Alibaba Chairman Jack Ma and Other Key Speakers at the Alibaba Computing Conference
Billionaire Jack Ma, chairman of Alibaba Group Holding, speaks during the Alibaba Cloud Computing Conference in Hangzhou, China, on Oct. 13, 2016. Photograph by Qilai Shen—Bloomberg via Getty Images

Alibaba’s Cloud Services Are About to Get a Lot Bigger Outside China

Nov 21, 2016

Alibaba Cloud plans to open four new data facilities outside China, the cloud unit of Alibaba Holdings said on Monday, as it seeks to grab global market share from leading players Amazon.com and Microsoft.

The data facilities in Dubai, Germany, Japan and Australia will extend the reach of China's leading cloud computing service provider to every major continent, and marks the latest step in the unit's $1 billion infrastructure investment drive.

Also known as Aliyun, the unit has flourished domestically thanks to Beijing's strategic emphasis on building homegrown cloud technology, while foreign firms have grappled with stringent licensing restrictions in the country.

However, it accounts for a much smaller slice of the global market for cloud computing, defined as the storage of data on remote networks rather than local servers, which is expected to reach $135 billion by 2020, according to research firm Canalys.

Alibaba Cloud is forecast to take 7.8% of that market, while leading players Amazon.com (amzn), Microsoft (msft), International Business Machines (ibm), and Alphabet (googl) are expected to account for 69.1%.

Yu Sicheng, general manager of Alibaba Cloud's international business, said the unit's strength in China was a significant advantage and a lynchpin in the company's globalization plans.

"We have the U.S., Europe plus China, which is quite difficult," he told Reuters in an interview.

The new additions bring Alibaba Cloud's total number of foreign cloud facilities to eight, surpassing the six within China, though the majority of the company's data volume remains squarely within China.

It will launch the data facilities through partnerships with Vodafone (vod) in Europe, Softbank Group (sftby) in Japan and YVOLV in Dubai, a joint venture between Alibaba Cloud and Meraas Holdings.

Yu, however, declined to comment on when the unit will likely post a profit, even as it has seen six quarters of consecutive triple-digit growth, to become Alibaba's (baba) fastest growing business sector.

"Our focus is to keep expanding our market leadership and presence and this is our priority for now," he said.

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