Joyent and Qihoo 360 Technologies Poised to Gain Traction in China’s Cloud Computing Market

Recent announcements by Joyent and Qihoo 360 Technologies indicate that the use of cloud computing technology in China is poised to proliferate dramatically in 2011. On May 16, Joyent revealed details of an alliance with ClusterTech whereby ClusterTech would become the provider of public cloud services to companies in the gaming, media, mobile and social media space in China. Under this arrangement, ClusterTech will provision Joyent’s cloud computing SmartDataCenter 6 software to “service providers, data center operators and systems integrators” that will, in turn, provide Joyent’s cloud computing technology to media, gaming and mobile companies in China. In licensing its cloud computing software to a third party distributor, Joyent leverages a business model that differs markedly from most of its U.S. competitors such as Amazon Web Services and Rackspace that retain control over the deployment of their cloud computing operating systems. Joyent’s partnership with ClusterTech builds upon its previous entry into the Chinese cloud computing market in 2009 with a public cloud data center in the Qinhuangdao Economic and Technological Development Zone (QETDZ), Hebei Province, China. Meanwhile, Qihoo 360 Technologies, developer of China’s most popular internet security software, recently announced plans to enter the cloud computing space by providing online data storage. Qihoo CEO Zhou Hongyi mentioned the possibility of acquiring relevant companies in order to expand into the cloud computing and data storage space. The company’s first quarter revenue more than doubled to $22.9 million as compared to $9.7 million from last year, largely as a result of increased online advertising revenue. Qihoo went public in March through an IPO that valued the company at $202 million, with the IPO share value at $14.50. As of June 1, the stock is trading at $26.25 a share, up more than 81% from its IPO value.