Alibaba’s cloud services business launches two new data centres in Saudi Arabia to step up its overseas expansion

·3-min read

Alibaba Group Holding’s cloud computing unit will open two new data centres this week in Saudi Arabia, more than a year after the Chinese e-commerce giant committed to invest up to US$500 million over a five-year period in the largest country in Western Asia.

Hangzhou-based Alibaba’s joint venture in the country, Saudi Cloud Computing Co, announced the infrastructure expansion at a launch ceremony last Sunday in Riyadh, the country’s capital, where the Chinese firm was represented by Alibaba Cloud Intelligence International president Selina Yuan. Alibaba owns the South China Morning Post.

The Chinese firm’s partners in the venture include Saudi Telecom Co (STC), eWTP Arabia Capital, the Saudi Company for Artificial Intelligence and the Saudi Information Technology Co, according to a release published by the Saudi Press Agency.

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STC and venture capital firm eWTP Arabia Capital first announced their partnership with Alibaba Cloud on December 28, 2020, when the Chinese firm also made its commitment to contribute to Saudi Arabia’s Vision 2030 – the country’s strategic framework to diversify its economy and reduce its dependence on oil.

Alibaba Cloud’s mobile app icon is seen displayed on a smartphone on April 1, 2020. Photo: Shutterstock
Alibaba Cloud’s mobile app icon is seen displayed on a smartphone on April 1, 2020. Photo: Shutterstock

Cloud computing services enable companies to buy, sell, lease or distribute a range of software and other digital resources as an on-demand service over the internet, just like electricity from a power grid. These resources are managed inside data centres.

In Saudi Arabia, the Alibaba joint venture’s data centres will help provide a wide range of public cloud services to help step up digitalisation initiatives by small and medium-sized enterprises and major companies across a range of industries.

That expansion reflects the gains being made by Alibaba Cloud in engaging users in industries beyond the internet sector.

In June last year, Alibaba announced a US$1 billion investment to develop its cloud services in Southeast Asia. In March, Alibaba Cloud opened a new data centre in South Korea.

“Their collaboration in Saudi Arabia may serve as a breakthrough for the company in its future [revenue] performance,” Livia Li, a senior analyst at Frost & Sullivan, said in May after Alibaba’s March quarter earnings report. She indicated that overseas markets are expected to contribute more to Alibaba Cloud’s revenue.

Alibaba’s first Cloud profit cheers investors amid broader e-commerce slowdown

Alibaba Cloud, which offers cloud computing services in 25 regions around the world, recently reported that it turned in a full-year profit for the first time in 13 years. The firm reported a 1.1 billion yuan (US$164 million) profit for the 12 months to March 31, its first such result since 2009.

In its home market, Alibaba Cloud remains the biggest provider of cloud infrastructure services, according to a report in March by tech research firm Canalys.

Alibaba Cloud had a 37 per cent revenue share of that US$27.4 billion market on the mainland last year, data from Canalys showed. Ranked behind it are Huawei Technologies Co’s cloud unit, with an 18 per cent share in the same period, and the cloud operation of Tencent Holdings, with a 16 per cent share.

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