-year growth of 66.82%. According to IDC's prediction, the compound growth rate of China's public cloud market will reach 39.91% from 2018 to 2022, and the market size will reach US $27.531 billion in 2022.
The favorable policies have also stirred the nerves of all parties. Last March, the Ministry of Industry and Information Technology released the Three Year Action Plan for Cloud Computing Development to promote the development of cloud computing. By 2019, the scale of China's cloud computing industry will reach 430 billion yuan. On August 10, the Guidelines for Promoting the Implementation of Enterprises on the Cloud (2018-2020) (hereinafter referred to as the Guidelines) was released, which once again provided policy support for enterprises on the cloud. By 2020, there will be 1 million new enterprises on the cloud, more than 100 typical benchmark application cases, and a batch of influential and dynamic cloud platforms and enterprise cloud experience centers.
In the second half of cloud computing in China, Internet+enterprises are on cloud platforms, and many large enterprises are more sensitive to data. As the Guide says, they will deploy key information systems with high data security requirements on private clouds. The information systems connecting customers, suppliers, and employees will be deployed in public clouds, and form a hybrid cloud architecture with private clouds. For information systems that require high data security and need external connection to provide services, consider adopting a hybrid cloud architecture where data is stored in private clouds and applications are deployed in public clouds.
In addition, today's cloud computing has further integrated resources into industries and industries, and the cooperation between basic cloud service providers and application vendors has become more and more extensive and in-depth. With the development of new technologies such as the Internet of Things and AI, enterprises not only need to go to the cloud, but also need to go to AI and big data. Whether it is the "ABC" trinity or the "CBA" trinity, they will move towards a data driven intelligent era, and the ecological competition will become more intense.
It can be seen that UCloud plans to raise 4.748 billion yuan this time, which is mainly used for the Youkede data center project and the multimedia cloud platform project in Jining District, Ulanqab City, Inner Mongolia, as well as the new generation artificial intelligence service platform project and the application data security circulation platform project in the network environment. UCloud is planning towards the future.
In the past ten years of domestic cloud computing, some people are happy and others are worried. Ji Xinhua, who has worked hard for seven years, will take UCloud to the market and enter a new stage in the second half of cloud computing, but this is not a success in his eyes, but a victory in a stage. There will also be challenges in the future, and success, as he said in an interview with China Youth Daily, "can turn 20000 users (2015 data) on our platform into 20000 listed companies, can help Chinese traditional enterprises fully integrate into the Internet, and then I will feel successful".
