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Recognizing that the telecom sector will plateau over the next decade, ZTE Corporation has expanded its presence in the IT space by setting up a cloud computing unit, the company's third major division after wireless and wireline.

 

"The industry won't be able to support the 25% annual growth we've seen over the past 25 years, so we need a new area to drive growth. We see cloud computing and IT as a strategic growth area for the company, with lots of opportunity for innovation," said ZTE Vice President for cloud computing and IT operations Wei Wang.

 

The company is so confident of the potential of its newly formed division that it expects to generate more than US$2 billion in revenues this year from cloud-related offerings for the enterprise market, which include datacom products, enterprise networks and servers, and storage products for government networks.

 

While still a fledgling undertaking for ZTE, relative to wireless and wireline, the cloud computing division is seen accounting for a third of the company's total revenues in the coming years, according to ZTE president Shi Lirong.

 

The company has set up a Global Cloud Computing Center in Nanjing, which employs more than 3,000 people, to help push its IT and cloud strategy. 

 

ZTE's foray into the cloud computing arena is not exactly new. Since 2006 the company has been investing in cloud computing patent applications. To date, ZTE holds 107 such applications in the field of cloud computing, giving it the top rank in that particular patent category, according to data from China's State Intellectual Property Office.

 

Apart from those 107 patent applications, ZTE also has five new proposals on the infrastructure, architecture, and ecological system of cloud computing that have been approved by ITU-T at the 5th FG Cloud Conference in Geneva.

 

Prior to the establishment of its cloud computing division, ZTE had a small cloud computing group, with only a handful of individuals. The new division combined this group with the company's VAS, system integration, and servers and storage units.

 

The US$2 billion target is not just new business -- before sales of switches, routers, servers and storage products to telecom operators where not classified as part of its cloud business. "Before we couldn't actually identify which was cloud computing and which was traditional services," Wang noted.

 

Wang said its enterprise strategy will focus in the beginning on PaaS (Platform-as-a-Service) and IaaS (Infrastructure-as-a-Service) because it is an equipment vendor. "Our strategy is to build a resource pool of public, private and hybrid cloud services and line up many partners together with operators and ISPs offering SaaS to enterprises."

 

The company will leverage its carrier-grade expertise and experience in the cloud computing area with large enterprises -- targeting companies such as PetroChina, which has one million employees, and help them migrate from traditional IT to cloud computing.