AWS seems to be choosing its battles wisely, and while facing Alibaba in China comes with a number of disadvantages, Singapore is a different story altogether. Apart from being named the world’s most business-friendly country for a number of years in a row now, Singapore’s Internet economy is estimated to hit $200 billion by 2025. This is going to be an interesting match because even though Alibaba has a huge influence in the region, Singapore isn’t China, and if AWS is looking for a fair fight, this is definitely the place for it, which is why this appears to be the site for the first round in the AWS vs. Alibaba Cloud Wars.
The fight begins
The way the global giants throw their weight around strategically is almost like watching “Game of Thrones,” except the “armies” here are made up of lots and lots of money. Speaking of lots of money, Alibaba is pumping another billion dollars toward increasing its share in Lazada, its latest acquisition. Lazada itself was the first billion-dollar acquisition in Southeast Asia and has since set up a trade and logistics hub in Malaysia’s Digital Free Trade Zone and doubled its data capacity in Hong Kong. The “Singapore Story” here is that Amazon showed up with Prime and has got every industry from retail to logistics to financial services in the entire region expecting to feel shock waves.
Although the Lazada acquisition and the launch of Amazon Prime has got nothing to do with cloud computing, e-commerce is still a different battle of the same war that’s on for the cloud. The fact that both companies make their “bread and butter” mostly through e-commerce is just one of the striking similarities between both companies, and lot of people feel like the Amazon Prime vs. Lazada battle in Singapore is just an “exhibition match” before the real war for international cloud dominance: AWS vs. Alibaba.
AWS vs. Alibaba: King Kong vs. Godzilla?
Earlier this year, Lazada CEO Maximilian Bittner explained that Amazon wasn’t a concern by saying, “It’s very hard for me to worry about someone who has not actually entered the market yet and so far they’re not here. “I think once they’re here, we can start worrying about them.” Well, they’re here now and since he has a $250 billion gorilla behind him, the $400 billion gorilla in front of him probably doesn’t look as scary.
From the point of an IT manager, however, especially one in Southeast Asia, choosing between the two may not be as simple as simple as choosing whether to buy cheese and chocolate from Amazon Prime or Lazada. Cloud providers offer different pricing models, unique discounting options, frequent price cuts, different services, and different styles of billing. To add to the confusion, customer reviews vary as per their personal experience, which is always something unique.
Cheaper by the dozen
If we have to generalize, pricing and latency are going to be on top of any users list in AWS vs. Alibaba, and with regards to both, AWS seems to have the upper hand. AWS has dropped its rates about 52 times so far with current rates that are around half of those being charged by smaller clouds. Additionally, Amazon has about five times the capacity of the next biggest 14 competitors combined, so Alibaba Cloud is not going to win that war. Interestingly enough, though, a recent report at Financial Times says Alibaba has “almost” halved its core product prices.
Alibaba has three different price options to choose from, the basic one is $7.49 a month and comes with 1 core, 1 gig of memory and 40 gigs of hard disk space. A similar configuration from AWS costs around $9.50 a month on an average, though all calculations go out the window when you scale up or down. This is probably why there are customer comments stating there have been instances when Alibaba Cloud actually wast more expensive than AWS.
AWS on display
Another “cloud” implication of the Amazon Prime launch in Singapore is that it’s essentially an advertisement for the AWS cloud ecosystem for the entire region. Now millions of potential enterprise customers from Southeast Asia will witness a real-life example of how a customer-obsessed company operates with the use of AWS’s cloud infrastructure and an ecosystem of powerful tools and services both open source and custom made alike. There is also speculation that since AWS is a major client for a lot of cloud, data, and analytics vendors, this will accelerate the entry of these players into this region.
The above statement is funny to say the least, because that’s exactly the opposite of what Alibaba’s strategy is. Alibaba has an army of about 765,000 paying Chinese customers behind a “great wall” that are also looking to expand globally and would rather carry their cloud with them rather than deal with foreign providers they’re unfamiliar with.
Additionally, in the wake of Edward Snowden’s revelations last year about U.S. government surveillance, a lot of Chinese companies feel safer with a homegrown cloud provider. Expanding globally by following your customers is a safe strategy, and while AWS’s approach may seem “braver,” the effectiveness of either can’t be argued. While AWS is breaking into new territory to encourage its clientele to do the same, Alibaba Cloud can basically sit back and enjoy the ride while its clientele spreads across the globe.
With regards to their clientele, that’s a huge market to say the least, and it’s almost exclusively theirs. Almost because they do have some competition from the likes of other Chinese companies like jd.com. If you think AWS has got it rough with Azure and everyone else creeping up from behind, jd.com is probably the Chinese Azure and is even outpacing the overall growth of e-commerce in China according to The Wall Street Journal.
Also since it’s China, there’s not just one Azure creeping up on you but a bunch of them, like Tencent and Didi Chuxing, which have all expanded their operations in the region since last year and are setting their sights on further investment in this home to 620 million people.
Pound for pound
In the AWS vs. Alibaba battle, it doesn’t look like Alibaba is giving up much to AWS technologically. Paul Miller, senior analyst at Forrester, was quoted stating that “Alibaba’s cloud is certainly credible and technologically capable.” He also added that “superficially, it demonstrates a lot of similarities to AWS.” The problem non-Chinese customers will face, however, is the lack of documentation in English as well a communication/cultural gap with regards to customer service and business needs.
Alibaba is doing the best it can to fix this and has reportedly been working extensively with its “Chinese-US” customers as well as with U.S. companies to better understand the market. Alibaba also works with Nvidia on stuff like cloud computing, deep-learning and high-performance computing initiatives, so they’re definitely getting there. Their strategy for now, however, is pretty much to play to their strengths and follow their customers geographically.
AWS vs. Alibaba: Round 1
Alibaba founder Jack Ma was quoted saying that the “difference between Amazon and us is Amazon is more like an empire — everything they control themselves, buy and sell,” which is pretty cheeky since that statement better describes China than AWS. Singapore is constantly among the top 10 least corrupt countries in the world while China is ranked around 79th with the likes of Brazil and India. Singapore is also easily one of the most affluent and “westernized” countries in Southeast Asia with lots of money that’s going to be spent on enterprise and cloud technology in the near future.
It’s also worth mentioning that this is a great gateway into the Chinese market that AWS is trying so hard to crack. Spreading into other Asian countries that Chinese customers are more familiar with brings with it higher chances of influencing their choice of cloud provider. All in all, AWS vs. Alibaba is going to be a great chess match between two evenly matched, yet very different opponents with almost unlimited resources at their disposal. Definitely a great time to go shopping for cloud space in Southeast Asia.