Alibaba ()
A glance through Alibaba’s (BABA) business highlights cloud computing as an emerging powerhouse for the company. Cloud computing is a strong driver of Alibaba’s robust ecosystem, a booster for its core business and a strong potential revenue-generator in itself. Here’s a closer look at Alibaba Cloud and how it is lining up to play a bigger role in 2018.
Alibaba Cloud, established in 2009, has become not only the fastest growing revenue segment within the Alibaba Group, but among the top echelon of global cloud players. During the September quarter, Alibaba Cloud’s revenue grew 99% year-over-year to $447 million, driven by an increasing number of paying customers. The cloud computing platform currently has 1,011,000 paying customers (doubling in a year), with more than 2,300,000 customers worldwide.
In June 2017, Alibaba Cloud was included in Gartner’s Magic Quadrant for Cloud Infrastructure as a Service (IaaS), Worldwide, which is reflective of its strong performance in China and growing investment as also presence in newer markets. This has placed Alibaba Cloud at the third spot on the list of vendors in the IaaS market in 2016 powered by a 127% growth, as per a September 2017 report. The worldwide public cloud services market revenue is projected to reach $260.2 billion in 2017.
Alibaba Cloud lies at the heart of Alibaba’s core e-commerce business; during the Global Shopping Festival 2017, Alibaba Cloud processed 325,000 per second at the peak. The e-commerce giant is focusing on research, development and application of advanced technologies, such as Artificial Intelligence (AI), Internet of Things (IoT), Virtual Reality (VR), to further equip Alibaba Cloud with a technology edge in its products and service offerings.
In October, the company committed to a $15 billion global research program. Over the next three years, the Alibaba DAMO Academy will open seven research and development labs around the world.
The growth witnessed in China’s cloud computing market has been phenomenal since 2010. It is projected that the aggregate market size of the country's cloud computing industry will touch $103.6 billion by 2020. While Alibaba Cloud enjoys a dominant position in the nascent Chinese cloud market, it isn’t confining itself to local boundaries. It aims to go beyond the mainland and compete with global players.
It has been actively expanding its global footprint, with a focus to support enterprises by enhancing its data centers capability; reports suggest that the company is set to open its second data center in UAE in 2018.
Alibaba’s Cloud is underlying Alibaba’s innovative initiatives in retail, automotive and healthcare space, among other industries.
Connected car technology is one example. The future of connected cars is bright, and with more and more connected cars on the road, there is a huge amount of data received from sensors, which needs to be analyzed and protected. Placing in-house servers, software and other infrastructure will involve expertise, and huge costs for automobile manufacturers; this is where cloud computing companies come into play. Alibaba has recently collaborated with Ford Motor Company to explore areas of cooperation in connectivity, cloud computing, artificial intelligence, mobility services and digital marketing.
Meanwhile, BABA entered into a partnership with Macau SAR Government to drive smart city development, under which Alibaba will support Macau's transformation into a smart city by using cloud computing technologies in order to bring benefits to both residents and tourists visiting the city.
Alibaba’s project City Brain was first launched in Hangzhou during 2016. It has helped ease traffic congestion by as much as 11% in Hangzhou’s pilot district.
These are just glimpses of what Alibaba’s Cloud is doing and given the immense potential that it holds, Morgan Stanley had valued the cloud computing business at $39 billion earlier this year. Alibaba Cloud is fast emerging as an alternative to the global hyperscale cloud providers and is well-positioned to take them on in the years to come.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
