Alibaba Cloud Closes the Gap on Competitors in APAC


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Alibaba Cloud is poised to close the gap with its rivals — namely global cloud providers Amazon Web Services (AWS), Google, Microsoft, and IBM — as it expands outside of China into the Asia-Pacific region, according to research and analytics firm GlobalData.

The firm predicted that an “insatiable trend” of cloud provider product launches will grow the cloud services market in Asia Pacific at a compound annual growth rate (CAGR) of 27.7 percent to $55.3 billion in 2022, up from $16.2 billion in 2017.

Siow Meng Soh, a GlobalData technology analyst, called Alibaba Cloud “a force to be reckoned with” in the region. “It has a strong presence and mindshare in China where it has almost 50 percent of the IaaS [infrastructure-as-a-service] market share,” Soh said, noting that the other cloud providers have had a tougher time penetrating the market in China due to political and regulatory reasons.

In the recent months, Alibaba Cloud has been working to take its services overseas, particularly out of China and into Southeast Asian markets, and has named a number of key partnerships, including with Hewlett Packard Enterprise (HPE), ElasticSearch, VMware, and Intel.

While, geographically, Alibaba Cloud is leading in China, these partnerships and expansions show that it’s aiming to get ahead in emerging markets such as Malaysia and Indonesia, Soh said. It is also pushing to compete in some of the more developed markets including Hong Kong, Japan, Singapore, and Australia.

One area where Alibaba has had less success is in the U.S., where it faces stronger competition from the leading providers — AWS, Microsoft, Google, IBM, and Salesforce according to Synergy Research Group. Last month reports surfaced that Alibaba would pull back from its cloud operations in the U.S. in part due to political hostility and trade pressure between the U.S. and China.

Soh, however, does not think that this will slow its growth. “There are still lots of opportunities for Alibaba outside of China including Asia and Europe,” Soh said. “The U.S. will be a tough market since there are many entrenched players with better infrastructure. Alibaba’s success will depend on the partners it can win.”

Soh also cited the pace at which Alibaba releases new products. “The company works to a DevOps culture and introduces products at an incredible speed,” Soh said. In its most recent quarter, Alibaba Cloud added more than 660 products and features to boost its cloud portfolio. This included language-based document and analysis tools, hybrid disaster recovery services, and analytics tools.

“It is catching up on products such as AI [artificial intelligence] and big data but it is also starting to get ahead of competition in some areas,” namely its Smart Access Gateway SD-WAN product, which it launched with China Unicom in August, Soh said.

A number of other research firms have noted the importance of the Asia Pacific cloud market, and Alibaba’s prominence in it, to the global cloud and IaaS market. Synergy Research Group Chief Analyst John Dinsdale told SDxCentral that “There is no doubt that cloud providers who do well in China will automatically improve their standing in the Asia-Pac market and also the worldwide market, though AWS is still a long way ahead of its nearest rival”

The Synergy report found that while cloud growth is happening globally, the Asia Pacific region is growing about 10 percentage points higher, with China having the highest growth in that region. AWS held the No. 1 spot in every region in the report. Microsoft held onto the No. 2 position in every region except for Asia Pacific, where Alibaba ranked second.

GlobalData also noted the importance of the Chinese market, saying that China has three times the number of internet users that the U.S. does. Soh said that this speaks largely to Alibaba Cloud’s ability to scale as it started later than some of the other providers but the adoption in China has taken off rapidly in the recent years.

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