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Analysis Of The ASEAN And Taiwan Infrastructure-as-a-service Market, Forecast To 2025

ASEAN and Taiwan are expected to register highest CAGR in the near future in the Infrastructure as a Service market. The Countries in the Region of ASEAN and Taiwan are adopting "Cloud First" strategy paving way for growth of the IaaS Segment of cloud computing.

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Definition / Scope

  • Infrastructure as a service (IaaS) is a form of cloud computing that provides virtualized computing resources over the internet. It provides virtual machines and other abstracted hardware and operating systems which may be controlled through a service API. Examples include Amazon EC2 and S3,Terremark Enterprise Cloud, Windows Live Skydrive and Rackspace Cloud.
  • Organizations are investing on Iaas as a consequence of growing volume of business and financial data and other critical information among the businesses in various verticals, aided by the need for reducing the burden of cost and IT administration, and a need to focus more on their core operations.
  • The technological advancements have led to increased mobility, BYOD, and other digitalization trends in numerous sectors, this in turn has created the need for adoption of Iaas.
  • The global IaaS market is segmented based on component type, deployment model user type, industry vertical, and geography. Based on the component type, it is classified into storage, network, compute, and others. Considering deployment model, it is divided into private, public, and hybrid models. User type includes large enterprises and small & medium enterprises (SMEs). On the basis of industry vertical, the market is categorized into banking, financial services, and insurance (BFSI); government & education; healthcare; telecommunication & IT; retail; manufacturing; media & entertainment; and others.
  • The global IaaS market was valued at $19,319 million in 2018 and is estimated to reach $140.075 million by 2025, growing at a CAGR of 25.3% from 2017 to 2025. The global IaaS market is expected to witness a high growth rate, due to the rise in ICT expenditure by governments in several developed and the developing regions, including North America, Europe, and ASEAN and Taiwan.
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Market Overview

  • The ASEAN cloud infrastructure market will gravitate towards a hybrid deployment model (partially premises-based and partially cloud-based) in the next 3–5 years. The demand for managed cloud offerings has been increasing, particularly for Application-as-a-Service and Network-as-a-Service offerings.
  • ASEAN and Taiwan are expected to register highest CAGR in the near future. Industry participants have realized the importance of strengthening the overall cloud infrastructure to ensure low-cost networking, servers, virtual data centers, storage solution, and easy accessibility of virtual computing from any device and location.
  • The ASEAN region, with countries, such as Singapore, Malaysia, Brunei, Indonesia, Thailand and Philippines and Taiwan is an emerging region for the vendors in the IaaS market. Moreover, growth in demand for mobility in enterprises drives the market in ASEAN and Taiwan.

The Market Leader - Singapore

  • In ASEAN, Singapore has been leading the region when it comes to the adoption of cloud computing, given the strong infrastructure setup to host cloud services. A major development of 2012 in the Singapore cloud computing market was the launch of the Central G-Cloud program by the Infocomm Development Authority (IDA) of Singapore. The key objective of this program is to not only build private cloud infrastructure for government agencies in Singapore but also to develop public cloud infrastructure. This program has been a boon to the local service providers.

The Challenger - Malaysia

  • Following Singapore closely, Malaysia is the second-largest cloud computing market in the ASEAN region with major enterprises beginning to move their services into the cloud. With the assistance from the Multimedia Development Cooperation (MDeC), many local independent software vendors (ISVs) and SMBs are stepping into the cloud arena. One of the programs by MDeC is the SME Cloud Computing Adoption Programme. The key goal of this program is help elevate competitiveness and efficiencies of local SMBs. The incentives, clubbed with the other benefits of cloud services, are driving SMBs to choose cloud computing over managed services, as it helps them focus on their core business rather than investing time and resources on IT infrastructures and management.

The Followers - Indonesia, Thailand, and the Philippines

  • Indonesia, Thailand, and the Philippines are the nascent cloud computing markets in ASEAN, taking a more wait-and-watch approach. The increasing awareness level, especially of the benefits around cost savings, and improved productivity and efficiency have led to an increase in uptake of cloud services in these countries. Thailand, in particular, has witnessed an increase in the uptake of cloud computing due to the flooding that was a major natural disaster in 2010/11. Formation of the Electronics Government Agency or better known as the e-Government agency is also to provide cloud services and to act as an application store for state agencies. The eGovernment agency will invest approximately THB50 million to set up cloud computing services for its agencies. Complete cloud package here includes all three services stacks - SaaS,Infrastructure-as-a-Service (IaaS), and PaaS.
  • It has been observed that top ASEAN performers including Singapore and Malaysia come out as global leaders ahead of much larger economies such as the United Kingdom(UK), Germany and the United States (US)
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Key Metrics

Metrics Value Explanation
Base Year 2017 Researched through internet


Market Risks

The main problems affecting the IaaS are insecure interface APIs, shared resources, data breaches, malicious insiders, and misconfiguration issues which are detailed below

Insecure APIs There have been some security issues with badly implemented APIs, but vendors are constantly improving their development practices. The cloud provider is responsible for fixing these kinds of vulnerabilities, so API bugs should be patched in a timely fashion without the end user worrying about them.

On the other hand, any update could change API settings, which may cause some customers’ existing applications or functions to break. This could cause the provider to delay the release of some patches in order to give customers the chance to upgrade their software beforehand.

Malicious insiders As with any IT environment, insider threats need to be taken into account when protecting sensitive data. It has been found that eight percent of reported data breaches in 2014 were a result of insider theft. If a public or hybrid cloud model is used, then there is the additional risk of a remote “insider” threat. This means that an internal administrator at the cloud provider could directly access the customer’s data and steal or modify it.

Depending on the cloud service’s features, full encryption or the use of homomorphic encryption schemes may not be possible. If the private keys are stored on the cloud premises, then they are still in reach of a rogue employee of the cloud provider.

Shared resources Cloud computing environments often share resources across multiple clients. Hard disks, RAM, CPU cache, GPUs, and other elements were not typically designed with multitenant privacy requirements in mind. As a result, the sharing of these resources may lead to leaked information. There have been side-channel timing attacks in the past, which leaked cryptographic keys across virtual systems. Vulnerabilities in core components, such as the hypervisor, can lead to the compromise of the entire cloud infrastructure itself.

Denial of service If a customer uses all of their cloud resources, they may degrade the service quality of other clients in the same cloud section. Attackers can take advantage of this and try to use up all shared resources, or at least bind most of them, to slow down a client’s systems. If attackers combine this with network-based denial-of-service (DoS) attacks, they could prevent customers from accessing their critical cloud resources. These attacks may even lead to an increased cost for the victim, as some providers bill the customer based on their use of resources.

Data loss/data breach Although cloud providers often do a better job of building their infrastructure with redundancy than many companies, it is still possible that some data could be lost forever. This could happen due to how errors are handled by the cloud provider, hardware failures, or an external attack.

The loss of privacy is still one of the main concerns of cloud users. Most data breach attacks that affected the cloud were directed at the web application itself or took advantage of poorly configured permissions in cloud implementations.

Stolen credentials Attackers can sell stolen cloud access credentials on underground forums for US$7-8 each. In most cases, the attackers misuse the stolen accounts to host their own command-and-control (C&C) servers or malicious sites in the cloud, in the hope that they can take advantage of the trust that users may have in the domain. Some attackers misuse the stolen resources to mine cryptocurrencies or launch distributed denial-of-service (DDoS) attacks.

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Top Market Opportunities

  • IaaS can deliver cutting-edge technology to organizations without requiring significant capital costs or hardware installation.
  • IT departments at midsize and large businesses that leverage IaaS can stop performing routine activities such as purchasing, racking and maintaining servers and instead shift their focus toward integrating cloud components to rapidly meet evolving business requirements. Offloading routine data center tasks also allows IT workers to focus on more business-oriented initiatives.
  • Infrastructure as a Service allows organizations to leverage computing resources in an unprecedented fashion. The scale of cloud providers allows them to improve the technology and cost effectiveness of their services at a much more rapid rate than would be possible in a traditional computing model.
  • IaaS represent a technology that facilitates a new way to accelerate business growth, intensify collaboration, create global networks, and scale effectively.
  • It has been found that IaaS can do more than cut costs and make companies more competitive. They also establish a robust IT foundation for companies to embrace the next wave of innovations, including robotics, artificial intelligence (AI), data analytics, and the Internet of Things (IoT), to find new business models and capture new sources of revenue.
  • The most prevalent IT services in the cloud are also the easiest to transition — storage, email and web hosting
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Market Drivers

Demand for Low-cost IT Infrastructure and Faster Data Accessibility: Enterprises across the globe focus on creating mobile workforce, wherein employees can access data from distant places through internet services, hence requiring virtual sets of IT components, such as servers, storage, networks, and others.

Increase in Cloud Adoption Across Several Industry Verticals: Several industry verticals, such as banking, financial services, and insurance (BFSI); retail; healthcare; manufacturing; telecommunication & IT; media & entertainment; and others, have adopted cloud services at a rapid pace.

Significant Shift to Hybrid Cloud as Primary Deployment Model: Low switching cost between private and public cloud infrastructure stimulates the demand for hybrid cloud models across several user types, which in turn is anticipated to fuel the IaaS market growth in coming years.

Lack of IT Infrastructure in Underdeveloped Nations: Some Countries in Asean are yet to transform to technologically advanced hubs with rich IT infrastructure and digital content, which is expected to hinder the IaaS market growth in the near future.

Rise in Adoption of Cloud among SMEs: Cloud infrastructure adoption has increased among SMEs, owing to advantages such as enhanced uptime, reliability, enriched IT service, increased flexibility of data access, and operational speed.

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Market Restraints

Privacy & security concern Confidentiality of data storage is the essential alarm for assurance of data security so cloud computing does not provide robust data privacy. All details of data migration to cloud remain hidden from the customers. The problem in cloud computing environments are security of cloud computing.

Vendor lock-in is perceived as a significant challenge to the adoption of cloud computing.Enterprises are also unsure of the cost savings that cloud computing can help them achieve.

Environment challenges The shortage of mature service providers is the single overwhelming environment-related challenge that enterprises perceive.There is a need for Vendors to develop go-to-market strategies to develop customer relationships and retention strategies. Collaboration among all channel partners is required to build a compelling case and visibility for cloud IaaS services.

Network limitation limitations or failures of the networking infrastructure (e.g. inside and between data center domains) can seriously impair the support of data-intensive and/or high-performance cloud applications

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Industry Challenges

Balancing Control, Cost and Capacity IaaS retains more control of IT infrastructure within the enterprise. But that control comes at a cost. Typically, IaaS models have cost structures that are more difficult to predict and manage.

Capacity and performance are the key operational considerations shared by IaaS vendors

Cloud computing migration costs the need to rewrite applications to optimise them for the cloud was one of the biggest costs, especially if the apps were complex or customised.It has also been cited that high fees for passing data between systems as a challenge in moving the mission-critical applications.

Shortage of skilled labor It has been found that the skills required for migration are both difficult and expensive to find - and that even when organisations could find the right people, they risked them being stolen away by cloud computing vendors with deep pockets.

latency issue There is the issue of latency,if the application is coming from a data center on the other side of the planet, or on the other side of a congested network, then you may find it sluggish compared to a local connection.

Technology Trends

Hybrid Cloud In 2018, the Hybrid cloud is a new reality! It is one of the biggest and the most valuable technology invention offering a plethora of opportunities to the enterprises striving to make it big in the industry.

It is assumed that by 2020 up to 80% of the business will be digital. Enterprises in order to address the growing demands of the changing environment, increasing data center needs, have to transfer their traditional data center over the hybrid cloud to achieve the benefits of agility and scalability.

Hybrid cloud is just perfect for business because:

  • It maintains security and high performance for mission-critical data and application
  • Helps to reduce cost, save time and improves network efficiency
  • One can have multi-cloud scalability to OpenStack, AWS and Microsoft Azure
  • It best runs workloads where they perform the best

Increased Storage Capacity A huge aspect affecting the future of IaaS is the amount of storage cloud computing will offer companies and individuals.This growth is because many businesses are adopting cloud technology as a huge part of doing business. It is predicted that providers will bring more data centers online with larger-capacity storage equipment throughout this year. Cisco estimates the storage capacity of the cloud will double this year alone. With this increased storage, more businesses will be able to store large data sets and perform analytics using cloud computing. Being able to perform analytics on this massive amount of data will allow companies to gain valuable insights into customer behavior, human systems, and strategic financial investments, just to name a few.

Automating workloads Cloud based workloads are becoming more complex with the rise of the hybrid cloud and the majority are still opting to manage, automate and orchestrate them manually within the IaaS provider’s console.It has been found that just over a third are using configuration management software, which offers a more granular automated approach to the process.

Cost control tools Embracing a holistic cost control strategy for cloud deployments is crucial for maximising potential savings but the uptake of cloud cost management tools is still relatively low.According to a poll conducted it has been observed that 30% will use AWS Trusted Advisor during the next 12 months, while 16% and 12% will use CloudCheckr and Cloudability, r

Pricing Trends

  • In Infrastructure as a Service (IaaS) Two types of pricing plans are prominently used: price bundling and unbundling.Price unbundling, as exemplified by Google, charges for each computing characteristic separately and has similarities to pay-per-use pricing plans.Price bundling as offered by IBM, Amazon, and Microsoft uses a discrete set of predefined packages Therefore, customers with specific computing requirements can only choose the next best plan that fulfils their needs and thus may be forced to buy computing resources that they may not fully need. Other providers such as Terremark offer pricing plans that can be categorised as in between price bundling and unbundling because they offer bundles of CPUs and memory but let customers decide on storage requirements.
  • Today’s pricing of infrastructure-as-a-service is not transparent because some providers, such as Google, charge separately for each service characteristic (e.g., $50 per CPU or $15 per GB of memory per month) and let customers freely configure the service. In contrast, competitors like Amazon, Microsoft, and IBM only offer predefined bundles (e.g., 4 GB of memory, 400 GB of storage, and 2 CPUs for $140 per month). These different types of pricing plans make price comparisons very difficult.

Regulatory Trends

The countries of ASEAN and Taiwan are adopting a 'Cloud First' strategy to focus on digital drive of the respective countries.For Instance In the Philippines, the Department of Information and Communication Technology (DICT) announced a government wide 'Cloud First' approach in January 2017 pushing departments and agencies to make cloud computing solutions a key part of their infrastructure planning and procurement.

Similarly in October 2017 Malaysia followed suit with adopting 'Cloud First' strategy as part of the nation's digital adoption initiatives to be driven by the Malaysia Digital Economy Corporation(MDEC). Cloud First' policies and frameworks may not be in place across all of ASEAN but regional governments are making the shift, putting cloud infrastructure and expertise at the heart of their wider digital transformation agendas.

Market Size and Forecast

  • The ASEAN and Taiwan Infrastructure as a Service market size is US$ 4 Billion in the year 2018. It has been observed that this sector has been posting a CAGR of 32.3% in the period 2012-2018.
  • The demand for managed cloud offerings has been increasing, particularly for Application-as-a-Service and Network-as-a-Service offerings. Enterprises are looking to deploy more open-source private cloud platforms across hybrid environments, as hybrid IT emerges as a new norm. Adoption of multi-cloud solutions will accelerate, owing to factors such as the migration of development applications to the public cloud and disaster recovery and business continuity purposes.
  • While cloud security and privacy remain major concerns for many companies in the ASEAN region, they present monetization opportunities for vendors to provide ancillary managed security, cloud, and other professional services. The expansion of open-source technologies, as well as advances in application programming interfaces (API)-accessible single-tenant cloud servers, helps promote acceptance towards managed cloud providers.
  • Established data center markets such as Singapore and countries experiencing high data center growth rates such as Malaysia, Indonesia, and Thailand are expected to be the key focus areas for cloud infrastructure market growth in the ASEAN region, owing to the availability of necessary infrastructure and connectivity, as well as the presence of hyperscale cloud vendors.
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Market Outlook

ASEAN and Taiwan is an emerging market for IaaS. More than 60% of the companies are planning to adopt both on-premises and cloud-based models in this region.The Infrastructure as a Service market is expected to clock a healthy CAGR of 30.3% from 2017 to 2025.The ASEAN and Taiwan market is expected to have the highest growth rate in coming years due to the adoption of cloud based business application and growth in the cloud service providers.

Distribution Chain Analysis

The Distribution model adopted in the Infrastructure as a Service is the Plug-and-Play where the customer can directly access the computing resources such as virtual machines,storage and other network components. The pay-as -you-go model simplifies the adoption of Infrastructure as a Service as a computing solution.

Competitive Landscape

The embryonic market of IaaS appears to be fiercely competitive and fragmented. Several large and small players are churning the competition to gain competitive edge accounting for a substantial market share. Collaboration, acquisition, partnership, product/ technology launch & expansion, remain the prevailing strategies of market players.

Competitive Factors

  • Fierce competition is experienced between companies offering Infrastructure as a Service because they are dealing with the same customer base and offer products similar to other companies.
  • With the Infrastructure as a Service growing rapidly, companies begin their price wars with their competitors. With such a high competitive market, it comes with a higher degree of rivalry.
  • There is a low exit barrier percentage for cloud computing because customers are locked-in to the cloud computing company when they decided to subscribe to their products.
  • Due to low expenses and expertise needed for startup companies, they tend to lack creativity and uniqueness which allows them to stand out from the crowd from the rapidly growing technology industry.Because of the absence of uniqueness, many companies blend together, making it difficult to identify one company from another.Not only it is difficult to distinguish companies from one another it is also difficult to distinguish the different, yet very similar products. As a result, the rating for rivalry among existing firms is a high competitive force.

Key Market Players

The top companies offering Infrastructure as a Service includes:

  1. Amazon AWS.
  2. Alibaba.
  3. Microsoft Azure.
  4. Rackspace Open Cloud.
  5. Google Compute Engine.
  6. HP Enterprise Converged Infrastructure.
  7. IBM SmartCloud Enterprise.
  8. Green Cloud Technologies.
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Strategic Conclusion

The Infrastructure as a Service market in ASEAN and Taiwan is poised to post a healthy CAGR growth of 25.3% for the assessment period 2017-2025.With the growing need for adoption of hybrid cloud significant growth is witnessed in the IaaS market.The adoption of "Cloud First" strategy by governments in the region of ASEAN and Taiwan will act as a driver fueling the growth of the Infrastructure as a Service market.

The ASSEAN region, with countries, such as Singapore, Malaysia, Brunei, Indonesia, Thailand and Philippines and Taiwan is an emerging region for the vendors in the IaaS market. Moreover, growth in demand for mobility in enterprises drives the market in ASEAN and Taiwan.

Further Reading

Appendix

  • iaaS - Infrastructure as a Service
  • US$ - US Dollar
  • C&C - command-and-control
  • DICT - Department of Information and Communication Technology
  • MDEC - Malaysia Digital Economy Corporation
  • ASEAN - Association of South East Nations


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