Alibaba Plans To Take on Amazon In The Field Of Cloud

Move comes as the Chinese ecommerce giant stakes in a series of partnerships to bolster cloud offerings.

In yet the latest signs of its troubles related to operating in China in the face of continuing economic slowdown, as evidenced from a decline in both exports and imports, Alibaba Group Holding Inc. (NYSE:BABA) has made a strong push of boosting its cloud offerings by entering into partnerships with global companies that are likely to prove great synergies, and also give competitors, such as Amazon, Google, and Microsoft a run for their money.

The deals will see Alibaba Group cloud computing division, Aliyun, utilize the existing data centers built by partners such as Intel, US data center company, Equinox, and  Singapore telecom giant, SingTel, so as to push their own services on the horizon. The move will see the Chinese corporate giant saving money and to localize its services to tap into new markets.

Simon Hu, President of Aliyun, stated that with more storage problems and more clients demanding for data analytics services, it has led to this move. The main clients will be small and medium sized businesses, who will be given advanced infrastructure to harness the power of big data and analytics.

It is not going to be an easy fight though. Amazon, IBM, and Microsoft are already big and dominant players in the $16 billion market, and their growth shows no sign of slowing down. However, this has not stopped Alibaba cloud computing revenue from growing from 213 million yuan to over 390 million yuan, which is more than 80% growth. The revenue earned is a tiny fraction of the amount that the company normally earns from charging a fee for exporters and importers.

Mr. Wu said that Alibaba is not scared about the competition, rather they are willing to learn from their US rivals and to benefit from “technology products and create a better balance and increased efficiency.“ When asked about pricing, he said that it would most likely depend on the locality.

Aliyun’s expansion outside China is not new since Alibaba had opened up a data center in the Silicon Valley, but the move suggests that it intends to utilize economies of scale by going for partnerships with other data centers and not having to go through the trouble of being burdened by building more data centers, even if they have bullish assessments about the analytics market.

 Alibaba’s stock price ended the day at $90.70, a gain of 0.12% from the previous week, after reaching the initial high of $91.5 in the middle of last week.