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Powered by four new facilities, Alibaba Cloud stretches worldwide reach

alibaba Holdings Ltd

Alibaba (NYSE:BABA) Cloud plans to open four new data facilities outside China, the cloud unit of Alibaba Holdings Ltd said on Monday. The Chinese giant seeks to grab global market share from leading players Amazon.com Inc (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT).

Part of the unit’s $1 billion infrastructure investment drive, the data facilities in Dubai, Germany, Japan and Australia will extend the reach of China’s leading cloud computing service provider to every major continent.

The unit has huge success domestically thanks to China’s strategic emphasis on homegrown cloud technology, while foreign firms have grappled with stringent licensing restrictions in the country.

However, it has much smaller share of the global market for cloud computing, in which data is stored on remote networks rather than local servers, which is expected to reach $135 billion by 2020, according to research firm Canalys.

Alibaba Cloud is forecast to take 7.8 per cent of that market, while leading players Amazon.com Inc, Microsoft, International Business Machines (NYSE:IBM) Corp and Alphabet (NASDAQ:GOOGL) Inc are expected to account for 69.1 per cent.

Head of Alibaba Cloud, Yu Sicheng, said the unit’s strength in China was a significant advantage and a lynchpin in the company’s globalization plans.

In an interview to Reuters, Sicheng said, “We have the U.S., Europe plus China, which is quite difficult”.

With the new additions, Alibaba Cloud’s total number of foreign cloud facilities reaches eight. It surpasses the six within China, though the majority of the company’s data volume remains squarely within China.

The data facilities will be launched through partnerships with Vodafone (LON:VOD) in Europe, Softbank Group Corp in Japan and YVOLV in Dubai, a joint venture between Alibaba Cloud and Meraas Holdings LLC.

However, Sicheng declined to comment on when the unit will likely post a profit, even as it has seen six quarters of consecutive triple-digit growth, to become Alibaba’s fastest growing business sector.

“Our focus is to keep expanding our market leadership and presence and this is our priority for now,” he added.

Paul

The author Paul