Alibaba may have a competitor in the Chinese market that is bent on overtaking it in the growing market for cloud computing services. Alibaba’s newest rival is Kingsoft Corp., a software company based in China; the company’s chairman is Lei Jun (co-founder of Xiaomi Corp.).
Kingsoft investing heavily in cloud
Kingsoft chief executive Hongjiang Zhang is investing in new businesses, from mobile games to cloud computing, to pull the company out of losses. Zhang told Bloomberg News in an interview that cloud services are expected to take off in the years to come as Chinese firms start to move their IT onto the Internet and no single company can hold a monopoly in the market.
Alibaba Vice Chairman Joseph Tsai said during the latest earning call that no Chinese company could match its capabilities in the space. Tsai described some of Alibaba’s rivals as “pretenders,” but Zhang is confident that his much-smaller company can compete with the online retail giant and other tech firms. In its latest quarterly report, Kingsoft cited IDC research showing that in 2015, it was the fastest-growing player in cloud services when the business more than tripled, Bloomberg noted.
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“In gaming and video cloud and healthcare, we are the leader, so I’m quite confident we will have our place and we’re gaining market share while increasing revenue,” Zhang said.
The CEO explained that being breakeven is not their priority, and he thinks it is not the priority of any company in China. Its cloud unit is the main reason for a near 30% increase in capital expenditures in its latest quarter.
Alibaba a social platform too
Alibaba is not just the Amazon.com or eBay of China, but rather, the e-commerce giant has been trying for years to push into social networking as well and is investing actively in startups like Snapchat. It appears the strong pursuits of Executive Chairman Jack Ma are beginning to pay off.
Alibaba’s Taobao mobile app, a riot of tiny print and icons, allows users to join a group chat for fishing enthusiasts to buy a new rod and other equipment and or book a trip. Tsai told Bloomberg that one has to provide more social features to capture the imagination and attention of youngsters.
“We want to continue the sense of community so that they’ll come back and engage with the platform,” Tsai said.
In 2003, the e-commerce giant started Taobao as an eBay-like site for entrepreneurs and small businesses to sell directly to customers.