Business Report

The Man Behind Cloud Valley

Edward Tian wants to bring the Chinese people the power of a supercomputer at the price of a book.

In a suburb of Beijing, 800 workers arrive each day to a glass-and-masonry office block and a shared mission: to create China’s version of the Internet cloud. 

Known as Cloud Valley, the 7,000-square-meter technology campus is the creation of Edward Tian, a 48-year old entrepreneur credited with bringing broadband Internet to China in the 1990s. On the campus, millions in investments from Tian’s enterprises now fund engineers to wire-up servers into refrigerated shipping containers and all-night coding sessions by young programmers. These are components of what Tian hopes will become a complete supply chain for cloud computing—all of it Made in China. 

China is home to the world’s largest population of Internet users, some 485 million, as well as its most-used micro-blogging service, the freewheeling and often-controversial Sina Weibo. Despite a boisterous Internet culture, however, the country has not been on the cutting edge of computer innovation. China assembles PCs and laptops that were designed elsewhere, and its use of web-based technology still lags badly. Government offices often require fax communications, and many small businesses do accounting, literally, out of a shoebox. With cloud computing, Tian believes he can help Chinese businesses, individual users, and government departments leapfrog into the 21st century—bypassing decades of legacy hardware and software.

Cloud computing allows data and applications to be stored not on individual personal computers but on remote servers. That can cut IT costs and give access to powerful software via smart phones and laptops. As important as such advances are in the West, Tian says, they are even more important to China. “With the cloud, you could have access to unlimited storage power with a very simple computer,” he says. “The cost of a computer could be like a book, maybe $100; all you’d really need is display. And this is fundamental for China, which is still a very poor country. To me, the goal of promoting cloud computing is to let every citizen—particularly those people in underdeveloped regions—afford computing access and information. My slogan is ‘The price of a book, the power of a supercomputer.’”

Tian’s ambitions dovetail with those of the Chinese government. In its most recent Five Year Plan, released in March, Beijing named information technology as one of seven strategic “emerging industries” targeted for investment totaling $600 billion (others include clean energy and advanced manufacturing). Cloud computing was placed under control of the newly created Ministry of Industry and Information Technology.

“Government is a big advocate because they recognize the strategic importance of cloud,” says Panha Chheng, senior director of strategy for iSoftStone, an IT services company headquartered in Beijing. “Since cloud is still relatively new, it is still possible for China to be an early adopter and then stay at the forefront.”

Tian has a long history in China’s Internet scene. In the early 1990s, as a graduate student at Texas Tech University, he cofounded a company, AsiaInfo Holdings, to bring Internet technology to China. In 1999, the Chinese government asked Tian to take the helm at the newly created China Netcom Group, with the goal of building the country’s broadband network. Today, he is a business heavyweight who sits on the boards of Lenovo and MasterCard International and whose Rolodex includes many of Silicon Valley’s elite.

Tian says he got the idea for Cloud Valley three years ago during conversations with two of China’s other Internet luminaries, Yahoo cofounder Jerry Yang and Trend Micro cofounder Steve Chang. Cloud computing was the next wave for China to catch, they advised.

With an initial investment of $78 million, China Broadband Capital, the company Tian now chairs, provided seed funding for nine startup companies working on different links in the cloud computing supply chain. One, China Supercloud, has already begun selling Chinese-designed servers that compete with those from IBM; other firms are designing software or developing designs for data centers. Tian expects all the companies will become profitable.

The companies are housed together at an office park in southeastern Beijing’s Economic and Technological Development Zone; the facility opened in August 2010. “It’s important to put all the entrepreneurs together to share ideas, and to put capital behind that,” says Tian. “When you walk through the cafeteria—the food is free—you can feel that excitement of young entrepreneurs.” Smaller branch campuses of Cloud Valley have also opened in the last year in Shanghai, Nanjing, and Shenyang.

China’s use of cloud computing services still widely trails that of other countries. A 2010 survey by the consulting firm Accenture found that only 11 percent of large organizations in China had deployed any kind of cloud technology, compared with 42 percent in the United States and more than 60 percent in France and Germany.

One obstacle is the slow speed of the Internet in China: painfully sluggish connections are common and poorly suited to real-time business needs. The structure of the Chinese Internet is part of problem, says Reuven Cohen, founder of the cloud service provider Enomaly. The network isn’t well integrated and is prone to interruptions. In addition, says Cohen, continual government monitoring slows down “even the most routine of Internet activities.”

Security concerns are another obstacle to building the cloud in China. The government could restrict applications if they become channels for prohibited political ideas. And foreign companies may be reluctant to store sensitive data on any Chinese server. “Perceived risk is a major barrier,” says Dale Sartor, an engineer at the U.S. Department of Energy’s Lawrence Berkeley National Labs, who has visited several large data centers in China. Users “must rely on, and trust, the service provider—a scary proposition for many who prefer direct control over their critical information and business resources.”

Tian is accustomed to responding to such worries. “This is almost always the first question people ask about the cloud: how safe is your information?” he says. But he plays down the fears. “With every technology revolution, you create a new set of problems. But you must compare that with the efficiency and convenience that the new technology brings.”

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