Is Poland the opening Alibaba needs to break grip of Amazon, Microsoft, Google on cloud?

Central Europe's cloud market could be just what Chinese e-commerce giant Alibaba is looking for.
Written by Michiel van Blommestein, Contributor

The international cloud market is dominated by Amazon, Microsoft, and Google, while the e-retail space is usually controlled by Amazon or local parties. 

But it's no secret that Chinese giant Alibaba wants a piece of both markets as well. Central Europe, which is still a cloud frontier, is its battleground of choice.

On almost every list of leaders for public clouds, Amazon is in top spot, with Microsoft second, and Google third. The big exception to that hierarchy is in China and, by extension, Asia.

In its home market of China, Alibaba reigns supreme and, according to figures from Synergy Research Group, that gives them a runners-up spot for the entire Asia and Pacific (APAC) region. The online retail market shows something similar, with either Amazon or a local party ahead of the pack, and Alibaba playing some role with its AliExpress platform.

However, given the global status quo for the cloud, even a huge company like Alibaba would have issues getting its foot in the door. But central Europe may prove the opportunity it needs.

On the e-commerce side, things already look promising for Alibaba, according to one executive of a service that offers cashback incentive programs for online platforms.

"They are not the leaders yet," Jan Sikora, CEO and founder of e-commerce services company Planet Plus, tells ZDNet.

"The Polish market is dominated by Allegro, but now we suddenly see AliExpress shaking things up."

SEE: Special report: The future of Everything as a Service (free PDF)

Data from Planet Plus collected over the past year suggests that almost half of all transactions in Poland tracked by the platform come from AliExpress.

The Alibaba-owned AliExpress retail service is growing fast: in the first half of 2018, the total value of its transactions was almost on par with the whole of 2017. That growth has taken place in a market that eBay tried -- and failed -- to tackle between 2008 and 2013.

"Alibaba is going for one market at a time, working their way from east to west," Sikora says.

"Amazon was for a long time unwilling to ship products to Poland, and you still have to do it through their German subsidiary. AliExpress was open to Polish buyers from the very beginning."

Targeting shoppers on a budget is key here. "They have no peers when it comes to discounts. Products that would cost $20 on Allegro, would go for $10 on AliExpress, including free shipping."

There are even more opportunities in the market for cloud computing. Traditional, on-premise IT is still pretty much the standard.

According to Mateusz Gordon, director for digital transformation for central and Eastern Europe at services company PwC, the general view is that since 2017 roughly 10 percent of all companies in Poland use the cloud. Small and medium enterprises are especially lagging.

"On the other hand, market dynamics for cloud solutions in Poland are quite impressive, with growth rates on the level of 25 percent growth from 2015 to 2016 and 2016 to 2017, showing that the need to transition is well understand with companies investing in cloud solutions," Gordon says.

Artur Kaminski, chief technologist at IT services company Apex.it, also thinks that Polish organizations are still wary about moving to the cloud.

"We have relatively modern IT from the perspective of infrastructure and data centers", he notes. "Costs of owning infrastructure are also mostly lower than abroad."

He also points to the relatively strict data privacy law and regulations that are in force in Poland.

"Unfortunately for them, all major cloud providers are operating from other countries, and even if data migration is secure from a legal perspective, data control is still a concern."

Gordon and Kaminski both point out that low adoption rates are what providers outside the top three need, together with a growing interest in trading with China.

"Alibaba has two major differentiators," Kaminski says. "The first one is price, the second is location. If someone wants to do business with China and needs IT, Alibaba is already on the correct side of the Great Firewall."

SEE: Cloud v. data center decision (ZDNet special report) | Download the report as a PDF (TechRepublic)

Alibaba's cloud and attractive pricing could offer realistic options for organizations that already use AWS services, according to Gordon. That situation makes the distribution deal that Alibaba closed last summer with Poland-based ABC Data relevant.

"ABC Data is one of the largest IT distributors in Poland. It is significant that the company also has distribution in the Czech Republic, Slovakia, Lithuania, Latvia, Estonia, Romania, and Hungary. This gives Alibaba an entrance into all these markets for a good gateway to the whole region," he says.

ABC Data confirmed to ZDNet that it is planning to make its platform, including Alibaba Cloud, available outside its home country.

"ABC Data Cloud platform will be soon available outside Poland in other central and east European countries: the Czech Republic, Estonia, Romania, Lithuania, Latvia, Slovakia, and Hungary, with local language versions," wrote Piotr Skorzynski, head of cloud solutions at ABC Data.

"Moreover, Alibaba Cloud will leverage its resources from Alibaba Group to provide tailored solutions to businesses from central and east Europe that aspire to expand their operations in China and the Asia Pacific region."

He added that ABC Data offers a broad cloud portfolio including products from Microsoft, Kaspersky, and others.

"Seeking a partnership with Alibaba was a natural move since ABC Data always wanted to be offering a comprehensive environment through its cloud platform, giving the resellers and their clients a choice of vendors."

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