After reviewing the fiscal earnings report for 2019 and the most recent quarterly report from June for the ‘big three’ cloud providers, we thought it was time to take a closer look at the Alibaba Cloud market share. Looking at the numbers, it’s obvious that AWS is still number one overall, but other cloud service providers are not trailing far behind.
Alibaba is at the top of the market in Asia, and dominating in China with cloud revenue up 66% year-over-year. While Alibaba is in the top 5 CSPs worldwide, they still have a lot of plans for the future to maintain this growth and continue to move up. Here’s the deal with Ali Cloud and why it should not be overlooked in 2019.
Note: a version of this post was originally published in May 2018. It has been completely rewritten and updated for 2019.
Alibaba Cloud at a Glance
Following Amazon’s AWS, Google Cloud, and Microsoft Azure, AliCloud is making headlines of its own after they released their latest quarterly revenue and full fiscal year 2019 reports:
- Alibaba Cloud sales up 66% in Q1, hits $4.5 billion annual revenue run rate
- Alibaba Stock Is Riding High on Growth in Cloud, Global Operations
- Cloud wars: Big Four providers increase dominance, Alibaba grows fastest – Gartner
To see how much the Alibaba Cloud has grown, here are the 2018 headlines we gathered last year:
- Alibaba’s fourth quarter cloud revenue puts it on $2.8 billion annual run rate
- Alibaba Expects Faster Revenue Growth on Commerce, Cloud Businesses
- Alibaba: Cloud Up 101% YoY to $2.135B
Here’s what Alibaba’s 2019 annual reports tell us:
- Cloud computing revenue grew 66% YoY in the most recent June quarter to $1.134 billion.
- For 2019, Alibaba’s annual cloud revenue reached $3.68 billion for the full fiscal year, an 84% increase from last year.
- In comparison, AWS growth was at 45 percent for the same period, and Azure was a surprising 64% YoY – the lowest it’s been in years.
- However, Alibaba’s cloud revenue can’t quite compare with the $30 billion and $33.7 billion generated for 2019 by AWS and Microsoft Azure, respectively.
- Alibaba Cloud, or Aliyun as some call it, accounts for 7% of Alibaba revenue. For comparison to the other big cloud + retail giant, AWS accounts for 13% of Amazon revenue.
- According to IDC, Alibaba Cloud has grown by 76% annually to hit $1.51 Billion in revenue.
Ali Cloud’s Market Presence
Alibaba is growing its market presence, not only with a firm hold over Asia, but also securing a spot as one of the top 5 cloud providers worldwide. Synergy Research Group reported Q2 2019 cloud market share numbers: Amazon 33%, Microsoft 13%, Google 8%, IBM 6%, and Alibaba 5%. Although Alibaba ranks lowest among the top five, they show consistently steady, upward growth, and land only a hair shy of catching up to IBM at 6 percent.
While AWS has a third of the total market share, Alibaba is holding onto a whopping 47.3% of China’s cloud computing market share. Out of all the China cloud providers, Alibaba is clearly in the lead with the biggest market share. According to Canalys findings, the closest competitor Alibaba Cloud has is Tencent Cloud who holds 15.4% of the China cloud market share. AWS comes in third holding 8.8% of the cloud market share in China.
So far this year, they have opened a second data center in Japan, as well as Indonesia. With the two data centers in Japan, AliCloud will offer 50+ services, such as elastic computing, image search, database, networking, disaster recovery, and storage services. These services can cater to key sectors.
Not only is Alibaba Cloud expanding their cloud footprint in the Asia-Pacific, but they have also recently expanded their reach to offer services in Brazil. They are focused on the bigger picture and continuing to increase their presence in the global marketplace. The company is growing at a rapid rate thanks to an increase in average revenue per customer. Alibaba is currently operating at a global scale in 55 availability zones across 19 regions around the world.
Not only is Alibaba expanding the number of data centers, but they also launched over 300 new cloud services during the June 2019 quarter. These include products and features that are related to core cloud offerings, security, AI applications, and data intelligence. On top of that, Alibaba also caught attention when it was named Salesforce’s exclusive provider in China. In an effort to expand their SaaS offerings, Alibaba cloud announced their SaaS Accelerator program. The goal of the SaaS Accelerator is to enable a seamless integration of SaaS offerings for vendors running on Alibaba Cloud.
We have seen that they are the public cloud provider that has shown the most YoY growth and Aliyun is proving that they are a force to be reckoned with and are showing no signs of slowing down anytime soon.
What People Are Saying
John Dinsdale, chief analyst and research director at Synergy Research Group, says “While not all cloud providers have released their Q4 numbers yet, it is quite evident that Alibaba growth has once again outpaced overall market growth”
Daniel Zhang, CEO of Alibaba Group, says “Our growth is driven by the power of Alibaba’s cloud and data technology that helps expedite the digital transformation of millions of enterprises.”
“The growth, evolution, and operating margin profile of Alibaba’s cloud services are following, and should continue to follow, the same path. At present, AWS represents only about 1/9th of Amazon revenue but generates over 60% of its operating profit. There is little reason to believe that Alibaba’s cloud business will somehow veer off trajectory and be different,” said John Freeman, equity analyst at CFRA Research.
“Alibaba’s advanced, secure infrastructure and knowledge of these markets will empower our global customers with a solution that meets local business needs,” said Salesforce, Alibaba’s newest strategic partner.
Alibaba Cloud Market Share – 2019 and Beyond:
So as we continue to see Alibaba cloud market share growth, could they be the next big cloud provider in 2019? Will they jump into the ‘big three’ or will it become a ‘big five,’ including IBM market share? What we know for sure is that we can expect more growth, and that’s a good thing for all of us because growth drives competition, innovation, and better offerings for all. The cloud market is constantly changing, so while we continue looking at AWS, Azure, Google, and IBM in the next year, we’ll also be keeping an eye on Alibaba Cloud to see what they bring to the table.
It’s unlikely that Alibaba will be keeping up with AWS, Azure or GCP in the United States anytime in the near future. We’ll keep up with the changes in the cloud market to see if this changes.