Apps & Software

Alibaba Moves Into Cloud Computing Business, Challenging Huge US Tech Firms

Alibaba Group Holding Ltd. (NASDAQ: BABA) will start to offer cloud-based services in the United States. These services are the cornerstone of the recovery of International Business Machines Corp. (NYSE: IBM) and critical to future sales at America’s largest tech companies, which include Microsoft Corp. (NASDAQ: MSFT) and Amazon.com Inc. (NASDAQ: AMZN). Alibaba has unusual resources. It is the largest e-commerce company in China, and it is bristling with cash from its recent initial public offering.

Recently, IBM announced its plans to increase falling sales. Cloud computing sits at the core of those plans. Amazon Web Services may pass the company’s e-commerce operation in revenue, according to founder Jeff Bezos. That means its cloud sales would approach $100 billion. Microsoft’s plans are just as aggressive. As it released quarterly earnings last month, the importance of the cloud was front and center:

“Microsoft is continuing to transform, executing against our strategic priorities and extending our cloud leadership,” said Satya Nadella, chief executive officer of Microsoft. “We are taking bold steps forward across our business, and specifically with Windows 10, to deliver new experiences, new categories, and new opportunities to our customers.

While the Chinese company played down its new move, the way it couched its intentions say otherwise:

Aliyun, Alibaba Group’s cloud-computing subsidiary, announced today it is opening a data center in Silicon Valley, planting a flag in the U.S. and marking the company’s first expansion overseas.

Already the largest public cloud services company in China with more than 1.4 million customers, Aliyun is little known outside of the mainland. Aliyun officials say they hope to change that with the opening of the Silicon Valley facility, through which the company on March 4 will begin selling cloud services to U.S. companies.

Said another way, the Chinese company intends to take aim at one of the most critical segments of the American big tech market.

ALSO READ: Post-IPO Low at Alibaba Could Signal Worse to Come