The Chinese e-commerce giant Alibaba recently made headlines by announcing an ambitious plan to invest $1 billion into Aliyun, its cloud-computing operation, to directly combat Amazon’s established Web Services division. This development is far from shocking to industry experts, considering the massive (and growing) $20 billion market that cloud-computing represents. The move will extend Aliyun’s reach beyond its current presences in places like China, Hong Kong, and Silicon Valley, into additional international markets. Up until recent years, Amazon and Alibaba have more or less avoided infringing upon each other’s hemispheres, but that era is rapidly coming to an end. Alibaba is currently breaking ground on an office in Seattle which many predict will serve as its U.S. headquarters, given city’s rich pool of cloud development talent. Amazon and providers of a similar caliber have already been aggressively cutting prices to nurture continued rapid growth.
In addition to receiving this massive injection of capital, Aliyun also formed a new strategic partnership with Yonyou Software, a software vendor that claims to be the largest independent enterprise software vendor in the Asia-Pacific region. Their contribution could likely empower Aliyun to win more enterprise customers in that corner of the world who are increasingly demanding big data, marketing, e-commerce, and cloud computing solutions. Alibaba also has deals in place with telecom and enterprise technology providers like Intel Corp., Equinix, Singtel, PCCW, and more.
To best appreciate the booming importance of cloud services and Alibaba’s motivation for making such a dramatic investment, consider the role Amazon Web Services has come to play as just one of their portfolio of offerings. Thanks to contracts with the likes of Netflix and Airbnb, the branch recently reported an 81% increase in revenue. Last year, Amazon beat out names like Google, Microsoft, and IBM by double-digit margins and claimed more than a quarter of the global cloud infrastructure market share. The extent to which the newly bolstered Aliyun may well shake up this status quo remains to be seen, but its presence will likely be felt sooner than later.
Ultimately, one consequence that seems almost certain, is the continued explosion of the cloud in terms of availability and accessibility. With millions upon millions of servers dedicated to various clouds, the pace of innovation is so fast that industry leaders can hardly afford to ignore.