Megazone Cloud relies on partnerships as competition builds

Megazone Cloud Corporation, South Korea’s first Amazon Web Services partner and the domestic cloud market leader, will establish a joint venture with Japan-based Itochu Techno Solutions before expanding into other Asian countries.

The partnership, which will give Megazone Cloud a 51 percent stake, is part of a strategy of mergers and acquisitions and joint ventures at home and abroad by the cloud managed service provider (MSP), and market insiders are watching closely to see whether it will bear fruit as competition builds among global cloud infrastructure services providers.

Last year Megazone Cloud acquired Korean open source software company Rockplace’s cloud business and Microsoft Azure’s partner Zenith & Company. It also formed CloundGram in a partnership with LG CNS.

More recently Megazone Cloud raised about 100 billion won ($84 million) in a Series B funding round from investors including Stonebridge Capital and KB Securities and NAU IB Capital that valued the company at 600 billion won.

Demand for advanced data management has strengthened interest in cloud MSPs since the outbreak of the Covid-19 pandemic. However, some insiders point out that the growth potential may weaken as a growing number of clients use more than one cloud system, pressuring existing MSPs to secure their partnerships and talent to maintain market leadership.

Amazon Web Services remained the dominant provider in the second quarter with a market share of 33%, followed by Microsoft Azure with 18% and Google Cloud Platform with 9%, according to research by Synergy Research Group. Others, such as Alibaba, IBM, Salesforce, Tencent and Oracle, had single-digit shares.

Private equity firms and venture capital firms that had considered investing in Megazone Cloud expect to see more intense  competition as the market tightens, and are interested in whether the company’s joint ventures tactic will succeed.

“(Cloud MSPs) will have to continue spending money to maintain their strong presences by acquiring firms that are partnered with global providers,” said an industry source. “Megazone Cloud has attracted multiple investors, but it is difficult to predict when it will actually swing to a profit.” (Reporting by Ar-rum Rho)