Enterprises and government strive for global competitiveness

By Kang Ye-won

Although cloud computing has become a hot business trend in recent years, its concept has been around for quite some time as it now broadly refers to computing resources that a user can access using the Web just like electricity from a utility.

When users create a file on Google Docs, for instance, and share and manage it with others, they’re working with data in the “cloud.” And when the Apple device users sync their iTunes music on different gadgets from a laptop to tablet to smartphone, their content is stored in the cloud.

The services of storing and managing data are part of cloud computing made for the consumers’ taking. For business customers, cloud computing further provides infrastructure and platforms to carry out those services to help companies lower costs and effectively handle ever-growing data.

Innogrid, a Korean cloud computing service provider for business customers, is one of many tech providers serving local clients, mostly young enterprises which often experience an unexpected traffic surge when a business is taking off.

“The key concept of cloud computing is virtualization and centralization of data, which improves efficiency and lowers cost,” said Cho Ho-gyeon, a director of cloud business at Innogrid.

Having launched its own cloud service called Cloudit last year, its sales more than doubled every year reaching over $4.3 million in 2010, and it developed some 30 software programs of its own and seven patents.

Virtualization lets users run and store as many software applications as needed without having to anchor at a specific computer. Behind the cloud, the Web giants such as Amazon manage the data centers across the globe renting the processing power and storage.

“If the current major companies like KT and NHN are targeting regular consumers for personal use, we are siding more with developers who are looking for specialized Internet services,” Cho said.

Innogrid’s clients include local start-ups such as Free Listen, a music streaming service on the Web and mobile platform, and Moragi, a messenger application on smartphones similar to Kakao Talk.

The market size of global cloud computing was about $80 billion in 2009 and is expected to jump to $343 billion in 2014, according to Samsung Economic Research Institute’s research note. Following the trend, Korean market is expected to reach over $2.2 billion by 2014.

Just this year, major conglomerates and telecommunications companies jumped into the cloud computing industry, securing data centers and developing programs, either on their own or by leveraging the services provided by global industry leaders.

“The emergence of telecommunications and major corporate helped increase the size of the pie in local cloud computing industries,” said Sung Chun-ho, the chief executive at Innogrid, during a seminar hosted by Korea Internet Security Agency early this month.

LG Group teamed up with Microsoft last year, releasing its cloud service called, LG CNS for both businesses and consumers. Samsung, too, with a separate affiliate named, Samsung SDS, is about to release its own application, similar to Apple’s iCloud, made for personal use.

And this March, local telecommunications leader KT selected a Cupertino, Calif.-based company called, cloud.com to use the company’s open source software for the foundation of its own cloud offering, uCloud. IBM built a private cloud computing environment including infrastructure, platform and software for SK Telecom in 2009.

Thanks to the local powerhouses which have the capacity to invest in building enormous Internet data centers for handling the exponentially growing data, small- and medium-size tech companies like Innogrid have latched on to the giants to borrow physical storage space and create their own virtual platform for the end users.

In a joint effort with a Japanese firm, Softbank, KT founded a global data center early this month in Gimhae, South Gyeongsang Province. SK built its own, too, in Ilsan, Gyeonggi Province. LG is also building a global data center in Busan to be completed by the end of next year.

And it’s not only private companies but also Korean government has jumped on the bandwagon in an effort to gain global competitiveness.

Last year, Korea Communications Commission introduced a plan to invest about $500 million in local cloud computing facilities until 2014. In an effort to increase its market size by 10 percent, government agencies including the KCC, Ministry of Knowledge Economy and Ministry of Public Administration and Security will adopt the service.

Despite the major players’ enthusiastic move, many companies still express concerns about data security and service reliability, among others.

Amazon, the global leader in renting Web services and storage to enterprises, went down for several hours this April, taking down about 70 sites which use its hosting servers. Amazon located its servers in five regions worldwide: Northern Virginia, Northern California, Ireland, Tokyo and Singapore.

Similar to Google’s time-to-time hiccups in its service, the Amazon glitch raised concerns on the capacity of cloud computing and its consequences.

“Because cloud computing tends to have a centralized data storage structure, the repercussions would be enormous if it shows a weakness in security and gets hacked, for instance, which is worrisome despite its legacy system,” said Cho of Innogrid.

Also security concerns on virtualization have not been fully addressed, he added, but because the field is still evolving, it is no more than “ambiguous” worries.

Besides anxiety over security and stability, companies yet fear the technical difficulty of integrating into in-house system and losing control over data in the cloud, according to a survey done by IDC, a technology market research firm.