Alibaba Takes On Amazon, Google, And Microsoft Head-On In India’s Cloud Market

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Posted by Matt Walker  on May 31, 2018

It’s a battle between the emerging giant of the east and the pioneers of the west in the highly competitive Indian cloud computing market, as Alibaba prepares to take on the “big three”: Amazon, Microsoft, and Google.

The Chinese ecommerce behemoth, which announced international ambitions for its cloud business (called Alibaba Cloud/AliCloud or AliYun) in 2015, recently launched a cloud data center in Mumbai, India. Alibaba has been active in India since 2007, but this data center is the first notable cloud investment made by any Chinese player in India.

Alibaba’s decision to open an India-based data center looks like a step to kill two birds with one stone: grab cloud market share from the big three, and, allay data privacy fears by establishing a local data center. This was a logical move, and low risk given the company’s deep pockets; it has over $33B in cash & stock on hand. Alibaba’s progress in India’s SME segment is worth watching over the next few quarters. Alibaba aims to be a top global cloud player, and India is one important testing ground. It will also test Alibaba’s ability to navigate some messy international political conflicts.

AWS, Azure, and GCP all opened data centers in India in 2016-17

Global cloud giants Amazon and Microsoft continue to scale up their cloud businesses in India: Amazon pumped US$215 million mid last year into its Indian data services arm, which offers cloud computing solutions. Microsoft recently partnered with the Indian ecommerce giant Flipkart and ride hailing services provider Ola to provide custom solutions via its Azure platform. Google completed three data centers across India in 2017.

The table below summarizes the India presence & cloud capabilities of the world’s largest webscale network operators. Amazon, Microsoft & Google are shown first, as they have the largest presence locally, followed by Alibaba. Apple, Facebook, Baidu, and Tencent each have India operations but no local data center (yet).

Table 1: Webscale network operators in India: local presence & data centers

Company Commercial Operations Network Infrastructure
Amazon
  • Amazon India opened June 2013
  • Acquired local payments company Emvantage Payments Pvt. Ltd. in 2016
  • AWS India has six office locations in Bengaluru, Chennai, Hyderabad, Mumbai, New Delhi and Pune
  • Launched its India network with two data centers in Mumbai in 2016
  • Since the launch, AWS customer base in India grew by more than 50% from 75,000 in 2016 to 120,000 in 2017
Microsoft
  • Active since 1988
  • 6,500 employees
  • First of the top three cloud vendors to launch cloud data centers in India at three locations in 2015: Pune, Chennai, and Mumbai
  • Serves Central India, South India, and West India regions respectively
  • Provides all three forms of cloud: public, private and hybrid
  • Has more than 9,000 cloud partners in India
Google
  • Started operations in 2004
  • Approximately 1,850 employees
  • Launched its first cloud region in Mumbai, India in 2017, hosted across three data centers
  • Primarily serves West India and South India regions
Alibaba
  • Active in India since 2007, mostly through notable investments in online retail (Snapdeal), digital payments (PayTM), and online grocery (BigBasket)
  • First India-based data center launched in Mumbai in January 2018
  • Provides large-scale computing, storage resources, and Big Data processing capabilities
Apple
  • Started operations in 1996
  • Opened a development center in Hyderabad in 2016, and an app accelerator facility in Bengaluru in 2017
  • None in India currently
Facebook
  • Started operations in 2010
  • Has offices in Hyderabad, Mumbai, and Delhi NCR
  • None in India currently
Baidu
  • Launched its India office in Delhi NCR in 2015 which employs ~10 people
  • Claims to have 45 million active monthly users in India for its mobile applications
  • None in India currently
Tencent
  • Active since 2015 through investments in Indian startups such as Practo (2015), Hike Messenger (2016), Flipkart (2017) and Ola (2017)
  • Announced reviving its India business in early 2018, with an investment of US$200 million in gaming
  • None in India currently

Source: MTN Consulting

Alibaba is the only Chinese webscale provider with a data center in India.

Mumbai data center to support a range of cloud capabilities, including AI-based solutions

According to Alex Li (Asia Pacific General Manager – Alibaba Cloud), Alibaba’s new Mumbai facility is a “mega-scale” (aka webscale) data center that will cater to the regional customers in the Indian peninsula, and could support the regional cloud needs for the next 3-5 years. Prior to its construction, Alibaba provided services to a number of Indian companies through its data centers located elsewhere. Now Alibaba will be better positioned to serve these existing customers more cheaply and reliably, while offering localized services to address the increasing market demand from small and medium enterprises (SMEs).

The Mumbai data center provides a broad suite of cloud computing and data intelligence capabilities that include elastic computing, database, storage and CDN, networking, analytics and big data, containers, middleware, and security. In addition, Alibaba Cloud may introduce its proprietary AI-based offering, ET Brain, into the Indian market. ET Brain has applications in industrial manufacturing, city administration, urban transport, and logistics. This strategic step could help capture the lucrative infrastructure and government sectors in the country, as AliCloud has started to do in Malaysia where its City Brain AI-based offering is used to help ease traffic woes. Such an offering could play into the Indian government’s Smart Cities Initiative.

Alibaba will target the underpenetrated yet growing SME segment

In evaluating services, large enterprises tend to emphasize brand, reliability and global coverage issues. SMEs are more open to a new entrant, niche provider as long as the price is right. This is the case in India’s cloud services market. As cloud adoption rates grow in India, Alibaba sees an opening for itself in targeting the country’s 51 million-strong SMEs. This effort is a key part of Alibaba’s globalization strategy.

As a new cloud entrant, Alibaba needs to build its brand and customer confidence. Partnerships will help Alibaba build compelling service offerings. That’s especially important in the network space, where Alibaba needs on-ramps to its cloud network. Recognizing this, the Chinese cloud giant has partnered with Global Cloud Xchange (GCX), a subsidiary of Reliance Communications, to enable direct access to Alibaba Cloud Express Connect via GCX’s CLOUD X Fusion service. Prior to this, AliCloud relied on Tata Communications’ IZOTM Private Connect service.

But can it survive the increased scrutiny over data security concerns on Chinese players?

Alibaba’s reasonably priced offerings seem positioned well to gain interest in the Indian SME market. However, Alibaba is a Chinese company, and viewed as such by Indian government authorities. Many countries, including India, have raised concerns around data security and privacy in their dealings with Chinese tech companies.

Just a few months before AliCloud’s Mumbai data center launch, in fact, Alibaba faced a huge controversy in India: its internet browser offering, UCWeb, came under the Indian government’s lens for allegedly sending personal data on its Indian users to Chinese servers. Alibaba risked a ban if found guilty. A few months later, their mobile browser application was taken down from Google Play Store.

With this case fresh on the Indian public’s mind, Alibaba has worked hard to alleviate the fears of Indian customers and government authorities surrounding data security and privacy prior to its cloud data center launch. The company claims to comply with highest cyber protection standards recognized by a number of international organizations. For instance, Alibaba Cloud is the first Asian cloud provider to complete the assessment for the Cloud Computing Compliance Controls Catalogue (C5) set out by the Federal Office for Information Security in Germany with the additional requirements. This definitely boosts Alibaba’s credentials, as only five cloud providers, including Amazon and Microsoft, have obtained the C5 validation.

TAGS: Webscale/Hyperscale, Artificial intelligence (AI), Regulations & policy, India

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