One of the world’s most valuable companies Alibaba announced on Monday, April 20 an RMB 200 billion or $28.2 billion investment in cloud infrastructure over the next three years.
The investment was prompted by an increase in the demand for services like live streaming and video sharing services as businesses adapt to the flu pandemic. According to Alibaba, the investment will focus on operating systems, servers, chips, and data centers.
Alibaba Cloud Intelligence president Jeff Zhang said the company is addressing businesses’ needs in times of pandemic. “The COVID-19 pandemic has posed additional stress on the overall economy across sectors, but it also steers us to put more focus on the digital economy,” said Zhang.
Currently, Alibaba is China’s biggest cloud computing provider next to U.S.’ giants Microsoft and Amazon. With the recent funding, many analysts like Synergy Research believe that the company is likely to pursue an international market push.
Cloud Computing Efforts
Despite the fact that cloud computing only comprises 7 percent in Alibaba’s total revenue, the company is thinking big in making it a main business in the future. Zhang is also positive about the latest investment, which will not only service businesses in China but also the Western countries, in the future.
The possibility of cloud computing service to become the main business is still a vision. Amazon and Microsoft are two of the biggest providers of cloud computing services in the United States and other parts of the world, including Asia.
Part of the reason why Alibaba is pursuing bigger markets is because it is intimidating rising competitors in the region, including JD.com.
Speed Up Recovery
The post-pandemic world will likely turn to digital services to survive and this is what Alibaba is investing on. In the next few years, businesses will need to rely on cloud-based intelligent solutions to grow revenue.
Alibaba sheds light on trusted computing resources and helps businesses speed up the recovery process. While Alibaba Cloud is yet to grow into the international market, the revenue is already huge at $1.5 billion for 2019.
The company reported a 62 percent revenue increase from the profits earned last 2018. Gartner also revealed that Alibaba is Asia Pacific’s largest cloud provider.
Alibaba’s cloud unit helped Hangzhou’s government to monitor virus using a digital system. This monitoring system was later rolled out nationwide to find out the rates of virus exposure.
