Amazon Vs. Alibaba: Cloud Computing & Infrastructure Growth

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Alibaba Group

Online retail giants Amazon (NASDAQ:AMZN) and Alibaba (NYSE:BABA) have both seen massive growth in their cloud computing businesses over the past few years. Both Amazon Web Services (AWS) and Alibaba’s cloud computing and infrastructure segments have outpaced the growth in total worldwide spending on cloud computing and infrastructure services. Alibaba has grown at a faster pace than Amazon, primarily due to the fact that it is primarily present in China, which is a relatively nascent and fast-growing market. Correspondingly, Alibaba’s cloud computing revenues are significantly lower than Amazon’s AWS revenues.

amzn1According to an estimate by Technology Business Research, the global cloud computing market is likely to continue to grow at a similar pace over the next few years. [1] It should be noted that the global cloud computing market size estimated in the report does not include certain sub-segments such as cloud business process services (or Business-Process-as-a-Service), cloud management, cloud security services and cloud advertising. Comparatively, the cloud computing market in China could grow at a CAGR of about 45% over the next few years, according to an estimate by Bain & Company. [2] Within public cloud services and cloud computing, Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) are likely to be the fastest growing sub-segments, which should help Amazon and Alibaba to continue to grow at a steady pace.

amzn2Moreover, more growth is expected from emerging markets, particularly in the Asia-Pacific region, compared to developed markets. In an attempt to consolidate its presence in the region, Alibaba recently signed an agreement with Japanese telecommunications and Internet provider Softbank to expand cloud computing operations in Japan. [3]

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our full analysis for Alibaba|Amazon.

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Notes:
  1. Roundup Of Cloud Computing Forecasts And Market Estimates, 2016, Forbes, January 2016 []
  2. Finding the Silver Lining in China’s Cloud Market, Bain & Company, July 2015 []
  3. Alibaba and SoftBank form SB Cloud, a cloud-computing joint venture in Japan, Venture Beat, May 2016 []