Korean web giant NAVER has outlined its ambition to bring its cloud to the world, and to become the third-largest cloud provider in the Asia-Pacific region.
NAVER started life as a Korean web portal, added search, won the lion's share of the market, and has kept it ever since. South Korea remains one of the very few nations in which Google does not dominate the search market.
As NAVER grew it came to resemble Google in many ways – both in terms of the services it offers and its tendency to use its muscle to favour its own properties. NAVER also used its scale to start a cloud business: the NAVER Cloud Platform. It runs the Platform in its home market, plus Japan, Hong Kong, and Singapore. Presences in Taiwan, Vietnam and Thailand are imminent.
But NAVER Cloud's revenue is negligible – just $234 million for 2020. Alibaba's annual take was more than ten times that figure.
Alibaba is an apt comparison because it is the region's top cloud by revenue when China is included in the tally. Across the region, AWS and Azure are the market leaders, although Alibaba has achieved second or third place in some nations. Tencent is also on the march across the region.
NAVER therefore has its work cut out for it, because Microsoft, AWS and Google are also building new bit barns across the region as they seek more market share.
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The core of the Korean giant's plan is to re-invest 80 per cent of revenue in technology development, to help it introduce products including Robot-as-a Service and isomorphic encryption. The company's AI, HyperCLOVA, will also be "expanding its application to various NAVER Cloud Platform services, allowing enterprise cloud customers to apply the large-scale language model to their services through NAVER Cloud Platform".
Platform-as-a-service will also be a focus, as NAVER's customer research indicates that's what buyers want. Headcount will be tripled to help the push.
Other plans all sound a bit me-too. For example, the company's announcement of its plan mentions imminent launches for "Cloud Data Box, which provides data and analysis for business insights; Data Forest, a large-scale data analysis platform that is capable of big data analysis and machine learning; and Robotic Process Automation".
None of those products will have rival clouds quaking in their hyperscale boots.
Nor will NAVER's global footprint, which currently includes presences in Germany and the West Coast of the USA, plus a plan for an East Coast facility. All major clouds have many more regions in action, so NAVER's plan to "advance its global expansion" is hard to perceive as a threat to incumbent clouds.
One thing in NAVER's favour is that buyers have many reasons to be uncomfortable with Chinese clouds. Indeed, Alibaba has revealed that one large customer – suspected to be TikTok's global operation – has quit its services for reasons other than the quality of the cloud service. The loss of that one customer knocked ten points off Alibaba Cloud's revenue growth rate for Q1 2022, translating to tens of millions in lost revenues. Between constant growth in cloud usage and positioning itself as a regional alternative to Chinese clouds, NAVER has opportunities for growth.
Yet if NAVER emerges with even four or five per cent market share from a regional base, that would mean it is not far off the likes of IBM and Oracle. That level of interest would also place it ahead of challenger clouds like OVH, Linode and Digital Ocean. ®