What Does Alibaba’s Latest Cloud Computing Move Mean for the Competition?

When it comes to cloud computing, most people will think of some of the major players in that market. Names like Amazon, Microsoft, and Google automatically come to mind, but they may soon be joined by another competitor, one not as well known within the U.S.

The Chinese e-commerce company Alibaba has made some recent and significant strides at expanding its cloud business, and its making waves among the cloud computing community. Alibaba recently announced that its cloud unit Aliyun will be opening a data center in Singapore.

This will serve as an international headquarters for Alibaba. While the announcement might seem rather mundane and unimportant on this side of the world, this move could be just a sign of things to come as Alibaba works to expand its influence and compete with the other big names in the cloud to store your big data.

The details of this major move by Alibaba reveal just how significant the companys strategy is. Alibaba invested $1 billion in Aliyun with the express intent of global cloud expansion. Establishing a data center in Singapore is just part of the plan. Data centers have already been built in Hong Kong and Silicon Valley, outside of those that are already part of mainland China.

As Alibaba continues to grow, the company plans on expanding into other regions such as Japan, Europe, and the Middle East. Before that happens, the focus will be on Southeast Asia and the tremendous opportunities located there.

The Southeast Asia focus makes sense for a number of reasons. Alibaba is already a big name in China, and as Chinas economic influence grows into the surrounding region, Alibaba will look to grow with it. Cloud use in Southeast Asia is still relatively low as well, but as the area continues to develop its IT infrastructure, the number of cloud users will likely increase dramatically.

In fact, Gartner predicts that the Southeast Asia region will have an annual IT growth of 6 percent. Alibaba is looking to be there near the start, specifically targeting startups and young companies that are seeking cloud services. By focusing on these emerging markets, Alibaba has put itself in an advantageous position in areas that feature populations in the hundreds of millions.

Of course, Alibabas strategy has not been lost on the major competition. Amazon, Microsoft, and Google have been battling it out with each other for years over who will dominate the cloud market. Most of their growth has been in North America and Europe, with a little penetration into South America. This makes sense because these areas feature lots of economic growth and numerous businesses, but the major cloud providers would be doing themselves a disservice if they ignore emerging markets like Southeast Asia, the Middle East, and Africa.

The real messages cloud competitors will take away from these recent announcements by Alibaba are that the cloud market is about to get even more crowded. China continues to ramp up its economic power, and while the Chinese market is sizeable on its own, international expansion is inevitable.

The result will be an intense competition not only between the likes of Amazon and Google but with companies that are just coming to the forefront. Alibaba is only one such cloud company thats making headlines in this way; Chinese tech company Tencent is also expanding its cloud operations.

Tencent recently announced it would invest more than $1.5 billion over the next five years as it prepares to take on the competition. So Alibaba not only has to worry about international competition but Chinese competition as well. These companies may have certain challenges that will be tough to overcome since they are relatively latecomers to the cloud market, but they also have the resources to compete on the international stage.

Its too soon to say what the overall impact the moves by Alibaba will make on the cloud market in general. Many cloud providers are constantly adjusting their strategies as the market continues to evolve. Theres no question, however, that Alibabas strategy introduces a unique international element into a hyper-competitive market.

Expansion into developing regions will soon become commonplace as companies fight over uncommitted customers. The intensity surrounding what is cloud computing may get more heated in the near future. The battle over cloud dominance might only have just begun.