Research from Parallels Reveals 4.1B RMB Cloud Services Market Opportunities in China for Small and Medium Businesses (SMBs)

November 30, 2011

Nascent Cloud market poised for exponential growth as 80 percent of SMBs plan to adopt hosted servers in the next three years

BEIJING, CHINA - November 30, 2011 - Parallels, the hosting and Cloud services enablement leader, today released the key findings of Parallels SMB Cloud Insights™ for China, a report illustrating how service providers can profit by delivering Cloud services to small and medium businesses (SMBs). Parallels estimates that the Chinese SMB Cloud services market opportunity is 4.1B RMB (US$640M) in 2011 and rapidly growing, fuelled by the country’s expanding Internet infrastructure and as businesses of all sizes continue to realize the economic and operational benefits of Cloud services.

Parallels SMB Cloud Insights™ for China addresses the types of Cloud services that hold the most appeal for SMBs, and details the best opportunities for service providers to drive growth and revenue in the Chinese hosting market. The research estimates the Chinese SMB Cloud services market for the traditional hosted services—specifically, hosted infrastructure and Web presence—at 4.1B RMB (USD $640M) in 2011. Of this spending, hosted infrastructure has the largest share, with 3.2B RMB (US$500M), and Web presence has the remaining 900M RMB (US$140M).

"Chinese SMBs, especially start-ups, are embracing the Cloud to establish their Web and e-commerce presence, increase productivity, and lower their IT costs,” said John Zanni, vice president of service provider marketing and alliances of Parallels. “Parallels SMB Cloud Insights™ for China presents a precise roadmap for service providers to better understand this growing market and help their ability to profit from the Cloud.”

Parallels estimates many growing Chinese SMBs will go straight to the Cloud and forego the process of installing in-house servers and desktop applications. As Chinese SMBs continue to forgo on-premise IT investments, Parallels estimates the market for new virtual servers will drive exponential growth in the Chinese Cloud infrastructure (IaaS) arena. Parallels has determined that the country’s rate of planned adoption of hosted infrastructure is high, which could add approximately two million hosted servers to the current market size in the next few years alone.

“As the Internet infrastructure in China continues to expand at a rapid rate, more and more Chinese SMBs are looking towards the Cloud to increase cost-efficiency and productivity,” said Dennis Ng, CEO, PacHosting. “Parallels SMB Cloud Insights™ provides service providers with actionable market intelligence so they can better market and sell Cloud solutions that to meet the growing demand of growing businesses across China.”

Additional key research findings in Parallels SMB Cloud Insights™ for China include:
  • Hosted Infrastructure
    • Only 17 percent of SMBs in China currently have in-house servers, a level far behind more developed countries.
    • Many growing Chinese SMBs are expected to go straight to the Cloud and save costs on building in-house IT infrastructure. 80 percent of Chinese SMBs with no servers are planning to adopt hosted servers in the next three years.
  • Web Presence
    • Only 29 percent of Chinese SMBs currently have a website—compared to a rate of up to 95 percent in more mature hosting markets.
    • Over 62 percent of SMBs without websites report they plan to add a Web site in the next three years.
    • Among Chinese SMBs with existing web presence, 25 percent of these businesses plan to increase their spending on hosted services in the next three years.
  • Hosted Communication and Collaboration
    • Larger SMBs have greater need for the organizational and collaboration features of hosted business e-mail.
    • Of SMBs in this size segment, 75 percent plan to add hosted e-mail, and 83 percent of companies that already have hosted e-mail plan to spend more on this service.
  • Other Online Applications (SaaS)
    • Chinese SMBs report that they intend to pay more (or start paying) for nearly all categories of online applications. The paid application categories that SMBs report they are most willing to pay for, and plan to increase their spending on, include online CRM (74 percent) and phone conferencing (64 percent)
    • Among Chinese SMB users of existing online applications, the new applications they are most likely to adopt over the next three years are online backup and storage (31 percent); e-mail archiving (26 percent), and content management (17 percent).

Parallels concludes that service providers in China should target the highest value segments with the most potential for adoption, then provide education to their SMBs and other customers about the advantages of Cloud services.

To download Parallels SMB Cloud Insights Reports™ click here.

About Parallels
Parallels is a worldwide leader in hosting and Cloud service enablement and desktop virtualization. Founded in 1999, Parallels is a fast-growing company with more than 800 employees in North America, Europe, and Asia. For more information, please visit, follow us on Twitter at and Like Us on Facebook at

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