Chinese e-commerce, media, and technology giant Alibaba is planning to follow in the footsteps of Amazon and attempt to grow its cloud computing business to surpass its retail wing. At present, Alibaba’s cloud business accounts for just 7% of its revenue.
Alibaba CEO Daniel Zhang revealed the intention to CNBC, stating that cloud computing will likely be the “main business” for Alibaba in the future.
“We strongly believe that every business in the future will be powered by the cloud. We are very happy to build this cloud infrastructure in a new digital era and support all business,” Zhang said. “I think cloud will be … the main business of Alibaba in the future.”
He also touched on the company’s recently developed Artificial Intelligence chip, emphasizing the importance of getting more computing power at greater levels of efficiency, and the need for specialized chips for specific business cases.
The company’s cloud business has been growing at a rapid pace, witnessing revenue rise to 5.67 billion yuan (about $820 million) in the quarter ended September 30, a 90% year-on-year increase.
Alibaba has been expanding the cloud business into new territories outside China over the past two-and-a-half years. It has opened new data centers across the world, particularly in Asia and Europe. It recently opened a new data center in the U.K., a country where rival Amazon already has a strong presence.
“Alibaba is investing at a tremendous rate to build up its cloud services. It has become one of the world’s hyper-scale cloud players, catching up with Amazon, Microsoft, and Google,” said Martin Garner, senior vice president at CCS Insight, a U.K.-based analyst firm.
“It is building out its geographic footprint around the world, recently opening a data (center) in the UK,” he said. “It is also innovating its cloud services portfolio at phenomenal speed, with a strong push recently into the Internet of Things.”
According to the Seeking Alpha transcript of the call, Alibaba CFO Maggie Wei Wu said this was primarily driven by “the robust revenue growth of our China commerce retail business,” which grew 56 percent from the previous quarter, as well as the consolidation of its Ele.me and Cainiao Network segments, and “strong revenue growth of Alibaba Cloud.”
