(From left) Hong Won-pyo, CEO of Samsung SDS and Lee Joon-ho, chairman of NHN. (Photos: Samsung SDS, NHN)

Korean cloud computing companies are launching counterattacks in the Korean cloud computing market, which is currently dominated by global players such as Amazon Web Services (AWS), Google, and Microsoft (MS).

The Korean cloud computing market is expanding into the public and financial sectors, and more and more companies are introducing cloud computing in the wake of the COVID-19 crisis.

Native IT companies such as Naver, Samsung SDS, and NHN are expanding their power by joining forces with other companies or by winning consecutive orders in new markets by utilizing their strengths as domestic service operators.

Samsung SDS and NHN signed a memorandum of understanding on May 28 to strengthen strategic cooperation in the cloud computing business sector to jointly explore business models utilizing their cloud computing products and solutions.

The two companies have decided to expand their joint participation in cloud computing projects and work together to develop cloud-based products and solutions. The two have also agreed to expand the data center infrastructure operation service business.

This marked the first time NHN has joined forces with other large domestic IT companies and the cloud computing businesses. After releasing “TOAST,” an integrated cloud service, in 2015, NHN entered various fields such as public, financial, game, and commercial business areas.

The Korean search giant owns facilities in Pangyo of Korea, Tokyo, and North America. The company is also preparing to build a second data center.

Based on 17 data centers around the world, Samsung SDS is pushing for services to help Samsung affiliates and corporate customers switch to cloud computing services. Recently, it is focusing on strengthening its cloud capabilities in response to demand for R&D and artificial intelligence (AI).

“We went ahead with this cooperation in order to increase our market competitiveness to cope with global cloud operators’ invasion of the Korean market,” an NHN official said. “We will seek specific cooperation measures in the future as a step to build a big framework for cooperation.”

Naver’s cloud computing subsidiary Naver Business Platform (NBP) has been aggressively ramping up its customers in the financial and public sectors since late last year. In the public sector, the government provides cloud services to the Central Election Management Committee, KORAIL, the Korea Educational Research and Information Service (KERIS), the Korea Communications Agency (KCA), and the Green Technology Center.

In the financial sector, the company has secured the Bank of Korea, Samsung Card, the Industrial Bank of Korea, and Mirae Asset Daewoo as its customers.

The Korean cloud computing market is dominated mainly by foreign companies, but recent orders from local companies are signaling a change. The size of the Korean cloud computing market is expected to grow to 2,781.8 billion won in 2020 and 3,723.8 billion won in 2022, according to market research firm Gartner.

The growth is gaining strong momentum as the spread of the novel coronavirus is fueling demand for digital transformation by companies.

While foreign cloud computing services have slowed down in the public and financial sectors, their Korean counterparts are securing more trust from clients with differentiated services such as quick communications and friendlier technical support. Foreign companies are not meeting the Korean government’s cloud-related regulations 100 percent.

In order to introduce cloud computing systems, financial institutions need to receive a financial cloud safety assessment from the Financial Security Institute of Korea. The Financial Security Institute evaluates 141 security items including basic protection measures which total 109 and additional 32 protection measures in the financial sector.

But foreign companies have to meet standards set by their headquarters so cannot disclose the locations of their data centers or install specific hardware. Financial companies can introduce them even if foreign companies do not meet all requirements. But their burdens are heavy as they have to take responsibility in case of problems.

Naver provides a hybrid CaaS cloud computing solution. CaaS stands for “Cloud as a Service.” The solution complies with tough data solutions and secure flexible IT infrastructure through an on-premise environment and the Naver Cloud Platform.

The solution allows sensitive data to be accessed within clients’ internal networks and a variety of the latest technologies can be applied quickly through external clouds.