Building the Great Cloud of China

[中文版]

China, the world's largest trading nation in 2012, has long been a desirable location for outsourcing labour and services, even within the technology and IT sector where it is not far behind India. The growth of cloud computing providers in Europe and the United States — particularly Amazon and DigitalOcean — may foretell cloud computing infrastructure becoming a commodity and outsourced to the cheapest provider.

The ever-increasing number of internet users in China (591 million at the end of June 2013) requires the development of home-grown internet infrastructure: hosting web applications and other content within a target user's own country typically speeds up requests and improves reliability. The number of internet users in China is greater than either the United States or Europe.

Stratospheric growth in Chinese cloud hosting

Although the number of web-facing computers in China has grown by 8.3% over the last year — the majority of this growth has occurred within the cloud hosting market. Aliyun (云, pronounced 'yun', is the Chinese word for cloud) is the largest cloud computing provider in China in terms of the number of web-facing computers, and remarkably, Aliyun now has six times more web-facing computers than it did a year ago, reaching a total of 17,934 in September 2013. Worldwide, only the cloud computing giant Amazon gained a greater number of web-facing computers.

Although China's cloud computing infrastructure is still in its infancy, Aliyun's future looks particularly promising, as it is owned by the Alibaba Group. This group is the largest hosting provider in China, features within the top 30 hosting providers worldwide, and has already established a strong internet presence with its better known e-commerce platforms, Taobao and Alibaba.com. Aliyun now makes up almost 92% of the web-facing computers at Alibaba Group.

Metric Sep 2012 Mar 2013 Jun 2013 Jul 2013 Aug 2013 Sep 2013
Hostnames 91,553 205,824 382,342 381,989 368,948 389,171
Active sites 23,596 55,654 119,089 116,835 146,310 150,089
Web-facing computers 2,670 8,038 15,931 16,846 17,670 17,934

Detailed view of Aliyun in terms of hostnames (web sites), active sites, and web-facing computers.

Indigenous market and the Great Firewall of China

Despite the strong growth of the Chinese cloud hosting market, most of the growth seen by Netcraft is hosting sites aimed at the Chinese market. Hosting content as close to the end-users as possible increases the performance of the web site, and this effect is particularly prominent in China: internet traffic crossing the border can sometimes appear to be slow, unstable, or even blocked, perhaps as a side-effect of blocks enforced by the Golden Shield Project (also known as the Great Firewall of China). In September 2013, more than half of the domains of websites hosted at Aliyun were in the .cn TLD, around 41% in .com, whilst domains in other ccTLDs appeared to be very rare. Unlike Amazon's global reach, Aliyun's reach appears to be limited to the local market — at least for the time being.

TLD share by domains of websites at Aliyun in September 2013


Obstacles holding back the Chinese cloud

Using cloud hosting in China could make sense for non-Chinese companies looking to increase their presence in China; however, a number of obstacles remain. These explain why the Chinese cloud is still mostly indigenous, and is likely to remain so for some time:

  • Neither the pricing models nor the variety or operating systems are as attractive as those offered by the cheapest non-Chinese cloud hosting companies. Taking Aliyun as an example, its on-demand instances do not support Windows operating systems unless you opt for a 2-core or 4-core CPU, and they are not significantly cheaper than its more established competitors. The cheapest on-demand option at Aliyun is ¥0.27 ($0.04) per hour which buys you a single core, 512MB of RAM, and a 1Mbps internet connection. This is almost twice the price of Amazon's cheapest option and a comparable DigitalOcean instance can be had for just $0.007 per hour. However, as pricing models vary, reserved instances at Aliyun can be cheaper in some circumstances.
  • Internet connectivity from outside China can be patchy — packets sent to www.aliyun.com from the United Kingdom take almost half a second to make the journey and back again, and the performance in the United States is not much better. More than 4% of requests to www.aliyun.com from the Netherlands failed during the past 20 days.

  • Performance of www.aliyun.com from a Netcraft performance collector located in the Netherlands


  • Many Chinese hosting services are only available in the Chinese language. This is the only language available for Aliyun's brochure website, control panel, and technical support. However, Amazon's support for the Chinese language is almost as limited — a single marketing site appears to be the sole Chinese-language site for AWS.
  • Some Chinese hosting companies only accept business from Chinese customers. For example, Aliyun's customers are required to have a Chinese mobile phone number in order to receive a verification code to complete the signup process. Customers wishing to buy an on-demand instance at Aliyun must go through an identity verification process, which requires the registrant to be a national of China or one of a few other Asia-Pacific countries, or to represent a Chinese company. Customers must also hold a credit or debit card issued by a Chinese bank compatible with Alipay. Customers must also register with the Chinese Ministry of Industry and Information Technology if they wish to associate a domain name with an Aliyun cloud server, but such registration is currently unavailable to foreign enterprises.

The current obstacles suggest that the cloud is unlikely to be outsourced to China yet. However, the availability of cloud computers in China is likely to increase to match its rapidly increasing local demand with competition both from local providers like Aliyun and overseas players like Microsoft and Amazon. Microsoft has collaborated with a partner company in China, 21Vianet, in order to bring its Cloud to China, and is making competitive price plans customised for the Chinese market. Perhaps by following this model, other non-Chinese companies such as Amazon could enter the Chinese market, providing local data centres and support to Chinese-speaking customers within the stricter regulatory environment. Equally, if some red tape were cut and network connectivity improved, Aliyun and other Chinese cloud providers could be poised to take a larger share of the global cloud computing market.

Netcraft provides information on the internet's infrastructure, including the hosting industry and web content technologies. For information on the cloud computing industry, please see http://www.netcraft.com/internet-data-mining/.

Most Reliable Hosting Company Sites in August 2013

Rank Performance Graph OS Outage
hh:mm:ss
Failed
Req%
DNS Connect First
byte
Total
1 Multacom FreeBSD 0:00:00 0.000 0.176 0.105 0.212 0.529
2 Hyve Managed Hosting Linux 0:00:00 0.007 0.272 0.069 0.138 0.140
3 Bigstep Linux 0:00:00 0.007 0.303 0.070 0.144 0.260
4 www.dinahosting.com Linux 0:00:00 0.007 0.215 0.098 0.195 0.195
5 Netcetera Windows Server 2012 0:00:00 0.010 0.079 0.074 0.158 0.305
6 CWCS Linux 0:00:00 0.010 0.234 0.127 0.217 0.564
7 iWeb Linux 0:00:00 0.013 0.160 0.084 0.166 0.166
8 Swishmail FreeBSD 0:00:00 0.017 0.134 0.068 0.136 0.182
9 INetU Windows Server 2003 0:00:00 0.017 0.147 0.080 0.207 0.454
10 Server Intellect Windows Server 2008 0:00:00 0.027 0.095 0.096 0.193 0.480

See full table

Multacom had the most reliable hosting company site in August 2013, with no failed requests and an average connection time of 0.105s. Multacom operates out of two secure data centres in Los Angeles, and focuses on providing shared and dedicated hosting services.

In second and third place were Hyve Managed Hosting and Bigstep. Both sites had only two failed requests, but Hyve's slightly shorter time to connect gave it the edge over Bigstep. Hyve provides managed hosting options from data centres across America, as well as in Shangai, Hong Kong, and London. Hyve also handles hosting for several major international firms, including British Airways, Tesco and Nokia. Bigstep, which provides hosting services for "big data" companies, continues to maintain its impressive record since Netcraft started monitoring its performance, with a consistent 100% uptime over 5 months.

For the first time since May, hosting companies running Windows Server ranked in the top ten: Netcetera's website runs on Windows Server 2012, INetU use Windows Server 2003 and Server Intellect use Windows Server 2008. The most reliable hosting company site, Multacom, runs FreeBSD (as does last month's most reliable site, Swishmail). All other sites in the top ten run on Linux.

Netcraft measures and makes available the response times of around forty leading hosting providers' sites. The performance measurements are made at fifteen minute intervals from separate points around the internet, and averages are calculated over the immediately preceding 24 hour period.

From a customer's point of view, the percentage of failed requests is more pertinent than outages on hosting companies' own sites, as this gives a pointer to reliability of routing, and this is why we choose to rank our table by fewest failed requests, rather than shortest periods of outage. In the event the number of failed requests are equal then sites are ranked by average connection times.

Information on the measurement process and current measurements is available.

Estimating the value of hosting companies by counting computers

Is it possible to estimate the revenue of a hosting company based on its public presence — that is, is the number of websites it hosts directly proportional to its market value? By using the market capitalisation (or acquisition purchase price, where appropriate) as a valuation and examining the number of web-facing computers, a striking patterns emerges.

Valuation of a hosting company against the number of web-facing computers found in August 2013.
Blue = "pure" hosting company; Orange = significant other areas of business. The dashed line is based only on pure hosting companies.
†Go Daddy’s valuation is based on its 2011 buyout offer, adjusted for growth in web-facing computers and for inflation.

Amongst the hosting companies examined, there is a fairly strong correlation between the number of web-facing computers and the valuation of the hosting company: the more computers visible at a hosting company, the higher the valuation. Considering only pure hosting companies (without significant other business, marked in blue), the average value per web-facing computer is circa $43,000.

An average company value per web-facing computer on the order of tens of thousands of dollars may seem surprisingly high, but there is, of course, more to it than the cost of a single computer. The number of web-facing computers does not take into account the potentially large number of computers used behind the scenes, which may vary from hosting company to hosting company depending on business model — there are likely to be fewer hidden computers at a shared hosting provider than at a cloud hosting provider.

Even with the same number of web-facing computers, the valuation of a hosting company can vary due to the quality of the physical hardware, the network infrastructure, and also sales and support staff. Most important is the current and future revenue, and hence profit, that each web-facing computer can generate.

This average value per web-facing computer masks a great deal of variation between hosting companies:

Hosting company Value per web-facing
computer (USD)
DADA $15.3k
Peer 1 $30.0k
SoftLayer $49.7k
iomart $52.3k
United Internet* $66.8k
Internap* $67.3k
Rackspace $68.1k
Go Daddy* $177.2k

Value (USD) per web-facing computer. Companies marked with a * have significant other areas of business.

Comparing two competitors in the managed hosting market, Rackspace and Peer1, highlights a significant difference in the valuation based on web-facing computers. Each web-facing computer at Rackspace is valued at twice as much as one at Peer1; perhaps this reflects the value of Fanatical Support and the flexibility of Rackspace's OpenStack-based cloud.

Go Daddy's valuation of $4.1bn is based on a deal in 2011 (adjusted for both inflation and computer growth), which reportedly amounted to $2.25bn for 65% of the company. This valuation is greater than expected from the number of computers at Go Daddy, but this difference could be explained by its equally prominent role as the largest ICANN-accredited domain name registrar.

SoftLayer is in the process of being acquired by IBM, who say the acquisition will strengthen their leadership position in cloud computing and help speed business adoption of public and private cloud solutions. Financial terms were not disclosed, but the deal is speculated to be worth more than $2bn.

The correlation between computers and market value can be used not only to estimate the value of private companies which have never been sold before, but also to estimate the value of the hosting divisions within much larger companies, such as Amazon.

Amazon's market capital stands at around $131bn today, but the majority of its revenue comes from online retailing. A valuation based on computer counting would suggest that its hosting division, Amazon Web Services, could be worth approximately $7.8bn, around 6% of Amazon's entire market value. Based on its Q2 2013 earnings report, Amazon's AWS division (within the Other category) accounted for 5.7% of its total revenue between 1st April and 30th June 2013.

Netcraft has developed a technique for identifying the number of computers (rather than IP addresses) acting as web servers on the Internet, providing an independent view with a consistent methodology on the number of web-facing computers at each hosting location worldwide. For more information, see our Hosting Provider Server Count.

Most Reliable Hosting Company Sites in July 2013

Rank Performance Graph OS Outage
hh:mm:ss
Failed
Req%
DNS Connect First
byte
Total
1 Swishmail FreeBSD 0:00:00 0.003 0.134 0.076 0.152 0.209
2 ServerStack Linux 0:00:00 0.003 0.096 0.078 0.158 0.158
3 iWeb Linux 0:00:00 0.003 0.146 0.083 0.166 0.166
4 Hyve Managed Hosting Linux 0:00:00 0.006 0.267 0.083 0.166 0.168
5 XILO Communications Linux 0:00:00 0.009 0.230 0.094 0.399 0.561
6 Qube Managed Services Linux 0:00:00 0.012 0.136 0.065 0.132 0.132
7 Virtual Internet Linux 0:00:00 0.015 0.164 0.089 0.383 0.594
8 Datapipe FreeBSD 0:00:00 0.018 0.089 0.031 0.062 0.095
9 New York Internet FreeBSD 0:00:00 0.018 0.142 0.079 0.159 0.491
10 Bigstep Linux 0:00:00 0.018 0.293 0.084 0.174 0.321

See full table

Swishmail had the most reliable hosting company site in July 2013. The New York based company failed to respond to only one of Netcraft's requests during the whole month, and had an average connection time of 0.076s. Swishmail primarily operates as an email hosting provider and uses three different data centers, run by Savvis, Level3 and Globix in New York City. Upstream connectivity is provided by Level3, Savvis, Cogent, AboveNet and Globix.

In second and third place, both also with only one failed request, were ServerStack and iWeb. ServerStack had the most reliable hosting company site during the previous month, and has data centers in New Jersey, San Jose and Amsterdam. iWeb's data centers in Montreal have a total dedicated server capacity of nearly 35,000.

For the second month in a row, none of July's top ten hosting companies were running on Windows operating systems. The most reliable hosting company site, Swishmail, was running on FreeBSD, as were two others sites within the top ten; the remaining seven were running on Linux. In terms of web server software, Apache was used by seven of the top ten sites, while nginx was used by three sites, including Swishmail's.

Netcraft measures and makes available the response times of around forty leading hosting providers' sites. The performance measurements are made at fifteen minute intervals from separate points around the internet, and averages are calculated over the immediately preceding 24 hour period.

From a customer's point of view, the percentage of failed requests is more pertinent than outages on hosting companies' own sites, as this gives a pointer to reliability of routing, and this is why we choose to rank our table by fewest failed requests, rather than shortest periods of outage. In the event the number of failed requests are equal then sites are ranked by average connection times.

Information on the measurement process and current measurements is available.

Most Reliable Hosting Company Sites in June 2013

Rank Performance Graph OS Outage
hh:mm:ss
Failed
Req%
DNS Connect First
byte
Total
1 ServerStack Linux 0:00:00 0.007 0.089 0.073 0.146 0.146
2 Codero Linux 0:00:00 0.010 0.234 0.084 0.266 0.528
3 Swishmail FreeBSD 0:00:00 0.014 0.133 0.070 0.137 0.184
4 Virtual Internet Linux 0:00:00 0.014 0.162 0.074 0.329 0.502
5 Datapipe FreeBSD 0:00:00 0.017 0.083 0.018 0.037 0.057
6 Bigstep Linux 0:00:00 0.017 0.289 0.072 0.147 0.228
7 Midphase Linux 0:00:00 0.017 0.246 0.111 0.225 0.380
8 www.cwcs.co.uk Linux 0:00:00 0.017 0.209 0.129 0.214 0.517
9 Memset Linux 0:00:00 0.021 0.111 0.074 0.146 0.291
10 Iomart Linux 0:00:00 0.021 0.115 0.088 0.181 0.339

See full table

ServerStack had the most reliable hosting company site in June, with only two failed requests. ServerStack provides managed dedicated hosting from data centres in New Jersey, San Jose, and Amsterdam, and counts amongst its clients high-traffic sites such as MTV and academic publisher Elsevier. Over the eight months Netcraft has been monitoring ServerStack's performance, it has appeared in the top 10 five times and been the most reliable hosting company site twice.

Codero and Swishmail took second and third place respectively. Both companies had 100% uptime and just two failed requests separate the top three companies. Both Codero and Swishmail are based in the United States: Codero has a presence in Virginia, Illinois and Arizona, whilst Swishmail operates out of three New York data centres.

Bigstep, which focuses on providing hosting infrastructure for big data companies, started being monitored three months ago and has maintained a 100% uptime record thus far.

For the first time since May 2012, none of the companies in the top 10 Most Reliable Hosting Company Sites were running a version of Windows Server. ServerStack runs Linux, as do seven other hosting companies in the top 10. FreeBSD is used by the remaining two: Datapipe and Swishmail.

Netcraft measures and makes available the response times of around forty leading hosting providers' sites. The performance measurements are made at fifteen minute intervals from separate points around the internet, and averages are calculated over the immediately preceding 24 hour period.

From a customer's point of view, the percentage of failed requests is more pertinent than outages on hosting companies' own sites, as this gives a pointer to reliability of routing, and this is why we choose to rank our table by fewest failed requests, rather than shortest periods of outage. In the event the number of failed requests are equal then sites are ranked by average connection times.

Information on the measurement process and current measurements is available.

The Meteoric Rise of DigitalOcean

[November 2013: Click to view updated graphs and statistics for DigitalOcean]

Cloud hosting startup DigitalOcean has grown extraordinarily over the past six months. In December 2012, DigitalOcean had just over 100 web-facing computers; in June 2013, Netcraft found more than 7,000. DigitalOcean provides SSD-backed virtual computers which are available by the hour. The cheapest droplet, as it refers to virtual computers, costs less than a cent per hour, about a third of the price of Amazon's cheapest option. DigitalOcean claims to be able to provision a new droplet within 55 seconds in one of three locations: New York, Amsterdam (available since January 2012), and San Francisco (April 2013).

Hosting provider December 2012 June 2013 Growth Growth (%)
Amazon 134,117 165,438 +31,321 +23.35%
Alibaba6,64917,347+10,699+160.91%
Hetzner75,88084,896+9,016+11.88%
DigitalOcean1387,134+6,996+5084.64%
OVH90,30596,558+6,253+6.92%
Shore Network Tech (Linode)54,05157,701+3,650+6.75%

Fastest growing hosting providers by web-facing computers, December 2012 to June 2013.

Over the last six months DigitalOcean had the fourth largest growth in web-facing computers with only Amazon, Alibaba, and Hetzner ahead of it. DigitalOcean's more than 50-fold growth makes it the 72nd largest hosting provider in the world by web-facing computers, up from 549th in December and 102nd last month. DigitalOcean had the second largest growth of web-facing computers last month — it was one of only five hosting providers to grow by more than 1,000 web-facing computers — and it contributed 10% of the total growth worldwide.

Previous hosting provider Net movement to DigitalOcean
New sites+6,211
Rackspace+1,475
Shore Network Tech (Linode)+1,028
Amazon+626
Softlayer+263

Sites (hostnames) switching to DigitalOcean from notable providers, May 2013 to June 2013

As shown in the table above, websites are migrating to DigitalOcean from its better known competitors; last month almost 1,500 websites moved from Rackspace and 1,000 from Shore Network Tech (Linode). NewsBlur, a news aggregation website, is one of the busiest sites hosted at DigitalOcean. Several websites belonging to the Ruby on Rails project including guides.rubyonrails.org and api.rubyonrails.org are now hosted at DigitalOcean after recently moving from Linode.

Operating System share by web-facing computer at DigitalOcean in June 2013

DigitalOcean provide a number of template images in order to create a droplet, including five Linux distributions: Ubuntu, CentOS, Debian, Arch Linux and Fedora. Of the web-facing computers presenting a distribution-specific server banner, Ubuntu is by far the most popular: over 70% of web-facing computers with an identifiable distribution are using the Debian-derived distribution. Microsoft Windows is conspicuous by its absence; DigitalOcean has postponed plans to support Windows citing complexities including licensing and security concerns.

DigitalOcean — 2012 graduate of the Tech Stars startup accelerator — has had difficulty getting access to a sufficient quantity of IPv4 addresses in Amsterdam which meant that it was uneconomic to provide smaller droplet sizes. In May 2013, DigitalOcean announced the availability of further IP addresses for smaller droplet sizes in Europe, re-enabling the creation of 512MB and 1GB droplets.

Netcraft provides information on the Internet infrastructure, including the hosting industry, and web content technologies. For information on the cloud computing industry visit www.netcraft.com.