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South Korean Government to Boost Private Cloud Spending: Report

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The cloud computing market in South Korea is expected to grow at an average rate of 22 percent per year between 2013 and 2018, according to the “Cloud Computing Market in Korea 2014-2018” report that says government initiatives will contribute to market growth.

However, like in other markets, data security concerns remain a major challenge to cloud industry growth, especially in government adoption. Analysts therefore anticipate an increased demand for private clouds in which organizations run clouds on dedicated infrastructure rather than on a public cloud where companies share resources and that is thought to be less secure.

“There is a huge demand for private cloud computing among government agencies and large enterprises in Korea,” an analyst involved in the report said in a statement. “Government agencies in Korea are concerned about data security and are therefore looking to adopt more of private cloud rather than public.”

According to a report by Technology Business Research, private cloud adoption will generate $69 billion in revenue by 2018. And a recent MarketandMarkets report found that total global government cloud spending will be $18.48 billion by 2018 – an average annual growth of 45.1 percent over this period – most of which will go towards deploying private clouds.

In late 2009, South Korea’s Communication Commission allocated about $500 million for the development of Korean Cloud Computing (KCC) facilities made to support the government as well as the ICT industry. This initiative was aimed at helping Korea gain a 10-percent slice of the global cloud computing market, and reduce public ICT spending of 50 percent by 2014. While it seems that Korea hasn’t reached this goal, the government plans to continue investing over the next few years.

Perhaps as an indication of attitudes towards offshore hosting, research published by Pingdom in May 2013 found that 97 percent of websites using South Korea’s .kr top-level domain were also hosted in South Korea. A website with a .kr domain probably identifies themselves and their site with South Korea, and it’s significant that so many would choose to host in Korea rather than another location with a wider selection of hosting options.

Of course, there are also incentives for building cloud infrastructure  in the US with select states are introducing tax breaks and other benefits for potential expansion. And Singapore provides tax breaks on businessing spending on cloud computing. With more countries competing for a share of the cloud computing marketplace, we’ll likely see more governments trying to give their local companies an advantage.

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