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Decoding the success of New H3C's cloud business


The H3Cloud OS operating system developed by the New H3C Group has been selected as one of the top 10 innovation projects in Tsinghua industries for 2016 by Xinhua News Agency and Tsinghua Holdings Co Ltd. 

New H3C Group, a subsidiary of Tsinghua Unigroup that is affiliated to Tsinghua Holdings, is a world leading provider in new IT solutions.

The award is a reflection of the huge success New H3C has achieved with its flagship product, which has become the dominant system in China's private cloud computing industry after years of development.

New H3C has been the biggest provider of cloud services to China's government sectors for two consecutive years, accounting for 19.6 percent of this huge market in 2016, according to the company.


Rise of cloud technology

Cloud computing is a form of internet-based computing that provides shared processing resources and data to computers and other devices on demand. 

Lu Guoqiang, head of New H3C's cloud product line, compared cloud technology to a "super computer" giving access to a shared pool of computer networks, servers, storage and applications, which can be rapidly provisioned and released with minimal management effort.

Through the power of the cloud, a user can unify the management of equipment and resources remotely, boosting work efficiency while cutting the overhead costs associated with maintaining a large network and banks of servers onsite.

These advantages resonate with governments at all levels in China, which are becoming more service-oriented yet struggle with the technical difficulties of integrating the work of multiple platforms for government affairs.

China's cloud computing industry generated revenue of 150 billion yuan ($22.3 billion) in 2015, up by more than 30 percent year-on-year. The number is projected to reach 430 billion yuan by 2019.

"It is common sense among governments that cloud computing is the premise of all matters," said Lu.

China's science and technology authorities have shown massive support for its growth. A recent three-year action plan for cloud technology released by the Chinese government identified the increased use of cloud computing as a vital reform and inexorable trend, as well as a catalyst for economic growth.


Private vs public

New H3C began developing H3Cloud OS in 2009, and commercialized the system four years later. It is the key tool in New H3C's private cloud solutions portfolio.

There were doubts about the prospects for the operating system at the beginning of the project, with insiders doubtful about whether it would be able to compete against the then-popular public cloud services on the market.

Public and private cloud computing each have their own unique strengths. The former allows the public to access resources more conveniently at a lower cost, while the latter provides customized services with greater security for clients.

Moving all resources to the public cloud platform also means that the user will have to abandon all its existing IT infrastructure, including servers, storage and networks.

More importantly, cloud computing is about more than simply setting up a cloud platform. The user, whether it is a government, a company or an institution, needs a partner who can provide consistent cloud services to fulfill its changing needs as it innovates and expands its operations.

"We've always provided our clients with comprehensive cloud solutions. We don't just sell products; instead we find out their needs and problems and help them to fix them," said Ban Shimin, head of New H3C's cloud computing .


Rising to the top

New H3C's cloud business thrived among different type of clients over the years, having undertaken more than 300 large cloud computing projects. 

Nine State-owned enterprises used New H3C's cloud service in 2016 alone. 

More than 200 universities and some 600 education bureaus across the country have joined the New H3C client list, with over one million wireless routers connected to it.

New H3C has dominance of the government cloud market. The company currently works with 12 ministries, 18 provincial governments and more than 200 local governments.

"The leading position of New H3C in the government cloud market is the result of its many competitive advantages," said Yu Yingtao, president and CEO of the group. 

On an international level, New H3C is one of only two cloud service providers able to provide high-performance computing, storage and setting up networks. 

Before teaming up with New H3C, the government of Zhoushan city in Zhejiang province relied on another company’s cloud service. But the relationship did not last long because the company was unable to solve an ongoing issue with IP address conflicts. 

New H3C's cloud platform is compatible with quite many types of software and hardware.

The H3Cloud system is also effective in its ability to allocate resources efficiently. Take Sinotrans, a large State-owned logistics firm, for example. It has nearly 30 subsidiaries across the country, which often competed for access to computing resources during busy periods.

After migrating its network to H3Cloud, Sinotrans can easily ration its resources to meet the real-time demands of its subsidiaries. 

One of the biggest beneficiaries of this system is colleges, which have long been troubled by once-a-semester network failures when thousands of students scramble to access the system to apply for places on their desired courses.

If universities invested in the infrastructure capable of handling such a huge amount of traffic, it would be a waste, since it would go unused for the vast majority of the year.

H3Cloud provides the much-needed solution with its dynamic resources scheduling, which can allocate sufficient resources at peak periods and release them afterwards. This allows universities to cope with the surge in network activity without the need to invest in any extra hardware.

New H3C has established its first ever cloud computing production line to connect the entire process of developing a cloud solution, from R&D to marketing, sales and after-sale service. The unified management has led to faster decision making and more efficient execution.

The company has also come up with tailor-made cloud-based application scenarios for governments, educational institutions, integrated media and companies, and plans to expand the service to more sectors, such as energy and finance. 


The company recently announced that it is working on upgrading its strategy from a "government cloud" to a "city cloud" model, aiming to add 100 "city cloud" projects and 10 "industry cloud" projects over the next three years.

It has also set itself a target of collaborating with another 100 partners to attract a further 300 billion yuan in investment.

"Every industry has its own unique characteristics. Our platform will back up the development of them all to form a real 'industry cloud'," said Wu Jian, vice president of New H3C.