Cloud Service Consumption Is an Indicator of Digital Economy Development, Pony Ma Says
Liu Jia
DATE:  Aug 25 2017
/ SOURCE:  Yicai
Cloud Service Consumption Is an Indicator of Digital Economy Development, Pony Ma Says Cloud Service Consumption Is an Indicator of Digital Economy Development, Pony Ma Says

(Yicai Global) Aug. 25 -- Chinese tech giant Tencent Holdings Ltd.'s [HKG:0700] cloud and payment services are beginning to pull in as much revenue as its online advertising.

As internet companies around the world turn to cloud computing, Tencent's founder Pony Ma believes that the total volume of cloud services consumed is an effective measure of how developed a country's digital economy is, akin to how electricity consumption was used in the past.

The company has rolled out a quick succession of business initiatives revolving around cloud computing in recent months, manifesting its resolution to catch up with industry leaders. As a late market entrant, the Shenzhen-based firm has managed to narrow the gap to its top competitor, Alibaba Group Holding Ltd.'s [NYSE:BABA] Alibaba Cloud.

Tencent caused quite a stir in the digital world earlier this year after it successfully bid CNY0.01 for an e-government cloud platform in the southeastern city of Xiamen.

It may have been an on-the-spot decision based on the given circumstances, but "in future, a company should keep its business-to-business operations within the scope of normal business activities and compete with other market players," Qiu Yuepeng, president of Tencent Cloud, told Yicai Global.

Tencent Cloud's mission is to build an information highway and provide artificial intelligence and 'smart cloud' services that enable clients to create value through technology, Qiu said.

More specifically, the cloud unit's cooperation model starts with technical capacity and connectivity, covering product modality at a top level. This point can be illustrated by the successful marketing of photo editing software release by the People's Daily app on Armed Forces Day (Aug. 1), that allowed users to edit their face into a stock portrait of a soldier. The program had reached a billion hits by Aud. 23 and at peak usage some 1.17 million people were using the software every minute. Tencent Cloud deployed about 4,000 cloud servers to meet demand for the service.

Tencent Mi Ying is a cloud-assisted medical diagnostics service. Using Tencent Cloud's image recognition technology it increased the success rate of early esophageal cancer screening from 10 percent to 90 percent. Earlier detection of the disease has led to a significant improvement in the survival rate and the cloud-assisted service is more accurate than a manual diagnosis, Pony Ma said.

The firm's cloud service has also collaborated with governments to enhance their operation efficiency, said Qiu. For example, the Tian Yan facial recognition system can compare hundreds of millions of faces stored in its database in one millisecond, and helped Fujian police find 124 lost persons within three months.

"The cloud business is a tough battle and a marathon race," Zeng Jiaxin, a vice president at Tencent Cloud, told Yicai Global.

Deutsche Bank AG [FWB:DBK;NYSE:DB] raised its earnings forecasts for Tencent Cloud by 14 percent for 2019 and 48 percent for 2020, predicting operating income will reach CNY29 billion by that time.

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Keywords:   TENCENT,Tencent Cloud,Cloud Technology