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February 1, 2019

Alibaba Cloud sets sights on Indonesia as it seeks growth beyond China

By GlobalData Technology

Alibaba Cloud has launched a second data center in Indonesia after launching the first 10 months earlier.

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 will provide training, mentorship, and venture capital opportunities to enterprises and professional services. Already launched in Jakarta, it will be extended to Bali in January 2019, as well as other global markets in the future. This is a strategic move since startups and SMEs in general are more ready to adopt a cloud-native approach; and can become heavy cloud users as they scale up.

Alibaba’s cloud revenue continued to grow strongly by 90% YoY in the quarter ended September 30, 2018. Alibaba Group has the financial strength and it remains committed to invest in its cloud business following the footsteps of Amazon’s.

It has been focusing on keeping pace with competitors in rolling out new products. For example, its Smart Access Gateway (SAG) is a competing product against Microsoft’s Azure Virtual WAN. Some other key products launched globally in recent months include its Data Lake Analytics, Apsara Stack (on-premise private cloud) and Global Blockchain-as-a-Service. It now has an extensive product set to compete with AWS, Microsoft and Google.

Alibaba Cloud looks for growth beyond China

However, the company’s success up until this point has been mainly in China.

Outside of China, the company has gained some advantages by getting into markets such as Malaysia and Indonesia early. Indonesia is experience economic growth but its cloud market is relatively small. GlobalData estimates the Indonesian infrastructure-as-a-service (IaaS) market in 2018 to be worth only about US$90m (about 1% of the Asia Pacific cloud market).

This is partly due to the lack of infrastructure and the presence of hyper-scale cloud providers in Indonesia. 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 region in Asia Pacific.

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 to grow in Indonesia, Alibaba Cloud is strengthening its local channel network. Alibaba Cloud highlighted in the press release a strategic partnership with PT IndoInternet as the distributor of its full range of cloud computing products and services.

Other key partners highlighted include PT Blue Power Technology and PT Sistech Kharisma

The hyper-scale window is closing

Alibaba Cloud has in a short period of time establish itself as a major hyper-scale public cloud provider.

The company is investing heavily to stay ahead in product innovation, as well as expanding its coverage and partner ecosystem.

Alibaba is expected to maintain its growth momentum and more service providers are expected to offer managed Alibaba Cloud.

Rackspace, for example, is already an Alibaba global managed service partner helping customers to architect, migrate and managed Alibaba Cloud services.

HPE also announced in August 2018 that it became the first vendor in Australia to offer Alibaba’s Apsara Stack (on-premise hybrid cloud optimised for HPE servers) and it was planning to bring the offering to Asia-Pacific in the same year.

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