Alibaba's cloud business rockets amid pandemic

Sales up 59 per cent

Alibaba saw its cloud sales rocket in its last quarter, driven by both public and hybrid cloud adoption throughout the COVID-19 pandemic.

The Chinese giant's cloud sales shot up 59 per cent year on year to $1.7bn during the quarter ending 30 June, equating to eight per cent of the firm's total revenue.

Alibaba CEO Daniel Daniel Zhang said: "The pandemic has transformed the way enterprises work, accelerating demand for cloud infrastructure and services.

"If you look at our revenue breakdown, obviously, cloud is enjoying a very, very fast growth and what we see is that all the industries are in the process of digital transformation."

Alibaba remains the largest cloud provider in China, but Zhang said that analysts have pegged the US market as being much larger than in its homeland - indicating that there is still plenty of room for growth.

"To give you a global comparison of the China cloud market and the US cloud market, based on the third-party studies that we've seen, the China cloud market is going to be somewhere in the $15bn to $20bn total size range, and the US market is about eight times that," he said.

"So the China market is still at a very early stage and we expect, based on what we've seen of our customers, as well as observing the whole market growth, the China market is going to be a much faster-growing market in cloud than the US market.

"We feel very good, very comfortable, to be in the China market and just being an environment of faster digitisation and faster growth of usage of cloud from enterprises because we're growing from such a smaller base [than in the US]."

Zhang also reiterated Alibaba's desire to not get dragged into a price battle with its competitors in the IaaS and PaaS arena.

"As I said before, we don't want to just provide cloud in terms of infra services," he added.

"If we just do it as an infra service, as SaaS services, then price competition is inevitable, and then all the cloud service is more like a commodity business.

"Today, Alibaba's cloud is cloud plus intelligence services and it's about cloud plus the power of the data usage. So that's why we work hard to develop industry-specific solutions."