For Alibaba, Size Does Not Matter As It Looks To Tap India’s Cloud Market

With startups leading game by adopting emerging technologies such as deeptech, Internet of Things, artificial intelligence (AI), machine learning and big data, India is on the path to Industry 4.0. Cloud computing is fast emerging as a huge market as many of the leading global players have opened up shops in India with the goal of tapping the emerging startup business.

The cloud market in India is set to grow to $7.1 Bn by 2022, according to NASSCOM. The report estimates that cloud spending in 2018 was around 6% of the total IT spending, meaning there’s huge potential ahead. The spending in India is still tiny compared to the global cloud spending which was estimated at $187 Bn in 2018 and is projected to grow at 16.5% per annum to reach $345 Bn by 2022.

While AWS, Microsoft Azure, IBM, Google Cloud have been leading the cloud market in India, other players Nutanix, DigitalOcean and now Alibaba are set to change the dynamics of cloud market in India.

Alibaba and Amazon have been fighting a long war of supremacy in ecommerce on different turfs across the world. The duo is now competing in cloud services market as well. And, unlike ecommerce, where Alibaba is not directly competing with Amazon in India, in cloud services, it’s become more interesting as Alibaba Cloud is directly taking on AWS.

While AWS came a little earlier to the Indian market, Alibaba Cloud entered in 2017.

Speaking to Inc42, Dr Feifei Li, VP of Alibaba Group, president and senior fellow of database systems, Alibaba Cloud Intelligence said that Alibaba Cloud is already the top market player in various country markets and India is another market where their growth in the last two years have been over 100% and is targeting for 150% growth next year. Li added that in China, Malaysia, Indonesia and Singapore, Alibaba doing really well, while Google Cloud and AWS entered later, so Alibaba is the market leader.

“Being an early entrant in the Indian market, it gives AWS a certain edge, but at the same time, that doesn’t mean their position is gonna be stable forever.”

Alibaba Cloud: Focusing On IaaS And PaaS

According to NASSCOM report, the Indian infrastructure as a service (IaaS) spending was estimated to be about $1 Bn in 2018, and is forecast to grow at 25% per annum to reach $2.3–2.4 Bn by 2022. The SaaS market is expected to grow at 36% per annum and touch $3.3-3.4 Bn by 2022.

Unlike Salesforce, Alibaba Cloud mostly focuses on IaaS and PaaS, said Li. “We have a wide range and rich collection of products and offering and services in our space, ranging from network solution to storage solution to elastic computing solution (ECS). On top of that, we have security products, we have database, big data solutions and so on. And, we also provide CDN (content delivery network).”

As part of offering, the goal is to build a reliable, secure and efficient cloud platform that enables partners to build their application in the SaaS layer. “That’s our overall strategy. The goal is to make computation easier and to make data intelligent and work for the customer, as well as work for our partners.”

Alibaba Leading Cloud Computing In Asia Pacific 

Alibaba may be a late entrant in the Indian market; but, it already has a lion’s share in Asia Pacific cloud market. Li said,

“In terms of positioning of our cloud offering. I’m proud to say that we are number one in the Asia Pacific market. We are leader in this market. We do better in this market than AWS or Google Cloud.”

Gartner’s report affirms Li’s claim. According to Gartner, with 19.6% market share, Alibaba Cloud tops in the Asia-Pacific cloud market for IaaS and infrastructure utility services (IUS) for the second year in a row. AWS comes at second spot with market share of 11%, followed by Microsoft with a market share of 8%.

“Asia Pacific broadly includes India and Southeast Asia, China, Japan, Korea and many other countries. We are number three worldwide. In terms of database revenue, we are only after AWS and have beaten Google Cloud and Oracle in the cloud database market.”

While AWS is currently a leading public cloud leader player with a 51.8% share in the cloud infrastructure market globally, Microsoft follows at 13.3% market share and Alibaba is distant with 4.6% share.

Size Or Segment: What Matters For Alibaba?

Speaking on the India strategy, Li explained that instead of questioning whether to cater to MSMEs or large companies, the idea has been to engage with internet consuming companies first. “We first look into whether it’s an ecommerce company, fintech or a traditional manufacturing company. Then, we look at the size of company, whether you’re a small or medium sized. This is mostly because internet companies are more tech-savvy and are agnostic and quick to learn new technologies.”

Alibaba Cloud is looking to build a partner network in India as well and in fact has already partnered with numerous Indian IT giants including HCL. These partners help Alibaba Cloud with their large distribution network. For Alibaba Cloud, the size of a company is not an issue, as it’s capable of serving companies of all sizes, Li pointed out.

“Company size itself is really not a key factor for Alibaba, but the segment we play with will give us the key strategy for the business.”

Alibaba Cloud is also the backbone of Alibaba ecommerce and it handles the database management for Alibaba. This is where Alibaba has a clear advantage said Li.

“During the Singles Day sale which happens on November 11 every year, we have witnessed unseen technical challenges. We sustained at peak time, which is like 5,40,000 orders per second. That’s a marvellous achievement. That’s a strong test, to the maturity to the stability, reliability, and scalability of our products.”

Further, Li stated that as a cloud service provider, Alibaba Cloud is compatible with open-source databases such as MySQL, PostgreSQL, Redis, MongoDB, and HBase, commercial databases such as SQL Server and PPAS, and databases of its own such as POLARDB and HybridDB.

“So, we had two things in mind while building our cloud services. First of all, we tapped on to the healthy and rich, open-source and open ecosystem that already exist. Many of our products comply with the standard ecosystem that’s already here, for example, PolarDB, as I mentioned, and our key database product. The second strategy, of course is to work with local companies.”

Like other cloud companies, Alibaba Cloud too is engaged with India’s developer community in order to raise awareness about its products and services. The company has already set up two database centres in Mumbai with a former Paytm exec heading its database team in India.  “We have to build a strong developer network to build a strong ecosystem while moving forward. This is our strategy pertaining to the Indian market.”