Omdia analysts have revealed their recommendations on how Tencent can strategically position to increase its share of the global cloud computing market.
Tencent has immense opportunities to grow as it has just 2 percent share in the global cloud computing market. This compares with 32 percent share for Amazon Web Services (AWS) and 23 percent share for Microsoft Azure.
Analysts at Canalys indicate that Tencent Cloud ranked third in China with 16 percent market share in the second-quarter of 2024. Cloud companies such as Tencent Cloud generates 26 percent of their sales through channel partners. The size of the China Cloud market was $9.64 billion in Q2 2024.
In June 2024, Tencent introduced a plan to attract customers to its AI foundation model by offering 100 million free tokens to new enterprise users.
Tencent launched multiple versions of its foundation AI model, Hunyuan, including Pro, Standard and Lite, along with complimentary dedicated migration tools and services.
Tencent recently said it achieved 150 percent increase in the number of its partners with revenue above CNY1 million or $142,000.
The size of the global cloud computing market is currently valued at $363 billion and expected to reach $536 billion by 2027, according to Omdia.
The leading cloud providers are Amazon 32 percent, Microsoft 23 percent, Google 12 percent, Alibaba 4 percent, Salesforce 3 percent, Oracle 3 percent, IBM 2 percent, Tencent 2 percent and Huawei 2 percent in Q2 2024, according to Synergy Research Group. Other companies which have a market share of nearly 1 percent include Baidu, China Telecom, China Unicom, Fujitsu, NTT, Snowflake, SAP, Rackspace and VMware.
Omdia recommendations
Omdia says Tencent Cloud has been successful in verticals such as gaming, media and entertainment (M&E), financial services, telecommunications, and the public sector. Tencent is now targeting further global expansion beyond these areas.
Roy Illsley, Chief Analyst, Cloud and Data Center Practice at Omdia, in a report, highlighted three core strategies that Tencent can leverage to drive growth.
Consumer-to-Business Expertise
Tencent’s experience in serving billions of consumers and thousands of enterprises, especially in M&E, allows it to tap into consumer-centric industries like retail. For example, Tencent collaborated with Orange to develop the Weixin/WeChat platform for Africa, providing not only the technology but also the expertise and partnerships needed to scale the project.
Customer-Centric Model
Tencent’s customer service excellence is key to its strategy. Instead of focusing solely on selling products, Tencent takes a holistic approach, working closely with clients through different stages of their digital transformation, using a joint success model. This method strengthens relationships and ensures customer satisfaction.
Product Innovation
Tencent is also driving innovation, particularly with cloud-native technologies like Kubernetes. Omdia praised Tencent’s Kubernetes Engine (TKE) and its TKE Housekeeping, a solution that optimizes Kubernetes environments by addressing resource inefficiencies like memory ballooning. These innovations help companies better manage cloud costs, aligning with the growing need for FinOps solutions.
Partnerships for Growth
Tencent’s partner network, now exceeding 200 new partners annually, plays a crucial role in its expansion. Its four-tier partner program (standard, silver, gold, platinum) offers a range of incentives, including a migration acceleration program aimed at helping businesses transition to the cloud more seamlessly. As Tencent moves into new market verticals, expanding its partner network will be essential for addressing industry-specific challenges.
Analysts at Omdia believe that Tencent’s strengths in consumer-driven business models, product innovation, and partnerships will enable the company to capture more of the expanding global cloud market. Its strategic focus on industries like media and entertainment, combined with a customer-centric and innovative approach, positions Tencent as a strong contender to grow beyond its current market share.
Baburajan Kizhakedath
