The cloud computing arm of Chinese retail giant Alibaba – Aliyun, Alicloud or, simply, Alibaba Cloud – announced last week that the company will be adding four more data centers by the end of 2016. The new data centers will be added in Dubai (Middle East), Tokyo (Japan), Sydney (Australia) and another in Europe. With these new data centers, Alibaba will have expanded its cloud footprint to every major continent of interest except for Africa and South America, but still a far cry from the footprint of IBM, Microsoft and its favorite inspiration, Amazon.
Alibaba’s cloud division has been growing at an extremely fast pace, but at $224 million in sales during the last quarter they are much smaller compared to the $3.231 billion Amazon reported during its third quarter.
“Alibaba Cloud has contributed significantly to China’s technology advancement, establishing critical commerce infrastructure to enable cross-border businesses, online marketplaces, payments, logistics, cloud computing and big data to work together seamlessly. We want to establish cloud computing as the digital foundation for the new global economy using the opportunities of cloud computing to empower businesses of all sizes across all markets” – President of Alibaba Cloud, Simon Hu
“Alicloud, which is known as Aliyun, is Alibaba’s fastest growing business unit, having reported six successive quarters of triple digit growth. The cloud business pulled in revenue of RMB 1.5 billion ($224 million) in the last quarter, up 130 percent year-on-year. It isn’t profitable at this point, however, having posted a loss of RMB 57 million ($8 million), but that’s a significant improvement on a RMB 386 million ($56 million in today’s rate) reverse from last year.” – Techcrunch
For any cloud provider, data center footprint is the most important aspect of their infrastructure business. Without a pan-global presence it will be extremely hard to convince a major client to choose your product over big infrastructure providers such as Microsoft or Amazon or Google. You may have cut down your price in order to lure your customer away from them. But with the biggest players already engaged in a furious price war, even that option has only a small probability of success.
Aliyun’s Chances of Breaking in to the Hallowed Cloud Stratosphere
Amazon announced last week that the company will be reducing the on-demand, reserved instances and dedicated host prices by upto 25%, which makes it the 53rd time Amazon has cut its pricing since Amazon Web Services was launched.
With the competition at the top heating up, not having a proper cloud data center network around the world is not at all on option, and that’s exactly what Alibaba seems to be doing now, beefing up its presence around the world ahead of any attempt to take on the bigger players.
As it stands, the cloud majors aren’t going to make things easy for smaller players such as Alibaba; nor are they are going to let newcomers such as Google and Oracle bulldoze their way into the market.
But the fact that we have such big companies with deep pockets fighting for our business is great news for us, and I hope to write about the 100th time Amazon has cut its EC2 pricing as much as I hope to write about Aliyun becoming profitable.
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