Can Hong Kong build a ‘Silicon Harbour’? Nah, probably not

hong kong skylineI might be back in London now but I’m still keeping one eye on the East. My latest for IDG Connect is a piece on whether Hong Kong can really lay claim to the title “Silicon Harbour”, given its dubious track record of under-investment and the increasing strength of rival Asian cities including Tokyo, Shenzhen, Shanghai and Singapore.

Well, as always, the jury’s still out. There are a lot of good things going on in Hong Kong, as this upbeat infographic shows. It’s politically stable, safe from most natural disaster and you can use the internet freely (unlike in mainland China). It’s also well connected internet-wise and relatively cheap, as Frost & Sullivan analyst Danni Xu told me: “enterprises in Hong Kong using 100 Mbps Ethernet Point-to-Point (P2P) per month are paying only one third the price of a similar set up in Singapore”.

“However, despite these advantages/benefits, Singapore remains popular in certain cases over Hong Kong when it comes to selecting a destination to set up a data centre,” she added. “Google was a prime example of this when its plan to establish a data centre in Hong Kong did not materialise. The cost and difficulty of acquiring suitable land were cited as the key reasons for this.”

It also seems like HK’s key strengths, its value as a financial centre and proximity to China, are also its biggest drawbacks.  This means Singapore and other cities are usually preferred as regional hubs while HK is the choice as a base for firms looking to expand into China. It also means investors can be reluctant to plough their money into untried or tested tech start-ups as the culture is mainly about finance and property.

Forrester analyst Clement Teo had this:

“There are some structural factors may constrain ICT development in HK e.g. its relatively small domestic market and shrinking manufacturing and industrial sector do not provide sufficient incentives to spur technological developments. Moreover, HK needs to divvy up scarce resources – like land, office space and investment funding and talent – among established economic pillars such as financial services, real estates and retail.”

The HK government this year released an ambitious Digital 21 Strategy – the latest in a long line of such policy documents from the SAR – and certainly talks a good game. But I’m still hugely sceptical whether the political will is there to help smaller tech firms – the start-ups and similar which could genuinely turn the city state into a ‘Silicon Harbour’.

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How cloud computing will let loose the Asian dragon

chinese dragonAsia’s unique combination of large numbers of entrepreneurs and software developers offers tremendous opportunities for dynamic cloud growth, while European and Australian companies continue to lag in the shadow of the US.

That’s the view of Nigel Beighton, VP of technology and product, for managed hosting-cum-open cloud company Rackspace, who was in Hong Kong this week to discuss how the “sleeping software giant” of Asia will soon awake.

He argued that European and Australian firms are 18 months to 2 years behind their US rivals and suffer from the same issues around legacy infrastructure.

“Asia is fascinating because it doesn’t track what happens in the US. It has its own culture and personality and if you think about software development in Asia it’s different. Even the code they write looks different. The way people think about mathematics and structure and architecture is different,” he said.

“Cloud enables business to be agile and Asia is very good at that – at being entrepreneurial. At the same time it’s cool to be a software developer here and cloud is enabling software developers to do what they want to do immediately.”

The US market, while it still has a “degree of creativity”, is very much in a phase of consolidation at the moment, dealing with legacy infrastructure and looking at changing business models, Beighton argued.

To an extent, Europe and Australian firms are in a similar boat – held back by a large legacy application estate going back 10-15 years which makes it difficult to scale vertically in the cloud, he added.

However, there aren’t many examples of cutting edge cloud innovation in the region – he gave China’s indigenous search engine companies led by Baidu as one – because it’s still early days. As a result, education remains an important part of the cloud provider’s role.

It’s worth bearing in mind here that even though it now has a successful enterprise business, Rackspace began life serving entrepreneurial SMB-type companies, which is why the firm is always keen to enthuse about this end of the market. It’s also part of the reason why it located a regional datacentre in Hong Kong rather than rival IT hub of Singapore which is geared more towards servicing larger financial organisations, according to Beighton.

“For us the entrepreneurial aspect of Hong Kong was really interesting, and how that would work in conjunction with China,” he said, adding that public cloud capabilities from the datacentre would be available in Q4 this year.

Rackspace is not the only cloud provider waxing lyrical about the huge potential in the Asia region. EMC Greater China president Denis Yip argued at a conference in Hong Kong last summer that China is actually trumping the US and the rest of the world at the cutting edge of cloud computing deployments.

However, despite huge building projects by local government in China, there is a real risk datacentre capacity will lie idle because not enough thought has gone into working out what to use it all for and how to generate profits once the infrastructure is completed.


Big Data: time to believe the hype?

big dataI was in Singapore this week for a big Intel announcement, ably covered by my Reg colleague Timothy Prickett Morgan here. That left me with no news but a bit of wriggle room to consider the bigger picture: just where is Big Data headed, what’s the big deal with Hadoop and is Intel really a software company now?

Well, let’s take the last question first. Yup, Intel has been a software company for several years now actually. It was the $7.6bn acquisition of security giant McAfee which really sealed the deal though and its roadmap for taking security capabilities down to the OS and chip level is taking shape nicely. This week’s big news was that Intel is getting into the Hadoop game with its own distribution of the open source Big Data management framework.

It’s a smart move for Chipzilla, helping to drive extra revenue and boost take-up of its Xeon chips. According to global director of Enterprise Computing, Pat Buddenbaum, however, there was another reason for the move, namely “to instill confidence that Hadoop will remain open”.

“One of the concerns was that its primarily driven by start-ups with venture backed direction, which may fork from the 100 per cent standardised open source path,” he told me.

Intel as open source saviour? Well you can be sure that commercial interests were probably its primary motivator here, and it has no plans to make similar moves for other open source frameworks which may be at risk of forking.

So what about Big Data? Should you believe the hype? Well, although even Buddenbaum admitted it was a bit of a buzz word, the premise behind it is sound. It’s about organisations making sense of the vast quantity of data – be it internal or external, customer-related data – literally inundating their  datacentres, in order to drive business growth and improve agility in realtime. Analysts I spoke to are in agreement that the Big Data trend is a positive one and Intel’s move will benefit the industry. Now it’s up to the OEMs, SIs, and ISVs to play their part and enable the democratisation of Big Data by pushing Hadoop down to the mass market via their products and services.

Don’t hold your breath though. The industry is at such a nascent stage that, according to Intel’s APAC Datacentre Products GM Jason Fedder, it’s not even clear which region if any is ahead of the curve. In the meantime the hype will continue as long as IT vendors (excluding Intel, of course) think they can flog some extra units on the back of this latest buzz word. But I’m pretty confident that in a few years’ time we won’t be talking about Big Data anymore – not because it will have fallen from favour but because it will be ubiquitous.


Intel marching on in China

intel logoWas in Bangkok with Intel this week to get an update on the firm’s cloud and datacentre plans – well, the two are inextricably linked I suppose.

No news as such but key themes from that part of the business included Big Data; stellar growth in China thanks to the datacentre needs of the large internet firms over there like Tencent and Alibaba; and continued security risks as pointed out by a McAfee representative.

Jason Fedder, Intel’s Asia Pacific datacentre group GM, agreed with the view of EMC and others that China is where some of the most exciting cloud projects are taking place today thanks in part to the lack of legacy infrastructure in organisations there.

But he went further to say that the PRC is really turning itself from being a technology follower to innovator – pointing to Tencent and Alibaba’s efforts to craft their own compute standards under the Project Scorpio banner, and of the state-run telcos ripping out their IBM boxes to replace them with spanking new Xeon kit.

Intel’s been in China for some time and is about as well-supported over there as any foreign company can be given the sometimes harsh business climate afforded non-local companies.

As an example of its growing influence in the country, Fedder explained how Intel is trying to broker a deal to ensure the closed Chinese crypto-standard Trusted Cryptography Module (TCM) is made interoperable with the Trusted Platform Module (TPM) hardware authentication standard its TXT technology is built on.

However, there are some aspects of doing business in China which even Intel can’t get around fully, as IT manager Liam Keating told me. The network infrastructure is still pretty bad outside the Tier 1 and 2 cities in the PRC, a fact made worse by the Great Firewall and meaning challenges in the firm’s smaller field offices and complaints from staff, he said.

To get around this Keating and his team have been forced to look at other ways to improve traffic flow, such as “in-country cacheing” using outsourced cacheing providers, and by modifying app design to reduce the amount of dynamic content.

It’s reassuring to know that even Intel has the same problems experienced by many when it comes to China’s infernal internet infrastructure.