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Battle Looms Between Amazon.com And Alibaba For Global Could

Amazon.com, Inc. NASDAQ:AMZN

Amazon.com, Inc. (NASDAQ: AMZN) finally broke its silence regarding Amazon Web Service (AWS) earnings in its 1Q2015 report. The company disclosed that $1.57 billion to its top-line in 1Q came through AWS, clearly confirming that Amazon is far ahead of U.S. rivals in the cloud infrastructure market. Amazon had not disclosed financial details for its AWS business for nearly nine years.

amazon aws services earnings

Amazon.com is hoping to conquer the world cloud market with AWS, which is nearly seven years ahead of rivals such as International Business Machines Corp. (NYSE:IBM) and Oracle Corporation (NYSE:ORCL). While Amazon enjoys a strong lead in the domestic market, the company faces strong opposition in the global market and that is coming from none other than Alibaba Group Holding Ltd (NYSE:BABA).

As things stand right now, Amazon controls 28% of the global cloud infrastructure market. In comparison, that is far larger than Microsoft Corporation (NASDAQ:MSFT)’s 10% share of the worldwide cloud market share.

Global expansion

Amazon is building out data centers in a rapid pace, expanding outside the U.S. in markets like China where it has established its cloud servers locally. Building local data center is both away Amazon hopes to better serve its clients and also comply with some regulatory requirements in those markets. But at the end of the day, Amazon hopes to have a clearly differentiated cloud operation that will enable it win more business that rivals.

In Amazon’s aggressive global cloud expansion, it has been fairly smooth in markets like Ireland, Brazil and even Singapore. However, China is turning out to be a completely different case.

Alibaba question

Alibaba is not only having ambitious plans to grow its cloud service Aliyun globally, but those ambitions could slow down Amazon’s AWS in the global market. So far, Alibaba claims Aliyun is used by over 1.4 million customers. The plan is to expand internationally so that the Aliyun can serve Chinese companies operating around the world. Amazon too has global ambitions for its AWS business, which currently boasts more than a million customers globally.

In the domestic market, Alibaba seems to have a leg up against Amazon.com, Inc. China’s cloud market is still very young unlike the U.S. market that looks fairly mature by now. Given the favor that local technology companies have from the Chinese government, Alibaba looks poised to make more gains in China than Amazon.

Internationally, a major war looms between Alibaba and Amazon.com, Inc. Both companies are making huge claims about their cloud services. It is unclear who will finally carry the day in the cloud war, but Amazon has been able to stay ahead of U.S. rivals because of its unique cloud offerings. Focus on unique products could potentially enable Amazon to effectively take on Alibaba in the global market.

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