Earlier today, tech giant Alibaba announced that it is investing $28 billion in its cloud computing unit due to demand surge. The company highlighted that it’s a crucial division that will help its future growth outlook.
The company said that the money will be allocated to infrastructures and developing technology that is related to its operations. The e-commerce giant confirmed that most of the funds will focus on its operating systems, networks, servers, and even chips.
In a statement, Jeff Zhang, head of Alibaba Cloud Intelligence, discussed the impact of the pandemic on the digital landscape. Zhang said that it has stressed the overall economy but also shifted the focus to the digital economy.
The technology company is the largest cloud computing provider in mainland China. However, the company still trails behind the likes of Amazon and Microsoft in the global market shares.
The firm now pushes to extend its international reach with the $28 billion (or 200 billion yuan) investment.
Technology news have cited that cloud computing is a critical area in the digital future and since then, Alibaba has pressed more effort. The company’s cloud computing services currently account for just 7% of its total revenue generation.
Daniel Zhang, the firm’s CEO and Chairman says he sees cloud computing as Alibaba’s main business in the future. The plan to shifts the company’s main business first came to headlines in 2018 when Daniel Zhang told the press.
The billion-dollar investment would help the firm’s expansion plans for its product and customer base in international markets. The company aims to rival the services of giants such as Amazon and Microsoft in the industry.
Competition in Mainland
A home-court advantage doesn’t always last for a certain company. And now, with the fast development of modern technology, the company’s reign in China is threatened.
JD.com Inc., otherwise known as Jingdong, was formerly known as 360buy and is Alibaba’s growing competition in China.
JD.com is one of the largest e-retailers in China and is also a growing force in the cloud computing sector. The company is known for its one-day or next-day delivery services in China.
And over the recent year, it saw an 18.6% increase in costumers. And in previous years, the company is looking to establish a strong foundation in supply chain development.
Despite growth prospects, both companies are not the biggest players in the global market. Before Alibaba takes over the global cloud computing market, it must also maintain its hold in the Chinese market.
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