Alibaba Cloud Snags 1M Paying Customers

Scott Ferguson

Alibaba Cloud, the infrastructure-as-a-service (IaaS) division of the online retail giant, is now boasting more than 1 million paying customers as it looks to expand its operations beyond China into other markets, including the US.

On Thursday, the company released its first quarter 2018 results, which showed overall revenue hit more than 50 billion yuan or $7.4 billion -- a 56% year-over-year increase. Much of the growth is driven by the company's ecosystem of merchants selling goods and services to consumers in China.

However, Alibaba Cloud is the one division that reached a major milestone.

During the quarter, the division added 137,000 paying cloud customers to bring the total to 1,011,000 -- the first time in the company's history that it made this mark. However, although revenue increased 96% year-over-year, the cloud division posted an operating loss of 352 million yuan or $78 million.

Alibaba HQ
(Source: Thomas Lombard via Wikicommons)
Alibaba HQ
(Source: Thomas Lombard via Wikicommons)

Overall, Alibaba cloud posted revenue of 431 million yuan or $359 million, and boasted of customers in China including CITIC Group and China Huaneng Group, which are both using its platform for hybrid cloud.

In a way, Alibaba Cloud is doing much the same as Amazon Web Service did when it started: sacrificing profit in order to gain market share and customers.

"Market expansion remains our top priority, and we will continue to invest to acquire customers by developing innovative solutions and deploying efficient and cost effective products and services," according to the company's August 17 statement.

The one significant issues blocking Alibaba's growth is its global footprint, which is limited to mainland China. However, that is about to change soon as the company is preparing to build two data centers in Southeast Asia -- one in Malaysia and the other in Indonesia.

In June, Alibaba Cloud inked a deal with Equinix that will allow its cloud service to work on the Equinix Cloud Exchange, which gives customers private access to public clouds. AWS, Microsoft, Google, IBM and others also work on the same exchange. (See Equinix, Alibaba Eye Cloud Expansion With New Partnership .)

While Alibaba Cloud might still be considered a regional player, it's growing. In the latest Synergy Research survey, Alibaba, along with Oracle, are considered the fastest-growing cloud providers in the world. Alibaba is also now the fourth-largest IaaS provider globally thanks to its base in China. (See AWS, Despite Slowdown, Reigns Over Cloud Market – Report.)

AWS remains the global leader in cloud, controlling over 30% of the market, with Microsoft Azure a distant second at 11%, according to the report.

Keep up with the latest enterprise cloud news and insights. Sign up for the weekly Enterprise Cloud News newsletter.

Related posts:

— Scott Ferguson, Editor, Enterprise Cloud News. Follow him on Twitter @sferguson_LR.

(3)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
User Rank: Light Sabre
8/29/2017 | 9:31:25 AM
Re: clouds
Yes, it does seem that Alibaba will have a very very long run to catch up with Amazon. Despite the " added 137,000 paying cloud customers to bring the total to 1,011,000," they are still posting losses big time. But who knows what might happen over the decade as the Chinese company gets it's plans moving in worldwide expansion.
User Rank: Light Beer
8/21/2017 | 7:20:42 PM
Re: clouds
@Ariella: I wouldn't expect it. AWS is so far ahead right now that the company would have to nearly collapse in order for others to get even close to it. 
User Rank: Light Sabre
8/21/2017 | 6:16:18 PM
So AWS remains the leader by a wide margin. Do you expect that will change in a few years?
More Blogs from Scott Ferguson

For the last several years, CIOs and IT professionals have been wrestling with two specific issues as they work toward a cloud-centric future: Agile IT and the rush toward digital transformation. While enterprises want to keep innovating, finding a starting point and knowing which projects to tackle first remain a major obstacle.

To get a better handle on Agile IT and digital transformation, Light Reading Managing Editor Scott Ferguson recently spoke to two experts in these fields: Dan Kearnan, senior director of marketing for cloud at SAP, and Roy Illsley, a distinguished analyst with Ovum.

From its roots in industrial farm machinery and other equipment, John Deere has always looked for a technological edge. About 20 years ago, it was GPS and then 4G LTE. Now it's turning its attention to AI, machine learning and IoT.
Artificial intelligence and automation will become more integral to the enterprise, and 90% of all apps will have integrated AI capabilities by 2020, according to Oracle CEO Mark Hurd.
IBM is now offering access to Nvidia's Tesla V100 GPUs through its cloud offerings to help accelerate AI, HPC and other high-throughput workloads.
CIO Rhonda Gass is spearheading an effort to bring more automation and IoT to the factories making Stanley Black & Decker tools and other equipment.
Featured Video
Upcoming Live Events
September 17-19, 2019, Dallas, Texas
October 1-2, 2019, New Orleans, Louisiana
October 10, 2019, New York, New York
October 22, 2019, Los Angeles, CA
November 5, 2019, London, England
November 7, 2019, London, UK
November 14, 2019, Maritim Hotel, Berlin
December 3-5, 2019, Vienna, Austria
December 3, 2019, New York, New York
March 16-18, 2020, Embassy Suites, Denver, Colorado
May 18-20, 2020, Irving Convention Center, Dallas, TX
All Upcoming Live Events