Greetings from Cloud Town – Alibaba Computing Conference 2018
Last week PAC attended Alibaba’s huge computing conference in the company’s home town of Hangzhou, China. The event was enormously popular – the scale of public participation that justifies a whole phalanx of emergency services staff on stand-by. It was held in “Cloud Town”, part of Alibaba’s enormous permanent campus, which rivals the high-tech headquarters of Mountain View and Cupertino for scale, if not for theme-park exuberance.
The official theme of the event was “Empowering Digital China” and certainly in this part of China, the impact of digital is already omnipresent – far more so than in London, Paris or New York. From the ubiquitous mobile payments (used by everyone for everything) to the huge popularity of the Didi ride-hailing service (the firm that acquired Uber China in 2016), China is the most vivid embodiment of digital transformation. Alibaba is determined to be the powerhouse delivering such new capabilities, both at home, and increasingly abroad.
Cloud in China is a great example of “the right service in the right place at the right time” – because so much of China’s adoption of IT has happened during the cloud era. This means that unlike in the West, China’s transformation landscape features a far greater proportion of net new workloads (the easiest to deliver on cloud), and by implication much less need for more difficult legacy migration.
At this year’s computing conference, the company’s chairman Jack Ma chose to focus on New Manufacturing. As he explained, while the manufacturing sector is not regarded as a hotbed of digital innovation, “New Manufacturing” will transform this perception, ushering in an era of on-demand personalisation. Data will be critical to enabling Alibaba’s vision of New Manufacturing, which will pivot the sector from creator-focused to user-focused, connecting end-consumers through complete retail supply-chains though to the point of manufacture.
Underscoring the company’s commitment to developing within the manufacturing vertical, SAP CEO Bill McDermott and Alibaba CEO Daniel Zhang used the conference to announce a joint partnership to make S/4HANA available on the Alibaba cloud.
This announcement highlighted a key and perhaps obvious takeaway from the conference: China is a huge and thriving economy (second only to USA by GDP) that due to the Golden Shield project, is difficult to service electronically from overseas: Foreign organizations of all types planning to expand within China need somewhere local to host their critical systems and tool. This is true of SAP (hence the announcement) but will also be true for many other applications that organizations rely on to support their operations. The opportunity is huge and growing, since more and more organizations are app-enabling their services, from healthcare to home automation to personal transportation. For many organizations, Alibaba or one of its local competitors will offer the easiest solution for quick and easy delivery of a China-based domestic IT platform. This represents what Alibaba terms its “Go China” strategy.
The corollary of this is the company’s “Go Global” strategy, which is about enabling China’s home-grown MNCs to expand worldwide on a familiar platform. This explains the company’s cloud instances on the US East and West coasts, and in Germany (delivered in partnership with Vodafone). The company has also announced future availability of an additional cloud instance in the UK, which will enable the offer of resilient solutions for “Go Global” customers targeting the EMEA region.
Highly unusually for a large tech conference, the event directly addressed a political topic: the emerging trade war between the US and China. Several speakers including Jack Ma appeared resigned to a protracted period during which trade with the US will be difficult. However the company seems determined to follow Churchill’s maxim to “never let a good crisis go to waste”, believing instead that the trade war will create an environment that further fosters innovation and creativity within China – which Alibaba will turn into further growth opportunities.
The conference covered a lot more than just cloud – IoT, smart digital platforms, security and AI were all big at the event – but cloud is a critical foundation for almost the entire Alibaba ecosystem. According to Simon Hu (President of Alibaba Cloud), over time cloud will develop into the company’s second largest source of revenue, second only to ecommerce.
Outside of cloud the company’s most compelling work seems to be in AI, which it is using to power everything from Smart Cities, Manufacturing, Supply Chain, Agriculture and more.
While from a distance, Alibaba appears to be China’s answer to AWS, Alibaba’s huge investments in AI suggest it has successfully leap-frogged a generation of US tech. If so it may have managed a complicated trick: delivering services that (it claims) are mostly compatible with AWS, while quietly evolving into China’s answer to Google.