Alibaba made headlines this week with a couple of announcements that could boost its cloud computing business in the world. While the Chinese eCommerce giant is a big deal in China, they don’t appear to be a major player quite yet in spite of Chinese press assertions otherwise.
But that hasn’t stopped Alibaba from making moves to do whatever is within its power to increase its world cloud presence. A few years ago, the magic number for going after AWS was a billion dollar investment in the cloud. We saw Cisco and HP vow to invest a billion dollars each in public cloud infrastructure only to exit the market without much success.
They found out what so many have learned, that going after AWS in the public cloud could be a fool’s errand, but that hasn’t stopped Alibaba from talking a big game. In 2015, Alibaba also made that magic billion dollar bet and Alibaba’s Simon Hu famously vowed to match or surpass AWS in four years. Two years in that doesn’t seem likely, but according to John Dinsdale from Synergy Research Alibaba is making some headway.
“While its core business is in China, it has made great strides to develop cloud revenues outside of China. Of its 16 operational data centers, seven are in China and three in Hong Kong – so it now has eight outside of Greater China,” he said. That’s a fairly substantial presence outside of China, but Dinsdale says the majority of its revenue is still coming from the Chinese market.
Building market share
In an effort to change that, the company announced a whopping $15 billion investment this week with plans to open a group of worldwide research centers covering areas like artificial intelligence, Internet of Things, fintech and quantum computing, all of which have been packaged and delivered as cloud services by other vendors.
The company says it plans to open these research centers around the world in China, Russia, United States, Singapore, and Israel. It’s a significant move and serious effort on Alibaba’s part to have a piece of the next big technologies.
The company also announced a partnership with Red Hat this week, which could help it expand in the US and Europe. Under the agreement, Alibaba will sell Red Hat open source tools to its customers and will also offer a hosting option for Red Hat cloud customers.
This is the type of partnership that could help give Alibaba a push, but it’s going to need many more agreements like this one to move the needle enough to ever come close to AWS, if it ever does. That’s likely more tough talk than reality, but Alibaba isn’t sitting still either.
It’s making big moves and trying to make its way in a highly competitive market, and who knows, perhaps this week’s announcements could bring it a step closer to its lofty goal.
Photo: leighklotz on Flickr. Used under CC by 2.0 license.
