Alibaba cloud operations in Malaysia offer answers to data sovereignty challenges, says IDC


Apr 3, 2018

This press release is an IDC’s analyst view based on the article.

KUALA LUMPUR, November 2nd, 2017 – IDC believes that there will be a rise in datacenter consolidations and migrations with the commencement of Alibaba Cloud operation in Malaysia. The presence of global cloud service providers in the local market will enable the enterprises to re-look at their datacenter strategies to gain benefits from hyper-converged and hyper-scale datacenters without worrying about data sovereignty.

“Datacenters are the backbone that supports the growth of large, SME and startup businesses. In the past, Singapore has been the regional hub for global players to build their datacenters across ASEAN region. However, due to increase in cloud adoptions and strategic location of Malaysia, the global datacenter service providers are already setting up or will set up their datacenters in Malaysia,” said Sreenath Kandarpah, Head of Services IDC Malaysia.

The local and global cloud service providers should re-strategies themselves as the competition for cloud service providers who focuses on the local market are expected to increase. In order to stay competitive in the market, the service providers should re-evaluate their approach towards enterprises by creating an attractive pricing and add-on services.

Malaysian enterprises have preference for global datacenter service providers such as AWS and Microsoft because they offer better service capabilities, process maturity, and ability to help them build best practices for IT environment. IDC foresees this landscape to change with Alibaba having their local presence, yet, it will require a lot of effort for Alibaba to build the trust and confidence due to their competitors’ maturity in the market.

“Other global datacenter service providers will also be launching their datacenters soon in Malaysia which will make it more competitive for Alibaba Cloud to penetrate the market. Right positioning, pricing and local alliances will be the key to success for Alibaba Cloud in Malaysia,” said Baseer Siddiqui, Head of Software Research of IDC Malaysia.

Alibaba Cloud’s presence in Malaysia will increase the challenges for local datacenter service providers as many of them are struggling to sustain their business due to lack of efficiency, low utilization and preference of enterprises to host with global datacenter service providers. As a result, more local datacenters will be consolidating and improving their facilities to match with global datacenters.

IDC’s Malaysia Datacenter Infrastructure Trends 2017 report reveals that Malaysia is placed behind many markets in terms of digital transformation maturity. Fortunately, it is shifting towards positive change because of worldwide pressures, such as the consumerization of IT and digital disruption, are forcing Malaysian firms to shift their vision and strategy. To achieve DX maturity, infrastructure is the underlying architecture. Therefore, as more global providers venture into the Malaysian market, local enterprises will have more options and required skill-sets to leverage on.

For more information about the report, please contact Sreenath Kandarpah at or Baseer Siddiqui at [email protected]. For media inquiries, contact Rushanthine Velayutham at or Trista Efendi at [email protected]

About IDC

International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,100 analysts worldwide, IDC offers global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. IDC's analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a wholly-owned subsidiary of International Data Group (IDG), the world's leading media, data and marketing services company. To learn more about IDC, please visit Follow IDC on Twitter at @IDC.

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