Alibaba's ambition is to downplay the cloud king Amazon
This is really a battle between two giants
Alibaba is the e-commerce giant in China, but Alibaba's future ambitions are not to continue to develop e-commerce. The ambition of this giant is cloud computing, and defeat the current king is Amazon Web Service.
In 2009, Alibaba began the cloud business. In addition to the core ecommerce business segment, this is Alibaba's most ambitious business and is aggressively invested.
In 2015, Alibaba decided to expand its cloud outside China with a billion dollar investment. This is the basis of Aliyn (also known as Alibaba Cloud). Alibaba Cloud Chairman Simon Hu vigorously stated: "Our goal is to surpass Amazon in the cloud over the next four years, in terms of market share, customers, technology and scale of storage centers around the world".
So far, Alibaba Cloud has been half way through the Amazon. So while Amazon continues to dominate cloud computing and is constantly expanding, what has Alibaba done?
The battles of giants are all the same
Amazon and Alibaba are two giants from the West and the Orient, but they have many similarities. Both have names beginning with the letter A, which have core businesses that are e-commerce and have seen remarkable growth in recent years.
Alibaba Cloud has reported growth of 115% year on year, with more than 500 million users in China including large businesses and banks. This new business will bring in $ 254 million in revenue in the latest quarter and is expected to hit $ 1 billion in fiscal year.
Amazon, apparently the bigger giants, with revenues from cloud computing in the latest quarter reached $ 3.53 billion and predicted $ 14 billion in fiscal year. The $ 10 billion revenue milestone not all cloud companies can reach, showing how far Amazon is moving away from its rivals.
Alibaba Cloud is ranked sixth in the world's leading cloud computing platforms (behind Amazon, Microsoft, Google, IBM, and Salesforce). But in China alone, Alibaba Cloud is leading with more than 40% market share and higher than both Amazon and Google.
Despite being behind, Alibaba Cloud has a very good pedal that is China to go further in the US and Europe. Global head of Alibaba Cloud, Ethan Yu said Alibaba Cloud's growth potential outside the Chinese market is still huge.
"China is a big market that we have not exploited yet, but we will be able to do even better when we step outside the world. The cloud computing market has just grown and we still have a few years to go, but it's definitely a step in the right direction. We currently have 14 data centers and eight outside China, "Ethan Yu said.
Challenge the American giants
Like AWS, Alibaba Cloud's platform and services are also focused on small customers. However, Alibaba is slowly changing its customer orientation and starting to look for big business.
Alibaba has proven that its cloud platform is of sufficient size and power to serve sophisticated e-commerce, financial and banking operations with enormous amounts of data and enhanced security.
Of course, big customers in the US market will be very different from the big ones in China. However, CEO Jack Ma proved quite confident after his visit to the newly-elected President Donald Trump. This important meeting promises to help pave the way for Alibaba Cloud to enter Amazon's home market, and in return, Jack Ma will create millions of new jobs in the United States.
The Chinese giants also have a strong financial footing, as e-commerce business continues to break record revenue. Thus, a loss of $ 49 million in the last quarter did not matter, as Alibaba Cloud's revenue grew 115% over last year.
Of course, Alibaba Cloud's revenue of $ 215 million was negligible compared to $ 3.53 billion from Amazon Web Service. But the Chinese giants have just taken their first steps out of China, a jump-start before officially joining the Amazon, Microsoft or Google races.
The cloud battle will become more and more noticeable, as there is a representative from Asia. But perhaps Alibaba will take years more, instead of the original four-year declaration, to really become a threat to Amazon.
By: Frank Sharpe