Alibaba's cloud computing business grows 90 pct in Q2 of FY 2019
China's Alibaba Group Holding Ltd said Friday that its revenue surged 54 percent year-on-year to 85.14 billion yuan (about 12.35 billion US dollars) in the second quarter of its 2019 fiscal year, among which the revenue generated from cloud computing business increased 90 percent to 5.6 billion yuan (about 810 million US dollars).
Infrastructure as a Service (IaaS) is a form of cloud computing that provides virtualized computing resources over the Internet.
According to market research firm International Data Corporation (IDC), Alibaba constituted 45.5 percent of China's IaaS market in 2017 and three percent of the global counterpart in 2016, next only to Amazon and Microsoft.
In a bid to snatch market share from the two competitors, Alibaba pumped capital into cloud computing. In recent years, its investment has begun to pay off handsomely.
This income growth is generated from both growing paying users and soaring units per transaction (UPT).
As of the end of March 2016, paying users of Alibaba Cloud Computing was 513,000. After merely one year, this figure surged to 874,000, and hit the one million mark in the middle of that year, said Alibaba in a statement.
The huge success of Alibaba should also be attributed to China's promising market.
Official data showed in 2016, the overall size of China's cloud computing marketplace reached 279.7 billion yuan with a year-on-year jump of 41.7 percent, among which the public cloud service occupied 22.86 billion yuan.
China's cloud computing industry is projected to stand at 430 billion yuan, according to China's top industry regulator Ministry of Industry and Information Technology.
Despite the strong growth momentum, the e-commerce giant claimed its full-year revenue forecast would be adjusted to between 375 billion and 383 billion yuan, a drop of four to six percent from previous projection.
Given current uncertainties in macroeconomic conditions, the Group recently decided not to cash in incremental advertising inventory in the short term to "benefit small and medium-sized enterprises (SMEs) on the retail marketplaces".
"We will not blindly pursue high growth and high income. Instead, we will assist SMEs in boosting sales and profits to sustain their survival during global economic woes," said Daniel Zhang, CEO of Alibaba Group.