The Hangzhou-headquartered company, which is planning to enter the fledgling e-commerce market in India this year, probably through an acquisition, wants to set up a local data centre to better compete with its rivals. A similar strategy is being followed by other tech majors such as Microsoft and Amazon.
Cloud computing is one of Alibaba’s most important verticals as it plans to expand its revenues beyond e-commerce. The company’s annual report states that the cloud computing business is growing at an annual rate of over 100 per cent, year-on-year.
Alibaba already has an indirect presence in the Indian market through investments in e-commerce marketplace Snapdeal and mobile wallet company Paytm. According to sources, Alibaba could open a data centre even before Amazon does.
Earlier reports suggest that Amazon is building multiple data centres while Microsoft has already launched data centres in Mumbai, Pune and Chennai to improve the performance of Azure services for Indian customers.
Alibaba’s spokesperson said details or comments on the cloud business could not be offered at this point.
The revenues of Alibaba’s cloud business AliCloud (Aliyun in Chinese) and Amazon’s cloud business Amazon Web Services (AWS) are growing rapidly. While AliCloud posted a 175 per cent increase in its revenues at $165 million in the March quarter, AWS’ revenues stood at a whopping $2.56 billion in the same quarter.
According to Gartner, the global public cloud services market will be worth $204 billion this year, up over 16 per cent from $175 billion in 2015.
Experts feel that it will be difficult for Alibaba to capture developed markets such as the US and Europe, where Amazon has a strong foothold. Similarly, fit will be difficult for Amazon to crack the Chinese market. However, both have an equal opportunity in India.
Says Sanchit Vir Gogia, Chief Analyst & CEO of Greyhound Research, an independent IT & Telecom Research & Advisory firm: “When they start on-boarding millions of sellers and suppliers on the platform, it is clear they will need a means to support that kind of data. It is less expensive compared to relying on a third-party data centre and also there are no issues of data theft.”
However, he felt that Alibaba would have difficulty competing with AWS in the cloud business as AWS has already captured market-share globally, with its overall revenues touching $6 billion.
Source: Business Line