Alibaba Cloud's second UAE data centre on hold as it evaluates regional business

Company's first data centre in Dubai is operated by YVOLV - a joint venture between Alibaba Cloud and developer Meraas Holdings

Selina Yuan, president of Alibaba Cloud Intelligence International, sees huge potential in the Middle East. Ruel Pableo for The National
Selina Yuan, president of Alibaba Cloud Intelligence International, sees huge potential in the Middle East. Ruel Pableo for The National

The cloud computing arm of Chinese e-commerce giant Alibaba is assessing its Middle East and Africa business before deciding the fate of the previously proposed second data centre in the region.

The company opened its first regional data centre in Dubai in November 2016 and earlier indicated it would open its second in the UAE in 2018, but so far the customer demand has not been there to support it.

“Our resources at the existing data centre [in Dubai] are enough to support the current workflow of regional business,” Selina Yuan, president of Alibaba Cloud Intelligence International, told The National in an interview.

Alibaba's muted growth plan for the region is in contrast to the rising demand for cloud services. The public cloud services market in the MEA is projected to exceed $1.9 billion (Dh7bn) by 2020, double what it was in 2016, according to Statista, as more and more companies move their data, applications and servers to web-based cloud providers to lower costs and create efficiencies.

“Our regional hub in Dubai is acting like a bridge … linking Middle East with Africa and Europe. There are some good indicators in the market and we are very confident in expanding our regional business this year,” said Ms Selina, declining to comment on specific investments or growth predictions for the region.

"“We will support local SMEs, start-ups and unicorns to grow their business and also open their doors to China,” she added.

In May Alibaba Cloud joined forces with co-working giant WeWork and consultancy SoftBank Telecom China to offer a cloud platform to global businesses that are aiming to enter China or scale up their presence in the world’s largest consumer market.

The product includes skills training on the new technology, technical support and marketing solutions.

Established in 2009, Alibaba Cloud is ranked third globally behind Amazon and Microsoft in terms of market share in the public cloud services market, according to US researcher Gartner.

Global revenue from Alibaba Cloud increased 76 per cent year-on-year to more than $1.2bn in the first quarter of this year. Without disclosing MEA numbers, company officials said the same growth was reflected in the region. Alibaba Cloud has a global network of 58 data centres in 20 regions. Its Dubai operation is operated by YVOLV - a joint venture between Alibaba Cloud and Dubai developer Meraas Holding.

Some of Alibaba’s clients in the region include Khalifa University, Dubai Parks and Resorts, Arabic games developer Onemt and Mena Mobile. It foresees future growth coming from new internet technologies and e-commerce.

Beating global giants Microsoft and Amazon, Alibaba Cloud was declared number one in its home market of Asia Pacific with a fifth of market share, according to Gartner. Such a massive presence in Asia Pacific is helping its Middle East clients, Ms Selina said.

“Having this wide presence is helping us to grow the regional business as many enterprises want to access a wider market. Moreover, the Middle East region reflects the same business culture as that of Asia Pacific.”

Several global players, such as Microsoft, Oracle and SAP have established data centres in the Middle East.

For regional enterprises, moving to a cloud system hosted by a specialised company proves cheaper than creating their own infrastructure of servers, hardware and security networks.

Updated: July 1, 2019 07:48 AM

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