Alibaba boosts cloud spend as it switches attention to the business market

• Says it will double spend on cloud infrastructure and new data centre technologies
• Currently Alibaba gets just 7 per cent of its revenues from cloud
• The global lockdown has exposed just how important agile and scalable cloud has become

Alibaba says it will boost spending on its cloud strategy, with a US$28 billion investment plan to run over three years. Cloud computing is already an important string to Alibaba’s bow, it’s just that it wasn’t growing at the required rate.  

According to the Financial Times  while Alibaba’s cloud revenues are currently growing by about 67 per cent per year, cloud represents a fairly modest 7 per cent of its total revenues, Alibaba needs to grow that bit of its pie fast if it is to maintain its overall position, especially as other parts of its business plateau or even decline with the impact of the coronavirus. 

With cloud it also has to find profitability, something it hasn’t yet managed.

Alibaba says that the $28 billion represents a doubling of its cloud investment and will be used to build “next generation data centres” along with allied data centre technologies for semiconductors and servers. 

The move is a reminder that in China, as in much of the rest of the world, cloud computing now dominates both IT and telecoms -  there is no way forward without it, and the virus and subsequent lockdown has exposed how crucial its virtues of scalability and agility have become in an uncertain world.  

While telecom networks have rightly been applauded for their ability to hold up under stress, it’s the cloud technology more than anything else which has enabled applications to scale up in response to sudden and unpredictable new demands. 

The online conferencing application,  Zoom, despite its difficulties with security, managed a huge cloud-based up-scaling as literally millions of new users piled on. For the most part, Zoom seems to have coped with a 750 per cent increase in user numbers, an astounding feat.

But cloud infrastructure is also holding up to the sudden arrival and upscaling of many online applications - for work-at-home collaboration as well as educational programmes for ‘learn-at-home’ school alternatives. 

The move to the cloud was already well under way, but the stalling of the consumer market, exacerbated by the disruption visited on the world economy by the virus, has ensured that Alibaba must turn to the business market and chase after global cloud leaders Amazon and Microsoft. 

That’s a tough ask, but the cloud market is already changing to make dominant positions perhaps less unassailable than they once were.  The cloud trend of the moment is multi-cloud or hybrid cloud which enables cloud users to run their applications across different cloud infrastructures, choosing those best able by cost and/or capability to meet their particular demands. That should mean there are opportunities still for new infrastructure approaches. 

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