Alibaba has just announced an investment of 1 billion dollars over the next three fiscal years to boost its cloud computing activity outside of China, while the economic situation in the Middle Kingdom is mixed and shaky.
Boosting Alibaba’s Partner Growth
The announcement was made this Thursday, September 22 in Phuket during the Alibaba Cloud Summit. The investment will consist of financial and non-financial incentives, such as funding, rebates and go-to-market initiatives “, explained the Chinese giant. Its objective is to support the technological innovation and the expansion of the market of its partners, for example through a program to help its customers to locate their cloud computing needs according to the market in which they operate.
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” Partners have always been at the heart of Alibaba Cloud’s concerns, and we are committed to providing them with strong support… both technologically and commercially. said Selina Yuan, President of Alibaba Cloud Intelligence International, during her speech at the conference. The company’s cloud division already has approximately 11,000 partners worldwide. Among them are tech giants like Salesforce and IBM.
Alibaba Cloud is currently the world’s third-largest cloud provider with 9.5% market share, according to analyst firm Gartner. It is behind Amazon Web Services (39%) and Microsoft (21%), but still ahead of the giant Google Cloud.
Alibaba is on the decline
This strategic choice on the part of Alibaba can be explained by several reasons. The company is indeed losing growth in its historical sector, e-commerce. During the second quarter, running from June to April, its net profit fell 50% to $3.4 billion. However, its revenues from its cloud computing service have increased by 10% during this period, which suggests a good margin of progress for the company while the cloud market is in full expansion.
This disappointment was notably caused by the very strict confinement imposed in China in March and April, putting several cities on hold, while the regulation of the technological giants was also accentuated. For these reasons, Alibaba wants to export more abroad in order to diversify its activities and is therefore betting on the cloud to achieve this: at its summit in Phuket, the company signed nearly 30 agreements to help customers and partners to accelerate their digital innovation capabilities with cutting-edge cloud technologies, reports the South China Morning Post.
In June, Alibaba Cloud also intensified its international business development efforts with two major initiatives: the introduction of the software-as-a-service tool Energy Expert to help its corporate customers manage their carbon emissions and the launch of two new data centers in Saudi Arabia.
The loss of a big customer
In addition to the economic situation, the geopolitical context, and in particular the trade war between the United States and China, also has repercussions on Alibaba. For example, TikTok’s parent company, ByteDance, decided to move its users’ data from Alibaba’s servers to Oracle’s, which affected Amazon Cloud returns.
In addition, the recent decision by the US government to block the export of semiconductors used in the development of data centers could be harmful for Alibaba, which notably uses Nvidia chips in its data centers. Taking all these elements into account, the heavy investment of the Chinese giant makes sense, since it will allow it not only to develop abroad, but also to avoid the repercussions of phenomena that are beyond its reach. .