Chinese e-commerce behemoth Alibaba has sent a strong signal to the likes of Microsoft and Amazon that they have a serious challenger in the cloud space. Alibaba and SoftBank announced Friday that they have formed a cloud computing joint venture in Japan. It underlines the Jack Ma-led company’s ambitions in the cloud space. The joint-venture, called SB Cloud Corp, will be headquartered in Tokyo.
Alibaba to get access to Japanese customers of SoftBank
The newly formed company will open a data center in Japan to offer data storage, cloud security services, processing solutions, and middleware offerings. It will tap into Japanese customers of SoftBank ranging from startups to large corporations. It gives Alibaba direct access to SoftBank’s existing customer base. Under the terms of the deal, SoftBank holds 60% stake in the joint-venture while the remaining 40% is held by the Chinese online retailer.
So far, Alibaba’s efforts to expand its cloud footprint in international markets have paid off. AliCloud revenues skyrocketed 175% YoY to $165 million in the quarter ending March, 2016. Last year, the Hangzhou-based company said it would invest $1 billion in cloud computing worldwide over three years. Its cloud revenues are expected to exceed $1 billion by 2018.
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Should Amazon, Microsoft be worried?
According to SunTrust Robinson Humphrey, cloud computing represents a $120 billion opportunity worldwide. The Chinese company has struck a number of partnerships with companies like Intel and Accenture and SAP. It has set up data centers in Singapore and the United States to woo international customers. The company also plans to open a data center in Europe by the end of this year.
It’s not the first time Alibaba and SoftBank are coming together. In fact, SoftBank is one of the largest shareholders in the Chinese e-commerce juggernaut. The two companies have previously collaborated on robotics. Last year, Alibaba invested $118 million in SoftBank Robotics Holdings. The Jack Ma-led company has been expanding overseas and diversifying its business into media, entertainment, and cloud to reduce its reliance on the Chinese e-commerce market. Investors fear that the cooling Chinese economy may adversely affect Alibaba’s e-commerce business.