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Oct. 26 (NBD) – Microsoft (NASDAQ: MSFT) announced at the company's Tech Summit 2018 on Thursday a plan to introduce Dynamics 365, a product line of intelligent business applications, in China in spring 2019.

Dynamic 365 would be the tech giant's third cloud service platform launched in China, with the first two - Azure and Office 365 - available for commercial use in the country in 2014. 

Alain Crozier, Corporate Vice President, Chairman and Chief Executive Officer of Microsoft Greater China Region, stated Microsoft is eager to provide more complete products, services, and innovation platforms to help local companies in China go abroad and help cross-border firms settle in China.

The announcement reflects Microsoft's ambition in China's huge cloud computing market since the market has grown substantially in recent years and shows no signs of slowing down.

In the past few years, the increase rate of both Microsoft Azure and Office 365 in adoption in China exceeded 100 percent. Among Microsoft's 54 sales regions in the world, four are in China. This shows the huge demand in China's cloud computing market.

According to an action plan released by the Ministry of Industry and Information Technology of the People's Republic of China, the domestic cloud computing sector is projected to reach 430 billion yuan (61.86 billion U.S dollars) in 2019. 

Statistics from the China Academy of Information and Communications Technology revealed China's public cloud market totaled 26.48 billion yuan (3.81 billion U.S. dollars) in 2017, a rise of 55.7 percent over the previous year. The market is expected to maintain a great momentum and reach 90.26 billion yuan (12.99 billion U.S. dollars) by 2021.

Although Azure and Office 365 have brought Microsoft a customer base, the company still faces great challenges from other tech titans like Alibaba (NYSE: BABA), Tencent (OTCMKTS: TCEHY), and Kingsoft (OTCMKTS: KSFTF).

According to global market intelligence firm International Data Corporation (IDC), in the IaaS (Infrastructure as a Service) segment of China's public cloud market, Alibaba Cloud took up 47.6 percent of the market share in the first half of 2017, followed by Tencent with 9.6 percent, and Kingsoft with 6.5 percent.

Alibaba Cloud currently boasts over 8,000 software development enterprises on its ecological platform and serves more than 100,000 customers. 

Tencent this year established Cloud & Smart Industries Group (CSIG) and Platform and Content Group (PCG), which signals enterprise cloud computing will be the priority of its strategic development in the following two decades.

On the one hand, compared with Microsoft, China's local cloud services providers offer a relatively affordable price, said an anonymous insider to 21st Century Business Herald, and companies like Alibaba Cloud are at an advantage over Microsoft in terms of providing solutions in accordance with local conditions.

On the other hand, compared with Chinese corporations, Microsoft is more experienced in delivering SaaS (Software as a Service) and hybrid cloud applications. The ambitious company has already built an eco-system with hardware firms and cloud management services providers. Microsoft is able to fully connect data and apply artificial intelligence (AI) computing to serve customers, said Mike Ehrenberg, Microsoft Technical Fellow and the Chief Technology Officer of Dynamics business applications group.

It is predictable that China's cloud computing market will remain an arena of fierce competition for a rather long time.

Email: wenqiao@nbd.com.cn