Alibaba Maintains Stronghold Over Chinese Cloud Market: What's Behind The Outperformance

Alibaba Group Holding, Inc.'s BABA flagship e-commerce business is going through a lean patch, a function of domestic softness and intensifying competition. Can the company's thriving cloud business pick up some of the slack?

A new report released by Canalys shows that Alibaba remained the undisputed leader among cloud vendors in China.

Chinese Cloud Market Grows Strongly in 2021: China's cloud infrastructure services market grew at a robust 45% clip to $27.4 billion in 2021 on top of the 33% growth in 2020, Canalys said.
Pandemic-related consumption drivers such as remote working and learning, e-commerce and content streaming were responsible for much of the upside, the firm added.

Canalys expects the domestic cloud market to grow at a five-year compounded annual growth rate of 25% to reach $85 billion by 2026.

Related Link: Why This Alibaba Analyst Is Bullish Despite Tempering Near-Term Expectations

AliCloud Stays On Top: Alibaba Cloud commanded a dominant market share of 37% in the cloud infrastructure services market in 2021, Canalys said. This gave the company the number one position among domestic cloud vendors.

Alibaba's strong growth, according to Canalys, is due to long-term consumption commitments from key clients and an expansion of its business into traditional industries.

The company's business also received a shot in the arm from the recently launched "DingTalk with Cloud."

"DingTalk, a communication and collaboration platform for enterprises, will serve as an entry point for cloud services into traditional industry sectors. A low-code development platform based on DingTalk is designed to help these companies in their digital transformation strategies, reducing barriers and complexity," Canalys said.

Huawei took the second spot, with an 18% share of the market, and Tencent Holdings Limited TCEHY ranked third, with a 16% market share.

Chinese search engine Baidu, Inc. BIDU had a 9% market share and was placed fourth.

At last check, Alibaba shares were down 6.27% at $101.51.

Related Link: Here's Why Alibaba, JD.com, Nio And Pinduoduo Shares Are Moving

Photo: Courtesy of alibabacloud.com