Amazon to launch cloud business in Hong Kong as competition with Chinese rivals heats up

Amazon Web Services (AWS) has rolled out data centers and cloud infrastructure in Hong Kong as it looks to ramp up services for users in Asia Pacific.

The expansion allows AWS customers in the city to access data stored in the cloud with lower latency. That means companies can run applications critical to their business more efficiently, thanks to a much faster data transfer following an instruction.

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Hong Kong, the eighth market in Asia Pacific for AWS, will have three data center cluster locations. Previously, local customers using AWS cloud services had to store their data in other locations, such as Singapore or Tokyo.

The launch of AWS in Hong Kong comes as competition heats up in the region, with Chinese rivals Alibaba Cloud and Tencent Cloud opening operations in the city in 2014 and 2017, respectively.

According to a Gartner report released Wednesday, Alibaba Cloud was the market leader in Asia Pacific for services such as infrastructure-as-a-service as well as infrastructure utility services in 2018. The report also noted that Alibaba Cloud commands nearly 20% of the market, compared to 11% for AWS and Microsoft’s 8%.

Alibaba Cloud, a subsidiary of ecommerce giant Alibaba Group Holding, is currently the world’s third-largest cloud services provider, with a 4.9% global market share, behind AWS and Microsoft, according to the Gartner report. The Chinese company also has the biggest cloud market share in China.

“It’s an opportune moment to launch in Hong Kong,” said Werner Vogels, chief technology officer of Amazon, in an interview. “It’s crucial for businesses that want to migrate into the cloud for lower latency access […] it will help them to build and innovate a whole new range of applications that were impossible before.”

The latency for Hong Kong businesses using AWS infrastructure in the city, as opposed to storing data in Tokyo or Singapore, could be reduced from 100 milliseconds to 10 milliseconds, said Vogels. That would make an important difference for time- or mission-critical applications where too much latency could cost businesses millions.

“It’s an order-of-magnitude improvement,” Vogels said.

Cloud computing enables companies to buy, sell, lease, or distribute a range of software and other digital resources as an on-demand service over the internet, just like electricity from a power grid. These resources are managed inside data centers.

Having data centers in Hong Kong will also allow customers with data residency requirements to store their data within the city, AWS said.

The US company already serves local enterprises such as Cathay Pacific, HSBC, and New World Development. It also counts Hong Kong startups such as Grana, AfterShip, Lalamove, and WeLend among its customers.

On top of data storage, AWS offers applications such as machine learning models, blockchain networks, and even a service that allows customers to develop, test, and deploy intelligent robotics applications.