Cloud computing in South Korea

LG CNS, Samsung SDS, KT, Naver and other local cloud service providers are on the verge of losing their home turf to foreign IT giants, with Google set to open a data center in Seoul early next year.

Google is a latecomer to the Korean cloud market that is dominated by Amazon Web Services (AWS) and Microsoft.

Industry officials said the Korean cloud market, with its rich network infrastructure and growing demand, has great potential for growth. But Korean companies are less competitive compared to foreign firms that possess technological prowess and price competitiveness, and are thus failing to build up any substantial market share.

Lee Woo-jin, who heads the software promotion division at the Ministry of Science and ICT, said the scale of the Korean cloud market is expected to reach 1.3 trillion won ($1.1 billion) in 2021, up from 500 billion won in 2015.

“Global companies have taken a 67 percent market share in the domestic cloud market,” he said during a lecture last month.

Foreign companies are expected to expand their presence in Korea further after Google joins the competition.

“There have been concerns that domestic firms could quickly lose ground or resort to partnerships with global firms,” said an industry source, asking for anonymity.

Google said its Seoul Cloud Region will have the same state-of-the-art hardware, software and operations expertise it provides in all of the regions it operates in.

With the establishment of its data center, Google is expected to be able to raise its competitiveness in various areas including security and services quality.

“Customers using applications here will get the same great performance, reliability and security as they would in any other Google Cloud region,” a company official said.

AWS has been leading the competition after it opened a data center here in 2016 and secured large companies such as Samsung Electronics and Hyundai Card as clients.

Microsoft also moved to secure more customers in the domestic market by establishing a data center here in 2017.

Korea has become a battlefield for foreign IT giants due to its growth potential. According to government data issued at the end of last year, only 12.9 percent of Korean companies use cloud computing services, meaning there are more potential customers that have yet to migrate to the cloud.

Based on the notion that it is not easy to go head-to-head with foreign companies, Korean firms are seeking partnerships with global firms or targeting the surrounding ecosystem provided by cloud services.

LG CNS plans to launch its cloud management platform CloudXper in June that offers management services for cloud platforms provided by AWS, Microsoft, Google and other global companies.

Samsung SDS is bolstering its security services for cloud computing by adding artificial intelligence, cryptography and data analysis technology.

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