Alibaba Cloud Continues Its Momentum in ASEAN as Competition Increases

A. Amir

Summary Bullets:

  • Alibaba Cloud strengthens its ASEAN presence with a new win in East Malaysia and its first event in Indonesia.
  • As competition intensifies, it is important for the cloud provider to expand its partner ecosystem, especially with the domestic players.

The Southeast Asia region (a.k.a. ASEAN) has been a new battleground for the hyperscalers for a few years. Cloud adoption is still relatively low compared to other markets. As the cloud becomes a commodity and the market grows, this opportunity has attracted global hyperscalers to expand their presence in the region. Alibaba Cloud opened its data centers in Malaysia and Indonesia in 2017 and 2018, respectively. Google announced in October 2018 that it will have its Indonesian data centers ready in early 2020, and AWS responded with a similar announcement in April 2019. These global hyperscalers are also offering their respective cloud stacks (e.g., AWS Outposts, Alibaba Apsara Stack, Google Anthos, and Azure Stack) for deployments in customers or third-party data centers to address the data residency requirement. They have also been strengthening their domestic presence by expanding the in-country sales forces and their partner ecosystem in the region through various collaborations with local providers, governments (such as universities), and other vertical players. Some of Alibaba’s recent initiatives include its partnership with SCC to offer Sabah Pay in East Malaysia and its first Cloud Day event in Indonesia.

Partnership with SCC to Offer Sabah Pay in East Malaysia

Alibaba Cloud announced its partnership with Sabah Credit Corporation (SCC) on February 13 to provide its infrastructure to enable a new e-wallet system, ‘Sabah Pay,’ in Sabah (a state in East Malaysia). Alibaba Cloud will offer its IaaS and expertise in fintech and e-wallet to provide an efficient and scalable platform to support the state government initiative to improve financial inclusivity and centralize all monetary transactions under one platform for a seamless experience.

The announcement shows not just another IaaS win for Alibaba Cloud, but also its capability to gain the trust from the state government to host an e-wallet system, which includes managing sensitive user information, while most other e-wallet providers still opt for private/on-premises deployment for security reasons. Scalability will be crucial for the new e-wallet systems considering the low banking penetration of the state’s 3.5 million residents, which may result in slow initial adoption. Alibaba Cloud also has an edge in e-commerce and fintech, especially with its track record of handling billions of transactions on Singles Day. After several collaborations with other government agencies in the previous year, this deal shows Alibaba Cloud’s continuous momentum in penetrating Malaysia and brings the provider a step ahead of the competitors, especially in the government sector.

Alibaba Cloud Day 2020 Indonesia

Alibaba Cloud held its flagship event (Alibaba Cloud Day) for the first time in Indonesia last month. Apart from bringing its senior management to speak at the event, there were also customers and partners (e.g., Serasi Autoraya, Blue Power Technology, and DCI Indonesia) sharing their experience working with the cloud provider. Key topics of discussion included the cloud in digital transformation, AI and analytics, e-commerce, fintech, and the ecosystem in the country. At the event, Alibaba Cloud also launched its Digital Empowerment Training Program, an initiative to collaborate with universities, incubators, and other tech players to offer cloud technology training to enterprises, lecturers, and educations in the country.

Compared to other ASEAN countries (apart from Singapore), Indonesia has been the main focus for the major hyperscalers like Alibaba, AWS, and Google. Alibaba entered the market in early 2018 and had an edge over the other hyperscalers at that time with local data centers to address the strict data sovereignty requirement set by the regulator. However, with just a number of collaborations and wins, the provider had not fully leveraged its early advantage until competitors announced their plans to expand their presence in the country. For example, telkomtelstra offers Azure-based hybrid cloud solutions, while AWS and Google plan to open their facilities in the country. AWS has also been adding new case studies and customer references including Advotics and Ayopop this year. The event and the launch of the Digital Empowerment Training Program are seen as positive moves for Alibaba Cloud in strengthening its brand in the country as well as a response to its competitors’ growing initiatives.

What’s Next

While there is an increasing demand for cloud services in ASEAN, there is still a gap with the available solutions in the market. The domestic providers such as the carriers and IT providers/system integrators have been offering cloud services hosted within the country for many years. However, their portfolios are usually limited to the basic infrastructure services (e.g., IaaS, PaaS, and SaaS) and lack added values such as security, database, IoT, and AI. Meanwhile, the global cloud providers (e.g., the hyperscalers) have a long service catalog but often lack local market understanding. Alibaba Cloud and other hyperscalers could address this gap by expanding its ecosystem partnerships to the domestic players, especially carriers and IT service providers. Hyperscalers have a partner network program but focus mainly on global SIs such as Accenture and DXC. However, the domestic carriers and SIs are usually the anchors in driving cloud services to enterprises and leading the domestic market. Alibaba recently announced its partnership with INET in Thailand and PLDT Enterprise in the Philippines for the Southeast Asia Games, but the partnership should comprise not just network interconnection and reselling, but also providing certifications and accreditations to deploy a range of services which would enhance their professional service capabilities.

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