Chinese e-commerce company Alibaba’s cloud computing business is growing fast, and will soon have a large amount of cash, which has industry insiders wondering if it will start competing with the American cloud giants. Cloud computing is a multibillion dollar business that is growing each year, and it is led by Google, Microsoft Azure, and Amazon Web Services, with IBM and other companies planning to join the fold.
Right now, there are 15 companies that are considered big players in the cloud computing business, 13 of those companies are American, if Alibaba starts competing with the American cloud giants, it will be the third international company to be considered a major player in the cloud business. According to documents Alibaba filed with the Securities and Exchange Commission ahead of their initial public offering, the company had revenues of $102 million from cloud sales last year, which was a 26 percent increase from last year, while it isn’t as high as the 50 percent increase Amazon Web Services saw, it isn’t bad either.
Although Alibaba has invested a fortune in American technological companies, and even hired Morgan Stanley to help them find a partner or company that can acquire them, they are not yet an international cloud contender. Industry insiders believe that the main reason they aren’t a contender is because they have their hands full handling their business in China.
Alibaba’s cloud business, which was started in 2009, still has a long way to go before they can really compete with the cloud giants, they have only three large data centers in China, and a small one in Hong Kong, compared to the 25 regional data centers and 52 smaller centers that Amazon Web Services has around the world, with another currently being developed in China. When it comes to their performance, Alibaba also lags behind Amazon Web Services. They handle $5.8 billion on China’s biggest shopping day, which is very impressive, and according to their filing with the SEC, their cloud service does 3.6 million computing transactions per minute, which is a lot, but it pales in comparison to Amazon, which does 1.5 million transactions per second.
For now, Alibaba’s focus is on their business in mainland China, where they are planning to learn more about the cloud business before venturing out in the future. From there, they will probably expand across Asia, where they have a lot of business relationships, then Africa, which is still an open territory for cloud computing businesses. Alibaba’s cloud computing business is growing quickly, but isn’t ready to take on the cloud giants in America for now. Expect them to be a major player in the cloud computing business a few years down the road.