A ripple of excitement still runs through Guo Lie, 25, when he reflects on the remarkable success of cartoon app MYOTee. Launched by a team of nine young entrepreneurs, the app attracted almost 20 million subscribers in June, becoming the most downloaded app that month. The success helped Guo's team secure financial support from IDG Capital Partners, an investment firm supported by the U.S. International Data Group.

Questioned whether their success is sustainable and how the app would be commercialized, the team silenced their critics with the release of FaceQ, a version of MYOTee for foreign countries, in the process getting positive reviews from overseas users.

"We used Aliyun, a spinoff cloud-computing division of China's e-commerce giant Alibaba Group Holding Ltd., instead of establishing our own IT infrastructure, as it reduces IT input," said Guo, leader of the team. He added that their monthly investment on IT infrastructure is only 73 yuan ($11.8) after signing up for the cloud computing service. "When users exploded in numbers, the service also helped upgrade bandwidth efficiently," he said.

With cloud computing services helping small and large businesses reduce costs on network and server infrastructure and maintenance personnel, it becomes possible for startup entrepreneurs like the MYOTee team to focus on innovation and growth despite a small team and limited financial support.

Huge potential

According to a report released in June by the China Academy of Telecommunication Research (CATR) of China's Ministry of Industry and Information Technology (MIIT), the market value of public cloud platforms in 2013 surged by 36 percent, reaching 4.76 billion yuan ($771 million) in China. Besides Internet-based private businesses like Alibaba, Baidu and Tencent, state-run communication carriers as well as foreign firms are competing to gain a foothold in this booming sector.

The sector has injected much-needed vigor into China's information and communication industry by providing cloud computing platforms for hundreds of thousands of Chinese websites, e-commerce vendors, banks, game and app developers and others. Statistics by CATR showed that by September 2013, over 18,000 web servers had been run on the Alibaba cloud computing platform, a surge of 500 percent from 2012. In the process, the number of domains hosted by the platform had jumped from 90,000 to 390,000 during the same period.

"The cost of using cloud computing is much lower. Spending 1 yuan ($0.16) on cloud computing, a business could save 4 yuan ($0.65) input in purchasing servers, database software and storage devices," said Wang Wenbin, President of Aliyun. "[Cloud] computing is also extensible, saving entrepreneurs energy in establishing sophisticated IT infrastructure, enabling them to concentrate on innovating key business," he added.

Aliyun's strong computing capacity has been well applied in real business, especially during the November 11 online shopping spree in 2013. It was estimated that 75 percent of the 188 million orders generated that day were processed by Alibaba's cloud computing system. In addition, the purchase-sales-inventory management system of Taobao vendors, China's leading online shopping platform, and 80 percent of Tmall are based on the cloud computing platform Jushita.

Moreover, thousands of offline businesses are also potential consumers of cloud computing services as they need alternatives with which to upgrade and maintain their IT infrastructure.

It was revealed in the Trusted Cloud Service Summit held from July 15 to 16 in Beijing that a procurement plan for cloud services by government ministries, including the Ministry of Finance and MIIT, has been completed and a pilot project would be launched in the near future. Based on the procurement procedures and standards in the plan, China's Central Government Procurement Center would take measures to encourage government departments at all levels to purchase cloud services.

Government support

How big will the market be? He Baohong, Director of Internet Center of the Institute of Communications Standards Research (ICSR) with CATR, estimated that the government procurement on information technology exceeds 50 billion yuan ($8.1 billion). "If 10 percent of the procurement is replaced by cloud service, the market will reach 5 billion yuan ($810 million). And there are expected to be more demands in the future," said He. China Mobile forecast a market in excess of 100 billion yuan ($16.2 billion) as the potential of the cloud service sector is fully tapped.

"The cloud service we purchased performs well, keeping our IT systems running smoothly," said Che Haixiang, Director of Information Technology Promotion Department with Hangzhou Economic and Information Technology Commission. Hangzhou first procured a cloud service in March 2013. Currently, the IT services in 26 out of 45 government departments in the city are provided by cloud computing. 

Che said it had been proved that a cloud computing service is a feasible alternative. "It is safer than buying firewalls and depending solely on our limited technical personnel. The cloud service provided a complete protection mechanism, covering all software as well as more professional technical support," said Che.

"It also saves input on IT systems. Given that IT equipment needs upgrading or becomes obsolete in five years, 60 percent of the expenditure of an IT project would previously be used to purchase hardware. The cost can be reduced by half if we purchase cloud service," he said.

"Encouraging government agencies to procure cloud service will help satisfy the increasingly diversified demands for better IT systems, improve the government's efficiency to serve the people, and promote the development of the cloud computing sector in China," said Wang Yin, Director of Government Procurement Administration Office with the Ministry of Finance.

Safety concerns

Bai Ya, CEO of Shopex, China's largest WeChat system service provider, said his company uses cloud computing services provided by Internet-based businesses. "We were using UCloud, and now are considering using Tencent's service to support some of our operations," said Bai.

The reason behind his decision is safety concerns. "Storing all our business data on the platform, in essence, is handing our information resources to users of the platform. Splitting them into different service providers will reduce the risks of information leaks," said Bai.

Shopex's concern over the safety of cloud computing is not unique. Safety risks are the reason why financial institutions hesitate to replace the previous IT infrastructure with cloud computing. "Once the users' account information is leaked, the losses will be immeasurable," said Li Ke, a bank customer service manager in Beijing.

"Aliyun doesn't have access to the information on our users' stores. As a platform, we just provide the service of cloud computing. The data information belongs to users. Aliyun's service is something like a safe. With mutual consent, users can exchange information on our platform," said Aliyun's Wang.

To ensure users are confident of the safety of cloud services, the ICSR with CATR issues certificates to service providers whose cloud services are trustworthy. The institute evaluates providers' legitimacy and authenticity.

"Without certificates [issued] by us, businesses cannot qualify as candidates for the government's procurement providers," said Wang.

To date, 35 cloud service providers operated by 19 businesses have been certified as trustworthy providers in China. Those services provided by China Telecom, China Mobile, Alibaba, Tencent, Sina, Baidu, Jingdong, China Cache, 21 Vianet and UCloud were all certified early this year. Inspur, 360 and Kingsoft were also added to the list in July.