Alibaba: Will it succeed being the AWS of China (and elsewhere)?

Alibaba is gunning to be the Amazon Web Services of China. There's no reason why it couldn't expand beyond its borders in a hurry.

Alibaba's fiscal 2015 results are impressive and the company just named a new CEO. The e-commerce giant is also hell-bent on mimicking Amazon Web Services on its home turf.

Can Alibaba succeed in the public cloud?

The company on Thursday reported fiscal fourth quarternet income of $467 million, or 18 cents a share, on revenue of $2.81 billion, up 45 percent from a year ago. Of that sales total, 80 percent of it was related to China commerce.

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For fiscal 2015, Alibaba reported revenue of $12.29 billion with net income of $3.92 billion.

In addition, Alibaba named Daniel Zhang as CEO. Zhang had been Alibaba's chief operating officer and is an eight year veteran at the company. Zhang was also a chief financial officer at Alibaba's Taobao Marketplace as well as operating chief.

What remains to be seen is how Zhang sees Alibaba's public cloud business. In a nutshell, Alibaba has outlined plans to create a Chinese version of Amazon Web Services. The formula for an e-commerce giant providing infrastructure as a service isn't exactly unique. Amazon has already proven the case.

Now it's Alibaba's turn. For the fourth quarter, Alibaba's cloud revenue was $63 million, up 82 percent from a year ago and 2 percent of total revenue.

For 2015, Alibaba's cloud revenue checked in at $205 million, up 64 percent from a year ago and 1 percent of revenue.

Not too shabby. Alibaba's presentation lists cloud infrastructure as a service as a major strategic priority in the future.


The big question is whether Alibaba will be content being the AWS of China. Can it expand into the U.S. market as well as emerging economies?

Possibly. In a research note, Forrester Research handicapped the public cloud race. The report was primarily focused on HP's plans in the cloud and noted that private cloud vendors will have to deliver public cloud capabilities to keep enterprises interested.

What caught my eye in the Forrester report was the firm's take on Alibaba. Forrester said:

Floating on a sea of cash and immense post-IPO valuation, Alibaba has signaled its intent to play in this space. Alibaba has publicly stated that its appetite is limited to Chinese companies doing business in the US. Don't believe it. Its real strategy is far more ambitious, but a China-centric customer base will probably grow to be a nice niche with which it can dominate over time as China's enormous economy continues to expand.

In other words, Forrester wouldn't count out Alibaba as a global cloud infrastructure as a service player. In the U.S., the field is AWS, Google, Microsoft and IBM joining the big cloud club. Other players looking into hyperscale services are likely to focus elsewhere.

The U.S., however, is ahead of the rest of the world when it comes to cloud. There's no reason why Alibaba couldn't be a China cloud juggernaut and then expand to other markets---especially emerging ones. If that formula sounds familiar that's because it is. Lenovo used that playbook well before. There's no reason why Alibaba couldn't run the same plays in the cloud.