Alibaba Cloud embarks on South East Asia expansion from Indonesia, says GlobalData

Ten months after launching its first data center in Indonesia, Chinese tech company Alibaba Group’s cloud computing arm has opened a second facility.

This strategic move will not only help the company to establish an early presence in Indonesia and diversify its business but also bolsters its international presence at a time when economic growth slackens and trade risks loom over China, according to data and analytics company GlobalData.

Alibaba posted 41% growth in year-on-year overall revenue to $17bn for the quarter ending 31 December 2018. Revenue from cloud computing business grew strongly by 84% to $962m during the reporting period. The company’s success up until this point has been mainly in China. However, the company is now looking for growth internationally.

Siow Meng Soh, Technology Analyst at GlobalData, says: “Outside of China, the company has gained some advantages by getting into markets such as Malaysia and Indonesia early. Indonesia is experiencing economic growth but its cloud market is relatively small. This is a strategic move since start-ups and SMEs in general are more ready to adopt a cloud-native approach and can become heavy cloud users as they scale up.”

GlobalData estimates the Indonesian infrastructure-as-a-service (IaaS) market in 2018 to be worth only about $90m (about 1% of the Asia-Pacific (APAC) cloud market).

Soh adds: “This is partly due to the lack of infrastructure and the presence of hyper-scale cloud providers in the country. This is expected to change as more competitors enter the market. For example, Google Cloud announced in November 2018 that Jakarta would become its eighth market in APAC.”

The second data center enables Alibaba Cloud to increase capacity, provide higher availability and improve disaster recovery capabilities. The company also launched the Internet Champion Global Accelerator Program to support the growth of start-ups and local talents. The program is launched in Jakarta and it will be extended to Bali in January 2019, as well as other global markets in the future.

Alibaba is ahead of its rivals in establishing presence in Indonesia and it wants to maintain the lead by strengthening its capabilities in the country. As part of its strategy, Alibaba Cloud has established a strategic partnership with PT IndoInternet as the distributor of its full range of cloud computing products and services.

Soh concludes: “Alibaba is investing heavily to stay ahead in product innovation, as well as expanding its coverage and partner ecosystem. The company is expected to maintain its growth momentum and more service providers are expected to offer managed Alibaba Cloud.”

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