Alibaba Group Holding Ltd (NYSE:BABA) is gaining major traction in the Chinese cloud services industry due to two major factors that are favoring it.
One of the two most important factors that are creating the opportunity for Alibaba-backed Aliyun cloud services to grow is the increasing Chinese distrust in overseas service providers.
Secondly, the company is gaining from various small-sized deals with government bodies to provide cloud-backed services. The latest of these deals include the establishing of a cloud computing data centre, in the cloud city of Dalian. This northeastern port city will also work with Chinese authorities to provide online bill payment for government services.
Alibaba Group Holding Ltd (NYSE:BABA) Aliyun, the cloud services will build on the scale and gain much experience in the Chinese market, due to these government-linked opportunities. This will be much before overseas giant ecommerce and cloud services such as Amazon.com and Google Inc begin their foray into the Chinese cloud services market space.
As Chairman of Greater Chinese consultancy, APCO Worldwide, James McGregor adds, BABA is ‘grabbing’ business opportunities, playing on the insecurity of political decision-makers.
Chinese government now remains focused on controlling information, news, data as well as technology food chain. Therefore, the opportunities for companies such as Alibaba Group Holding Ltd (NYSE:BABA) abound, claims McGregor.
Globally, cloud services have gained market share due to the lowering of costs of data storage on the cloud, using remote servers. Besides, leading US-based market researcher IDC has found that the Cloud IT infrastructure is expected to grow by over 21% to $32 billion before end of 2015, over 2014 growth prospects. By the year 2019, IDC results forecast $52 billion growth.
Though, Aliyun is considered a small player in the cloud services, it already holds the largest of the Chinese market share in this segment. The scale it will soon be able to leverage due to its Chinese portfolio will allow it to gain expansion into global cloud services.