Alibaba will be allocating $44.2 billion to boost its cloud computing business. The company is on a quest to take a big chunk of the world’s biggest market share holders.
The Coronavirus pandemic has shifted all the attention to the digital world. Companies have implemented work from home arrangements. Essential goods purchases are done online and delivered to homes. Families and individuals are also turning to streaming services for entertainment.
The reliance on the internet has never been higher. Reports have noted that the internet almost crashed in certain countries during the earlier weeks of their lockdowns.
Powerful servers are needed to support this volume of activities online. Majority of these activities are routed through servers housed in the U.S. and Europeans soils.
This is about to change as a new and state-of-the-art server is about to be built by Alibaba in China.
Alibaba joins the big leagues
The cloud computing business of Alibaba was launched in September 2009. Since then, Alibaba has become China’s biggest cloud computing business service provider.
It started only as an e-commerce website, but has now transformed into a behemoth. They have gone beyond simple e-commerce. Since their launch, the company has expanded to online payment services, online cloud computing business, and streaming services.
Moving forward, Alibaba will be pouring in billions of dollars to build a bigger and newer server in China. This will support the unexpected acceleration of the demand for online services especially during the pandemic.
Majority of the funds will be used to install and upgrade the existing chips, servers, computers, and networks. The roll out shall be spread across a three year span as the Chinese company braces for an increased demand.
In under 1 wk since offering #AI – & cloud-based services to help combat #COVID19 , #AlibabaCloud has received requests from 49 organizations in 19 countries. We invite all research institutions, hospitals & govt authorities working on a cure to join us. https://t.co/Vl6PYAMTFo pic.twitter.com/Qj4ED4rbKm
— Alibaba Cloud (@alibaba_cloud) March 26, 2020
Alibaba’s future in cloud computing
Alibaba’s Jack Ma stepped down in 2019, and he was replaced by Daniel Zhang. In an interview, the new CEO was quoted saying that cloud computing shall be the next frontier of Alibaba. He added that it shall be next big business of the company.
Alibaba’s commitment to increase the cloud computing services is challenged even before the actual implementation of the program.
The U.S. and Chinese market are similiar. The U.S. market is led by Amazon, which owns almost half of the market share in the country. Alibaba also holds China’s half of the market share. In Alibaba’s case, it is heavily challenged by the second and third biggest market share holders in China.
JD.com, which has Tencent Holdings as its biggest investor, is planning to work with U.S. Fortune 500 companies. Their main purpose is to be these Fortune 500 companies’ gateway to the Chinese market.
JD.com is also backed up by Google and Walmart, which makes the company a competitor to look out for.
Photo from Alibaba_cloud/ Twitter