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Alibaba to Take on Amazon Web Services with $1 Billion Investment

Alibaba: Where Does It Stand before Its 1Q16 Results on August 12?

(Continued from Prior Part)

Aliyun prepares to give serious competition to Amazon Web Services

Alibaba (BABA) plans to invest a whopping $1 billion in its cloud-computing arm Aliyun in order to challenge the popular Amazon (AMZN) Web Services (or AWS). The objective is to leverage the global cloud computing market worth around $20 billion, as estimated by analysts.

Alibaba has announced its plans to open new Aliyun data centers in the Middle East, Singapore, Japan, and Europe (EFA). Alibaba also plans to form partnerships with telecom and enterprise technology providers, including Intel (INTC) and Singapore Telecommunications.

Although Intel isn’t working to build its own public cloud to compete with AWS, it certainly plans to target regular enterprise companies. Intel plans to supply cloud vendors customized processors that can power virtual machines.

Amazon leads key segments in cloud services market

Amazon leads the key segments of the global cloud services market. According to a report from Synergy Research Group and as you can see in the above graph, Amazon leads the cloud infrastructure service market. For full year 2014, AWS’s share was 28%, followed by Microsoft (MSFT), IBM, Google, Salesforce, and Rackspace.

Aliyun, on the other hand, leads the cloud computing market in China. It recently set up its first data center outside China in the Silicon Valley in California to target Chinese as well as US clients. Amazon Web Services and Microsoft’s Azure, Aliyun’s rival cloud computing services, are working to increase their presence in China.

Aliyun has a competitive edge over Amazon and Microsoft in China due to its numerous clients and its ties to key government agencies.

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