Parallels Asia-Pacific SMB Cloud Insights Reveals Strong Expected Growth in Cloud Services Across the Region

Proprietary research determines 75 percent or more growth in Cloud services adoption anticipated in Australia and Japan; double-digit proliferation of hosted servers also expected in China and India as Internet infrastructure continues to expand

SINGAPORE – November 21, 2011 - Parallels, the hosting and Cloud services enablement leader, today released the key findings of Parallels Asia-Pacific SMB Cloud Insights™, a report illustrating how service providers in Australia, China, India and Japan can profit by delivering Cloud services to small and medium businesses (SMBs). Parallels has determined that the market opportunity to serve SMBs in the developed Asian markets such as Australia and Japan remains vibrant, while developing countries such as China and India are poised for explosive Cloud services growth as they continue to build out their Internet infrastructure.

Parallels Asia-Pacific SMB Cloud Insights™ addresses the types of Cloud services that hold the most appeal for SMBs and details the best opportunities for service providers to drive growth and revenue across APAC hosting markets. In addition to basic hosting and Web presence for developing markets, service providers should focus on value-added hosted applications and services such as social media presence, content management and online customer relationship management (CRM) tools.

Parallels sampled 1,600 SMBs in the four countries —representing a broad cross-section of industries and sizes — to learn about their attitudes and current and planned adoption of Cloud services. The report also identifies the opportunities to provide Cloud-based operational services such as hosted infrastructure/hosted communications, online backup and storage and hosted e-mail and archiving.

“SMBs in Asia-Pacific, like much of the world, are rapidly realizing value of embracing Cloud and other hosted services,” said John Zanni, vice president of service provider marketing and alliances of Parallels. “The introduction of Parallels SMB Cloud Insights™ for Asia-Pacific provides a new perspective on the business value of Cloud services in the region, and we are confident the specific market insights we provide will enable service providers at any level to profit from the Cloud in Asia-Pacific.”

In Japan and Australia, Parallels determined that SMB adoption of Cloud services lags behind the rest of the developed world in nearly every service category, primarily due to the lack of education on the business and technical aspects of Cloud services. However, given the countries’ strong IT infrastructure, service providers should expect both the Japanese and Australian SMB markets for Cloud services to grow by 75 percent or more in the next several years, eventually matching the Cloud adoption levels in Europe and the U.S.

“We are already seeing Australian SMBs understand and leverage the benefits of cloud services via our Parallels platform,” said Michael McGoogan, CEO of UberGlobal. “The SMB Cloud Insights™ research further highlights that there is a great opportunity for our reseller partners. These resellers can now really take advantage of the Cloud, profit from it and at the same time, differentiate themselves by adding their own unique value and service to their customers.”

China and India both have millions of SMBs who could potentially benefit from Cloud services, with only a small fraction of these businesses are currently using them, as only 36 percent of the Chinese population and 8 percent of the Indian population are online.* As Internet infrastructure proliferates in these markets in the next few years, Parallels envisions many of the SMBs will forego the stage of buying and maintaining in-house IT infrastructure such as servers, and instead embrace Cloud services and applications, presenting a massive growth opportunity for service providers to leverage.

“As the Internet infrastructure continues to expand at a rapid rate, more and more Chinese SMBs are looking towards the Cloud to increase their efficiency and productivity,” said Dennis Ng, CEO, PacHosting. “Parallels SMB Cloud Insights™ for Asia-Pacific will give service providers a new level of confidence for tailoring on-demand Cloud solutions that can resonate to the specific needs and demands of growing SMBs.”

Country specific findings in Parallels SMB Cloud Insights™ for Asia-Pacific include:

Australia

· Parallels estimates the Australian SMB Cloud services market for hosted infrastructure, Web presence, and hosted communication and collaboration at A$480 million in 2011. Of this spending, hosted infrastructure has the largest share, with A$230 million; Web presence has A$190 million; and hosted communication and collaboration has the remaining A$60 million.

· Only 12 percent of Australian SMBs report using hosted servers. Service providers should target replacement of in-house servers as 40 percent of SMBs with in-house servers are planning to switch to hosted servers in the next three years.

Japan

· Parallels estimates the Japanese SMB Cloud services market for hosted infrastructure and Web presence services to be ¥63B (US$795 million). ¥32B (US$405 million) of this total consists of hosted infrastructure, and ¥31B (US$390 million) consists of Web presence services.

· Pricing remains as the biggest concern for adopting hosted servers with 77 percent of SMBs with in-house servers citing price as the main reason for not switching to hosted servers. This presents ample opportunity for Virtual Private Server (VPS) offerings in the market.

China

· Parallels estimates the Chinese SMB Cloud services market for the traditional hosted services—specifically, hosted infrastructure and Web presence— at 4.1B RMB (US$640 million) in 2011. Of this spending, hosted infrastructure has the largest share, with 3.2B RMB (US$500 million), and Web presence with 900M RMB (US$140 million).

· 80 percent of SMBs with no servers are planning to adopt hosted servers in the next three years and 62 percent of SMBs without websites report that they plan to add a website in the next three years

India

· Parallels estimates the Indian SMB Cloud services market, which includes hosted infrastructure and Web presence services, at 5.5B INR (US$123 million) in 2011. Of this total, hosted infrastructure has the largest share, with 4.3B INR (US$97 million), and Web presence has the remaining 1.2B INR (US$26 million).

· Huge growth opportunity in the overall Cloud services market due to the low Internet adoption rate. Only 5 percent of the SMB population uses servers of any kind and 8 percent of Indian SMBs have a website or email.