Cloud Competition
As global cloud companies including Amazon and Microsoft are considering building data centers in Korea, an upheaval in IT industry is expected.
According to sources in the industry on August 10, Amazon and Microsoft have been negotiating with local governments and related companies to build data centers in Korea from the end of last year. Both companies have completed major discussions, and are now adjusting specific details. Based on this, both companies will start to target the Korean cloud market soon.
Amazon, the number one company in the world’s cloud market, has made surface lease agreements with 2-3 data centers in Korea, and will start providing services in Korea late this year at the earliest. KT Mokdong Center is the strongest candidate.
Microsoft has also concluded a surface lease agreement with KT Kimhae Global Data Center for cloud services. Microsoft is currently under negotiations with Busan in order to build a separate data center. Microsoft will announce the results in August at the latest.
As global IT companies plan to build data centers in Korea, Korea’s national brand power as a strong IT country might be enhanced.
However, professionals and industry associates are not just welcoming this data center establishment. If Amazon and Microsoft start offering cloud services through data centers in Korea, Korean companies cannot really compete with them. Furthermore, small and medium-sized hosting companies and hardware companies, including storage companies, will also be hurt from the cloud storage services of Amazon and Microsoft.
A cloud support team member under the Ministry of Science, ICT and Future Planning analyzed, “If major global companies build data centers in Korea and provide direct services, the costs of network lines will be radically reduced, quality and efficiency of services will be enhanced, and clients will feel so much more comfortable. Especially, 80 percent of Korean companies that expanded overseas are currently using Amazon cloud services, and they will be likely to integrate domestic and overseas businesses into Amazon services.”
In Korea, KT and SK Telecom are leading cloud businesses. However, their services are not widely used in the market due to limited options, more expensive cost, and narrow overseas services. On the contrary, Amazon scored more than 100 billion won (US$97 million) in sales in cloud services in Korea last year, and sales of Microsoft’s Office 365 also grew over 400 percent during the second half of last year compared to the previous year.