Aliyun firm competes in both the domestic and international market in the cloud computing segment. Some major international competitors of the company are Amazon, Microsoft, IBM and domestic rivals include Tencent, Baidu and Uncloud.
In the international market, Aliyun’s cloud computing has no advanced technology such as Microsoft’s Azure, not as diversified and professional as Amazon Web Services. However, Alibaba has extremely close relationship with Chinese local enterprises as well as gets a lot of support from the local authorities.
In the domestic market, Aliyun is almost the leading company in the cloud computing area since this company is the first to offer this service in China.
Bloomberg said Alibaba had signed strategic agreements with about 12 local areas along with many contracts with state-owned agency companies. This element ensures sustainability for Aliyun’s market share in China and creates difficulties for international competitors.
Aliyun’s main customers in this area are small and medium enterprises, while Baidu and Tencent’s are mostly individuals.
Currently, the potential development of cloud computing in China is still very large in comparison with the US market. Calculate the ratio of total sales of the cloud computing industry to the total GDP, the US market is 52 times as much as China. If calculating the ratio of total computing revenue to the total number of Internet users, the difference is more than 100 times.
According to Bloomberg, less than 10% of investment in the IT segment in China now is for cloud computing industry. This enormous potential makes many experts predict that Aliyun will have faster growth rate than Amazon, especially as the cloud computing market is booming as today. Bloomberg estimates, particularly the Chinese market, which is the home of Aliyun, has 1.4 million customers wishing to use cloud computing services. Meanwhile, Amazon said their total global customers were just over 1 million people.
Aliyun’s customers are also quite different from international competitors when they target at small and medium enterprises, in accordance with the e-commerce business of Alibaba. Conversely, the international competitors target at large corporations or subsidiaries of multinational companies.
Aliyun are showing clearly ambition in the global market. During the past year, Alibaba has cooperated with Intel, Equinix and 4 other companies in the cloud computing area, at the same time opened a data center in silicon valley. Obviously, CEO Jack Ma is actively implementing the goal of competition in the international market.
Another competitive advantage is that Alibaba’s server processor chipset is customized. Despite being manufactured by Intel like Amazon, Alibaba is more interested in custom, energy-saving chip with ARM’s design. Because of it, Alibaba teamed up with Linaro to develop software to run on ARM’s original design without having to use available technology. This factor helps Alibaba save a lot of operation energy and costs of maintaining the operation of data centers.
Aliyun has approximately 1,200 employees and 80% are engineers, the company has also started planning the design of hardware and software for cloud computing segment for 10 years. Thus, Aliyun absolutely has enough resources to carry out such action. Today’s world, only Google, Microsoft and Amazon are enough potential to specifically design software and cloud data processor chip.