Alibaba Cloud Invests USD 920 Million to Build Data Center in Hangzhou
COVID-19 and China
Former Alibaba Cloud president HU Xiaoming &  Kongsberg Gruppen Executive Vice President Hege Skryseth. PHOTO: Credit to Alibaba Cloud

Feb 25, Alibaba Cloud (阿里云), the cloud computing division of China’s e-commerce giants Alibaba, invested CNY 75.3 million (USD 11.3 million) for a 100,391 square meters data center located at Yuhang District, Hangzhou, China. The company invested at least USD 920.36 million for this program to enhance its local capacity, according to a notice published by Yuhang District Government, reported by Lie Yun Wang. Alibaba Cloud now has 56 availability zones across 19 regions worldwide as of Jan 2019.

Alibaba Cloud has built a strong infrastructure-as-a-service (IaaS) offering. The company also provides platform-as-a-service (PaaS) and software-as-a-service (SaaS) to drive the company’s development leveraging data technology and intelligence capability.

The company announced ZHANG Jianfeng (张建锋, Jeff Zhang) as president of Alibaba Cloud, adding to his responsibility on top of his role as our Chief Technology Officer, directly reported to ZHANG Yong (张勇), the CEO of Alibaba Group. The former Alibaba Cloud President HU Xiaoming (胡晓明) served as the president of financial division Ant Financial since then.

On Alibaba Group Q3 2019 Results Earnings Call, the company indicated that cloud computing revenue grew 84% year-over-year to CNY 6.61 billion (USD 962 million) in the quarter ended December 31, 2018, primarily driven by increased spending from enterprise customers. Meanwhile, adjusted EBITDA for cloud computing segment was the loss of CNY 274 million (USD 40 million) reflecting a negative 4% EBITDA margin, improving from negative 5% from the same quarter last year, according to the company’s Q3 FY 2019 report. During the December 2018 quarter, Alibaba Cloud launched 678 new products and features, including those related to core cloud offerings, data intelligence, AI applications, security and enterprise solutions.

Alibaba Cloud has a dominant market share in China, just as AWS does globally. It is beneficial for Alibaba to win in the Asian-pacific market. Exploring in Chinese market for seven years, Alibaba Cloud's market share has increased by 7% points from the end of 2016, and its market share has expanded to 47.6% in China Public Cloud IaaS. The number was 30% in 2015. Alibaba Cloud has been working to take its services overseas, such as Southeast Asian and European markets. Alibaba Cloud opens second data center in Indonesia and Japan last month.

While Alibaba Cloud is still much smaller compared to AWS, but it is growing with explosive growth rate (see more in this article) and has likely once again outpaced overall market growth even not all the cloud providers have released their Q4 numbers yet.

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