Alibaba to invest $28B in cloud over three years

Chinese tech giant plans to pump 200 billion yuan ($28 billion) over the next three years to boost its cloud play.

Alibaba has unveiled plans to invest 200 billion yuan ($28 billion) in its cloud business over the next three years, focusing on infrastructure development including servers, chips, network, and operating system. It will also deploy its proprietary technologies in its data centres "in the coming years".

The Chinese tech giant said in a statement Monday that this investment to build "next-generation data centres" would facilitate the delivery of improved cloud services and support its clients in driving their digital transformation initiatives, once business resumes after the coronavirus outbreak. 

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Alibaba added that technologies and products it developed, including the Apsara Distributed Operating System, artificial intelligence-inference chip Hanguang 800, X-dragon Architecture, and VSwitch, would also be deployed across its data centres in the coming years. 

The company currently operates data centres in 63 availability zones across 21 regions, including Singapore, Indonesia, Australia, and Malaysia.

In February, it marked a new milestone for its cloud business by crossing 10 billion yuan in revenue for the first time in a single quarter to hit around 10.7 billion yuan ($1.53 billion). Fuelled by demand in its public and hybrid cloud services, its cloud business climbed 62% year on year for its third quarter, ended 31 December 2019. 

However, cloud accounted for just 7% of Alibaba's overall revenue, the bulk of which came from its commerce units, which encompasses its retail and wholesale e-commerce as well as logistics businesses. 

When ZDNet asked Alibaba how much it was looking to push up this figure with the new investment and how much it had invested in its cloud business over the past three years, the Chinese vendor declined to elaborate. Asked if it planned to focus its investment on certain technology areas such as AI or quantum computing, it reiterated its plans to focus on cloud infrastructure development, covering areas such as servers, chips, networking, and OS. 

In response to questions about its growth markets outside China, Alibaba pointed to "robust growth" particularly in Southeast Asia and noted that it was the "only global public cloud service provider" to operate two data centres each in Malaysia and Indonesia.

Alibaba Cloud Intelligence's president Jeff Zhang said in the statement: "The COVID-19 pandemic has posed additional stress on the overall economy across sectors, but it also steers us to put more focus on the digital economy. By increasing our investment on cloud infrastructure and fundamental technologies, we hope to continue providing world-class, trusted computing resources to help businesses speed up the recovery process, and offer cloud-based intelligent solutions to support their digital transformation in the post-pandemic world."

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