Competition in the cloud managed services market is heating up. China-based e-commerce giant Alibaba recently announced its foray into the wider field, and Amazon Web Services could turn out to be its biggest opponent, according to Want China Times. In March, Alibaba’s cloud division, Aliyun, opened a data center in Silicon Valley in order to better serve U.S. customers. The company hopes to use its partnership with Equinix to deliver cloud infrastructure services to customers both in China and, eventually, the U.S., according to The Wall Street Journal’s Shira Ovide.
A rivalry in the making
Amazon and Alibaba are similar companies. Both run online retail sites to great global acclaim. Both have invested in the cloud services market. It makes sense that the two would be rivals. Although Alibaba is stepping lightly into the cloud infrastructure industry by first offering services to Chinese companies working in the U.S., the far-reaching implications of another player in the cloud field remains to be seen.
The two companies’ market forecasts show similar numbers. According to Want China Times, at market close on June 26, Amazon was worth $203.45 billion, and Alibaba’s market value was $205.29 billion. Amazon also suffered somewhat during 2014, eventually incurring a net loss of $241 million. It’s not clear what the future holds for Alibaba and its cloud arm Aliyun, but its cloud presence is getting bigger by the day: For fiscal year 2013, Alibaba’s cloud services generated sales of $125 million, Ovide reported.
“Every industry is affected by the cloud in some way.”
Where do we go from here?
The entrance of Alibaba into the U.S. cloud managed services market is telling of the health of cloud computing. Cloud infrastructure service providers will likely continue to see the growth of an already huge market. A 2015 report from Bessemer Venture Partners indicated that by 2018, the cloud computing market will probably be worth a staggering $127.5 billion.
Every industry is affected by the cloud in some way; some are more impacted than others. For instance, customer relations will get a boost from the cloud. The Bessemer Venture Partners report estimated that 62 percent of all customer relationship management software will be cloud-based by 2018. In addition, according to a new report by MarketsandMarkets, the health care cloud computing market will be worth $9.48 billion by 2020 – that’s a compound annual growth rate of 20.5 percent from 2015 to 2020. These are only two of the fields that are and will continue to be heavily impacted by the benefits of cloud computing.
As the market continues to grow, more IT functions will be conducted in the cloud. Infrastructure providers that offer private cloud computing will see increased demand. Enterprises that don’t want to get left behind in the race toward the cloud should choose a cloud services provider that can meet and exceed their expectations and that has critical experience catering to large companies.