The China-based e-commerce giant, ALIBABA Group Holding Ltd., will be pumping a whopping 200 billion yuan, which is equivalent to S$40 billion into cloud infrastructure; this mainly includes data centers.
This big funding will be almost equal to 50 percent of the entire company’s generated revenue in 2019. This shows the importance of the division in the company that it depends on to expand internationally.
To complement the 21 existing network regions, Alibaba will be building more data centers in support of certain areas like AI-interface chips.
Alibaba’s cloud computing is now one of the fastest-growing initiatives of the company that has gone beyond the traditional sphere. There was a significant rise in division’s revenue by 62 percent, which took the figure to 10 billion yuan, this saw the company topple the global leaders Amazon.com Inc. and Microsoft Corp in the online computing business.
The firm currently remains as one of the leading cloud players in Asia with a close follow-up of Baidu Inc. and Tencent Holdings Ltd.
The Bloomberg Intelligence analyst, Vey-Sern Ling, noted that the main focus when it comes to medium-term is gaining scale in infrastructure, customers, and product offerings. He further says that making a profit needs a long-term focus.
The cloud in Alibaba came about as a result of the great computational ability that was needed to sustain the online transactions from over a million shoppers. The firm also has a lot of home advantage since, unlike many American companies, the Chinese internet-based market is not very much congested. Entry into the cloud by the e-commerce firm is a comfort from the low domestic consumption since many services are provided via a server from a very small area.
Earlier on the way before China came to realize the very first contraction of the economy, Alibaba had given a warning of the same that the outbreak of the coronavirus would have a very big effect on the business it runs.
Alibaba’s cloud computing division is the main effort of the company that helps it to get a large amount of data that is produced on a daily basis. This is what is referred to as the “new oil” by Jack Ma, the Alibaba co-founder. This division alone contributes 7 percent of the company’s total revenue.
Jeff Zhang, Alibaba’s president, says that increased investment in cloud infrastructure helps in providing good computing resources that make the business much better.