South Korean IT giants are doubling down on cloud business to add revenue fuel to their stagnated platform business amid active digital migration work at home.

Naver Corp. launched its cloud platform, Naver Cloud, in 2017 while Kakao Corp. established AI technology-based B2B company Kakao Enterprise in 2019.

NHN Corp. and KT Corp. spun off cloud division as standalone businesses NHN Cloud and KT Cloud on April 1.

Unlike contents, where platform operators must seek bigger overseas market, the cloud market at home has ample room to grow.

Naver’s revenue from cloud business rose 41 percent on year to 273.7 billion won ($214.4 million) in 2020 and another 40 percent to 380 billion won last year

Kakao Enterprise raised 95.5 billion won in annual revenue last year, up 40 percent from the previous year.

NHN’s cloud sale expanded 65 percent to 219.7 billion won last year.

KT’s Internet Data Center (IDC) sector, which was part of its B2B business, gained 16.6 percent last year from the previous year.

According to technology market research firm Gartner, Korea’s cloud market is expected to expand 22.9 percent from the previous year to 5.92 trillion won in the public sector alone.

Cloud business is less risky as unlike consumer businesses, companies deal with mostly big companies including foreign IT giants such as Amazon, Microsoft, and Google.

IT companies have set ambitious goals for their cloud businesses this year.

Naver Cloud is aiming to double its sales. Naver is the only domestic cloud service provider (CSP) that has its own cloud technology. It provides its own artificial intelligence (AI) technology that is easily configurable and offers a number of smart solutions for businesses. A total of 204 services in 18 categories are being provided to more than 60,000 clients. The company is also trying to further provide cloud services that are optimized for each industry.

Naver Cloud is expanding not only domestically but also globally. By the latter half of the year, Naver Cloud will begin operation in Japan and Southeast Asia. Naver Cloud has partnered with Tokyo-based SoftBank Group Corp. to create B2B models and joined hands with the likes of Deskera, a leading software developer based in Singapore, to enter Southeast Asian markets.

NHN Cloud is also aiming to grow sales by 30 to 40 percent compared to last year in the public cloud sector business in the second to fourth quarters.

NHN Cloud’s flagship cloud infrastructure is based on OpenStack technology. OpenStack is an open-source cloud operating system that develops and manages cloud computing platforms.

KT Cloud announced that it aims to reach 2 trillion won in revenue by 2026. In 2011, it built Korea’s first cloud data center in Cheonan.

Kakao Enterprise tested its “Kakao i Cloud” service on its affiliates early last year. After being certified by the Cloud Security Assurance Program (CSAP) in June last year, it released Kakao i Cloud for public institutions one month later in July. In December it officially launched Kakao i Cloud.

The Korean government will be converting all the information systems of administrative and public institutions into the cloud system over the next five years at a budget of 860 billion won.

The largest portion of the budget will be used this year - 299.9 billion won earmarked for the conversion of 3,151 informational systems.

As of now, government and public institutions can only use cloud systems from domestic cloud companies for security reasons.

“The opening of the public cloud market last year has provided new business opportunities for domestic cloud companies,” said a domestic cloud industry insider. To achieve the ambitious goals set by many cloud companies, they will have to first successfully target the public cloud market, he added.

By Oh Dae-seok and Susan Lee

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]