Positive Outlook for Alibaba
Alibaba is in the news again, and this time too, for the right reasons. Analysts world-over are painting an optimistic picture of its cloud business.
This technology giant has been making rapid expansion to its cloud business, as it has added new centers in Australia, Dubai, Japan and London over the last year. Within the next few years, it plans to tighten the competition for global cloud services – a market that is being dominated by companies like AWS and Microsoft.
If you’re wondering why there is so much talk about Alibaba’s cloud business, it’s simply because of its potential to become a big player in the coming years.
Already, it is the leading cloud services provider in China. It is estimated that the Chinese market has huge potential, and currently only a small piece of the cake is covered. Imagine the growth potential of Alibaba just within China when it’s cloud industry matures? To give you a perspective, the Chinese cloud market was worth $1.5 billion in 2013, accounting for only three percent of China’s enterprise market. According to Bain and Company, this is expected to grow to $20 billion by 2020, signaling a growth rate of almost $1 billion per year.
And that’s not the end because the Chinese government has made cloud computing a priority. In its 13th five year plan that spans from 2016 to 2020, this government wants to give a big impetus to cloud, and to achieve this, it’s willing to offer support to cloud service providers as well as those that want to embrace cloud for their operations. Big tax incentives are being offered to lure more companies to move to the cloud, and all this means, the Chinese market is a huge potential waiting to be explored.
Many companies like IBM are partnering with local Chinese companies like 21ViaNet and Wanda Group to get a strong foothold in the Chinese market, simply because of the huge opportunity it offers. For Alibaba, this is not an issue as it is the most-established and leading cloud services provider in this region.
In addition to China, Alibaba is also rapidly expanding to other parts of the world in a bid to increase its customer base and service coverage levels. This could be a reality soon as this company is sitting on a decent pile of cash generated by many of its popular technology businesses within and outside of China. Also, investors feel confident about this company, so funding is never an issue. Since this is an important part of expansion, we can expect Alibaba to have a smooth transition from a Chinese cloud provider to a global cloud provider.
Alibaba has already started taking steps towards this transition by opening data centers in different parts of the world and entering into partnership with companies in the field of advanced technologies such as artificial intelligence, machine-to-machine learning, deep learning, virtual reality, augmented reality and more. With these partnerships, Alibaba plans to offer world-class products and cloud services to its customers.
The future is sure going to be interesting!