Breaking overreliance on e-commerce
Cloud computing is one of Alibaba’s (BABA) promising businesses, and the company’s recently released fiscal 4Q17 report confirms it. Alibaba is the largest public cloud provider in China (MCHI) in terms of revenue, according to research company IDC (International Data Corporation). Like Amazon (AMZN), Alibaba is also betting on cloud computing to break its overreliance on e-commerce sales.
Cloud computing is shaping up to be the next frontier for the tough battle between Alibaba and Amazon. So far, Amazon has largely subdued Alibaba in the cloud computing space, at least going by the most recent quarter’s figures.
AWS is at least ten times larger than Alicloud
In terms of revenue, Alibaba’s and Amazon’s clouds are worlds apart. While Amazon reported cloud revenue of $3.7 billion in its most recent quarter, Alibaba’s cloud sales for the same period came to ~$314.0 million. As such, we can see that Amazon’s cloud, better known as AWS (Amazon Web Services), is more than ten times larger than Alibaba’s cloud, also known as Alicloud.
In terms of growth, however, Alicloud is growing twice as quickly as AWS. While AWS grew 42.7% in its most recent quarter, Alicloud grew 103.0%.
A $20.0 billion cloud opportunity in China
China’s cloud computing market should be worth $20.0 billion by 2020, compared to $1.5 billion in 2013, according to research company Bain & Company. While Alibaba hopes to lead in China’s cloud computing market, Amazon, Microsoft (MSFT), IBM (IBM), and Alphabet’s (GOOGL) Google are also eyeing the market due to its sheer size and growth potential.
It remains to be seen whether Alibaba can successfully keep foreign competitors at bay in China’s cloud computing market as it has in the e-commerce market.