Alibaba Cloud - anything new to offer?

As China's cloud behemoth lumbers into view we look at what it means for European firms

At the start of this year, Simon Hu, president of China's Alibaba Cloud, said he wanted it to "match or surpass" Amazon Web Services by 2019. He made this statement based on Alibaba's breakneck growth. While most of that growth has been within China itself, the company is looking to make inroads into other parts of the world too, on the back of the Chinese government's 'One Belt One Road' policy designed to connect China's infrastructure with countries in Asia and EMEA.

Yeming Wang

But there was little such braggadocio in evidence from Yeming Wang, general manager for Alibaba Cloud EMEA, when Computing interviewed him last week. Speaking in the company's recently opened London office, Wang's was a softly-softly approach, emphasising platform partnerships, support and vertical specialisations rather than direct competition with the likes of AWS and Azure. He also played down one of Alibaba's key cards - its economies of scale.

"Of course, pricing is one of the cards we can play, but we emphasise that it's not only the pricing because that's always the last thing to make a decision on. Today when people are thinking about cloud they're not only looking at the costs but also at how much business value cloud can bring, and this is exactly what we want to deliver especially in Europe.

It's not the pricing comparison but it's more a value comparison - Yeming Wang, Alibaba Cloud EMEA

"So it's how to deliver Alibaba technology and Alibaba innovation to help those companies with the digital transformation. It's the value of the big data, it's not the pricing comparison but it's more a value comparison."

Big numbers

Like Amazon, Alibaba began as a retail platform and later diversified into cloud. Beginning in 2009 the company completely overhauled its infrastructure creating a bespoke cloud platform in order to cope with rising traffic. Like Amazon, it later opened up its cloud infrastructure as the basis a public cloud service, but unlike Amazon, the majority of these cloud customers were consumers using its self-developed AliOS mobile operating system on their smartphones to connect to cloud services.

In 2014, the company went public, raising $25 bn in an IPO. Its current market capitalisation is estimated at $542 bn making it one of the 10 most valuable companies in the world. Like many things Chinese, the numbers are big. A combination of eBay and Amazon, Alibaba is now the world's biggest retailer as well as one of the biggest payment and financial services providers.

Last year the company launched Apsara, its scalable cloud platform. Aspara supports all of Alibaba's ecommerce and mobile services, as well as providing a basis for its PaaS and IaaS offerings.

The firm claims almost 600 million active users in China and around 20 million merchants on the core ecosystem. Wang said Alibaba commands 47.8 per cent of the Chinese cloud market, putting it way ahead of second-placed Tencent, which is in the low double figures. But in Europe's crowded cloud services market already dominated by US tech giants, the does Alibaba have anything new to offer, despite its obvious clout?

Wang mentioned the firm's focus on three main sectors fintech, retail and manufacturing where it can add value by calling upon its own considerable experience and expertise.

In the retail sector, it is focused on omnichannel sales to connect online, mobile and bricks-and-mortar stores. Meanwhile, for manufacturers there is a focus on AI, what the company calls its ET Brain, a mix of algorithms and data science services (other AI ‘brains' are also available, for example, Health Brain for medical diagnostics and City Brain for urban traffic control).

Alibaba is also a big player in finance with its Alipay mobile app (now part of Alibaba affiliate Ant Financial the highest valued fintech company in the world) and its roots in ecommerce. This a good fit for both fintech startups and traditional banks looking to transform in the face of PSD2, said Wang.

"We have not only the payment solution but also the banking solution. So for example in our banking solution you need three minutes to apply for the loan and one second you get it approved with zero manual human intervention. I can even use my handset. I borrow money from the bank. They have my credit score. This is something very innovative in the fintech world and even traditional banks want to adopt this kind of technology."

In China, Alibaba offers private cloud stacks to banks, something that separates it from AWS and Azure, he added.

Multi-cloud

Alibaba counts some large European companies among its customers, including Philips, Delloite, KPMG, Nestlé and Schneider Electric. Most are those are interested in increased access to the Chinese market, said Wang, adding that many big firms are also looking for a multi-cloud approach to avoid lock-in.

"Traditional companies choose multi-cloud because of vendor lock-in and they also want to have somebody from the eastern world in order to better serve their global development in Asia and China, this is the main reason why they choose us."

While many of its services are proprietary, a few familiar names are now hosted on its platform, including SAP, Kubernetes, Postgres and Docker.

Open sesame?

So is it time for more companies to choose Alibaba cloud? Certainly, it makes sense to try it out, said Sam Leng, test manager at hire car provider Tristar Worldwide. While there are no concrete plans to adopt, developers are experimenting with the free tier, said Leng.

The general perception is that they can do anything Amazon and Microsoft do, but potentially cheaper - Sam Leng, Tristar Worldwide

"The general perception is that they can do anything Amazon and Microsoft do, but potentially cheaper. However, it may take a while to adjust to the new interfaces and tools used if you were to switch from AWS or Azure. Also, they are still seen as a technology follower rather than innovating anything new in cloud services," said Leng, adding that Alibaba's historical China and Asia focus (it is a big player in countries like Malaysia and Indonesia) makes it a little-known quantity in Europe at this point.

Alibaba Cloud - anything new to offer?

As China's cloud behemoth lumbers into view we look at what it means for European firms

The rather sizable elephant in the room, of course, is that the Chinese government might demand access to the data. You don't get to be as big as Alibaba without having close links to the Chinese Communist Party after all, and while similar concerns exist with US cloud players with legislation such as the CLOUD Act, this is perhaps more of a known quantity.

"The regulatory environment in China where politics dominate everything means that everyone thinks encryption keys must be handed over for ‘national security' reasons," said Tristar's Leng.

Unless you are planning to host data in China this may be less of a concern though. Wang points out that in EMEA the company operates data centres in Frankfurt and Dubai, that data can be restricted in its location and that the company's cloud is compliant with GDPR and Germany's C5 security attestation.

"From the security and compliance point of view Alibaba is very much compliant with the different countries different laws," he said. Whether this would prevent the Chinese government accessing data on foreign soil, though, as with the US CLOUD Act, is not clear.

A CIO in the higher education sector told Computing that Alibaba Cloud might fit with his organisation's multi-cloud strategy, even if he didn't necessarily trust it on data access.

"We're are looking at it for the research side of things, for certain things like physics computations. Actually, we don't care if the Chinese steal it, it's nothing that's that intimate and it's in the public domain."

Of greater concern, the CIO said, is having to learn a whole new set of tools. "At the moment we're not doing very much there because it's yet another cloud you've got to figure out how to use."

Vertical integrations

To increase its visibility, especially among cloud-first organisations where it can really play to its strengths, Alibaba runs competitions to attract startups in areas such as AI, big data and cyber security. Its approach is to offer a self-service cloud platform to SMEs and vertically-oriented, value-added services to larger firms who may already be using other providers quite extensively.

"Vertical integrations would be good though if done well," commented Leng. "They are following Oracle and SAP I suppose but hopefully they won't overdo it - Oracle supposedly had nearly 1,000 products for different vertical industries and markets last time I looked…"

Ultimately, though, Alibaba's immediate success outside China may depend on the geopolitical situation - which the Trump White House seems to be doing its best to upend. Wang was not keen to get into the specifics of the looming US-China trade war except to hint that it might make Sino-European business links stronger.

"I actually believe that China is today attractive to global markets especially from Europe," he said. "So for me, we don't have a lot of worry about this, especially about Europe."

Clearly its early days in terms of Alibaba's journey around the world. Whether it makes sense for organisations to adopt it will depend very much on whether they are in its target sectors, how much they want to break into China, how serious they are about a multi-cloud setup and how worried about possible connections to the Chinese authorities. Whether it is just one more interface to learn or if it will offer something genuinely new to EMEA, remains to be seen, but things move fast in the world of cloud and open source.

We wouldn't be too surprised to see that price card being played fairly soon though.