The Relentless March of Cloud Computing

Alibaba Group’s recent announcement to invest a further $1 billion into Aliyun, its cloud computing subsidiary, will mean it can now push on with its expansion into new markets, beyond existing data centers in China, Hong Kong, and Silicon Valley.

Alibaba appears to be following in the footsteps of Amazon and its Amazon Web Services (AWS), providing cloud-computing services to some of the mega brands of the Internet.

What is Cloud?

In the old days of the World Wide Web, clients would simply buy a server or two, stick them in a rack somewhere and bingo, you were on the Internet. All very good, but as your business (hopefully) grew, you needed more and more servers, more support people, more electricity, pretty much more of everything. Cloud does away with that by pushing the computing grunt work onto the likes of AWS or Aliyun. They have thousands, even millions, of these servers around the world in state of the art data centers and can scale capacity, availability and proximity to the customer in a matter of seconds. It’s a bit like renting rather than buying a car, but one that can suddenly grow 10 extra seats when you find you need to ferry a whole bunch of kids home from soccer practice.

Customer Interaction

Beyond practicality, cloud offers another huge opportunity for customer interaction. With essentially limitless computing power up in the cloud, personal devices like phones, watches or other smart devices don’t need to work so hard to do some pretty nifty things. Things like automated translation, monitoring your health or helping you buy something. This means these devices can be smaller, cheaper and use less power – perhaps the three most important factors that encourage consumers to adopt a new technology.

Cloud is big business. IDC estimates that spending on cloud computing in 2015 will hit $32 billion, up 28 percent on 2014. They suggests that this year 33 percent of all IT infrastructure spending will be cloud-based.

Challenges

Not everyone is completely sold on cloud computing. We are getting there, but there are still some hold outs from organizations like banks, who have understandable concerns about security and the fact that their software and data is somehow ‘mixed up’ with everyone else’s and not protected by one of those big strong steel doors that you still get on the front of many server racks.

Alibaba is a respected and successful company, but it is also a Chinese company (albeit listed in the U.S.). Is the world ready to entrust its business operations, confidential customer data and intellectual property to a company that has its headquarters in a country where technology stories often lead on censorship, hacking and intellectual property abuse?

Alibaba and Aliyun are respected international businesses, but some may still ask – why take the risk? After all, ‘no one ever got fired for buying IBM.’

This concern mirrors Huawei’s experience as the world’s largest telecommunication network infrastructure provider. Being Chinese, there are concerns about the security implications of using its equipment. This sees it banned from some markets and projects. Although this does not seem to have dented Huawei’s global expansion, with its aggressive pricing strategy and appetite for risk, Huawei is perhaps the default choice in many developing markets.

In the Footsteps of Huawei

Could this be Aliyun’s strategy? Driving into emerging and underserved markets? Thus supporting a computing generational jump in say remote parts of Africa, where suddenly low cost, accessible data clouds, SAAS applications and customers armed with cheap smartphones can leapfrog legacy e-commerce and computing and lead the way in becoming a truly digital, mobile society?

With the cloud secured by the Aliyun bridgehead, it’s the behemoth e-commerce parent Alibaba can follow. And follow it must.

Going Global

Alibaba’s Alipay and Tmall may be defacto standards for e-commerce in China, but they are virtually unknown by consumers overseas.

Alibaba’s international e-commerce business is only a tiny fraction of its Chinese business. With China’s economy slowing, this suggests that Alibaba needs to expand more aggressively internationally, moving beyond the somewhat obscure B2B sourcing of widgets that they are perhaps best known for at the moment.

A string of Aliyun data centers across growing emerging market locations might be the perfect vehicle to support that growth. First the cloud data center, then SAAS e-commerce, peer and payment tools, perhaps some consulting services and eventually new and emergent businesses, riding on these ‘Ali-Platforms,’ serving growing new consumer segments for whom transacting seems like it has always been this way.

Early Days

E-commerce is only the start. Alibaba and its competitors are spreading their wings across many other aspects of our lives, with potential services that can only really be delivered from the cloud. These might include healthcare management, banking, education and governmental services, even collaborative or distributed working.

What many of these services have in common is that they are not always effectively delivered in many emerging markets, if at all. The idea that these could almost literally appear out of the sky is a huge benefit for aspiring citizens, who, unaccustomed to traditional government welfare schemes, are perhaps more prepared to pay for things that will help transform their lives for the better.

Potentially a huge prize for the companies that provide and host these services and games that in many places might well be one that is winner takes all.

*Homepage image via Shutterstock