Chinese e-commerce and technology giant Alibaba announced its financial results for the quarter that ended December 31, 2017. In the report, Alibaba disclosed that it had generated cloud computing revenue of RMB3,599 million (US$553 million) for the quarter. That’s a 104% year-over-year increase from the same quarter in the previous year.
In the report, Alibaba said that the increase was spurred by a combination of, “Robust growth in paying customers and revenue mix toward higher value-add product.”
The global cloud market has indeed been growing by leaps and bounds in recent years. A recent report from Synergy Research Group indicated that the quarterly cloud infrastructure service revenues have grown 44% in 2017. Public IaaS and Paas services alone account for the majority of that market and experienced a 50% growth in the fourth quarter.
It’s also notable that Alibaba has grown to a point where Synergy is listing it alongside other global cloud leaders Amazon, Microsoft, IBM, and Google. This inclusion follows a ~1% increase in market share for Alibaba for the quarter. During the same period, Amazon only increased its market share by one half of a percentage point.
Alibaba’s Growing Cloud
In addition to revenue growth, Alibaba has been expanding its existing cloud platform. In the December 2017 quarter, Alibaba added 396 new products and features to Alibaba Cloud.
Alibaba noted that one of its most substantial new products is a set of proprietary AI technologies that focus on real-world applications including traffic, manufacturing, and airport operations.
Not noted in the report is Alibaba’s large library of blockchain patents. China is leading the world in issued blockchain patents, and Alibaba tops the list of patent holders in the nation with 49 patents. 44 of these patents were published in 2017, alone.
Competition in China
In addition to regional competition from China Telecom and Tencent, Alibaba is facing emerging opposition from U.S. companies moving into the Chinese market it currently dominates.
Market leader AWS recently doubled-down its efforts in China, adding a second cloud in pursuit of Alibaba’s market share in the region.
Microsoft Azure is in the process of tripling its resources in China, a move made following the success of its partnership with China-based datacenter provider 21Vianet in 2014 which helped Microsoft gain 1,000 cloud partners and 80,000 enterprise customers.
Google Cloud announced the addition of a new platform region in Hong Kong coming in 2018. This announcement came alongside investments in three new undersea cables, including the HK-G Cable connecting Hong Kong with Guam. That cable will enter service in 2019.
Also on Alibaba’s radar is OneThing Cloud, a Chinese consumer-powered public cloud utilizing over a million individual users’ extra bandwidth, storage, and processing power to create a giant public cloud that competes head-on with traditional cloud providers. OneThing Cloud was recently featured at CES. It has sold 1 million units in China, with 19 million more on pre-order.
Alibaba continues to grow both in its home territory of China and in global markets. It has regional reach in Frankfurt, Silicon Valley, Virginia, Dubai, India, and Sydney.
Alibaba remains a distant contender in the global market. However, its foothold in one of the fastest-growing cloud markets makes it a clear contender moving forward.