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Cloud business at Alibaba is an important future market
Aim for profitability in the current financial year
Share of total sales still manageable
Amazon earned $ 3.36 billion on an operational basis in the second quarter with one of its fastest growing divisions, Amazon Web Services. The profit margins in this segment are very lucrative; numerous other companies have identified the cloud business as a growth driver. This is also the case with the Chinese Amazon competitor Alibaba, which for its part is aiming for break even in its cloud division this year.
Profitability in the next few months
Alibaba’s cloud computing business is expected to be profitable for the first time in the current financial year, said CFO Maggie Wu on the livestream at the latest Investors Day. Accordingly, Alibaba will earn money with its cloud business until March 31, 2021.
On the growth side, the cloud computing area is already a success for Alibaba. In the quarter that ended June, revenues in this area rose by 59 percent compared to the same period last year. It was the business with public and hybrid clouds in particular that drove the business area.
Alibaba dominates in Asia
In the spring, the research and consulting company Gartner determined that Alibaba’s cloud business is the market leader in the Asia-Pacific region. Globally, Alibaba came third behind Amazon and Microsoft in terms of market share in 2019. Synergy Research sees the Chinese in second place behind Amazon in the Asia / Pacific region.
The relevance of Alibaba to its cloud division becomes clear when you see the investment volume in this area. The Chinese want to invest 28 billion US dollars over a period of three years in building new data centers and developing hardware and software.
Alibaba CEO Daniel Zhang had already emphasized in an interview with CNBC in 2018 that cloud computing will be Alibaba’s main business in the future.
Currently, the share of the cloud division in Alibaba’s total revenue is still manageable at around 8 percent. E-commerce activities continue to make up the lion’s share of business among the Chinese.
Finanzen.net editorial team
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