(CBN - Global) May 16 -- E-commerce heavyweight Alibaba Group Holding Ltd. [NYSE:BABA] has joined forces with Softbank Group Corp. [TYO:9984], Japanese telecoms and Internet giant, to form a cloud computing service targeting the Japanese market.
The joint venture, called SB Cloud Corp., will offer cloud computing services to local companies. Alibaba will hold 40 percent of shares in the joint venture, and SoftBank will hold the remaining 60 percent. The two companies have a long history of partnership. Softbank was an angel investor in Alibaba and remains the biggest single shareholder with a 32 percent stake.
Softbank will be primarily responsible for market development, and a data center will be set up to tap SoftBank's abundant local client resources. Alibaba subsidiary Alibaba Cloud Computing Ltd. will provide technical and product development, including data storage. The new venture will first offer its services to small businesses and will gradually expand to all industries including global ventures.
Amazon Web Services and Microsoft Azure, rival cloud computing services offered by e-commerce and Internet giants Amazon.com Inc. [NASDAQ:AMZN] and Microsoft Corp. [NASDAQ:MSFT], entered the Japanese market before Alibaba, but did not set up joint ventures.
As the dominant player in the Japanese internet industry, Softbank will enable Alibaba to gain a stronger foothold in the Japanese market than it has managed to do in other expansion efforts into the US, Singaporean and European markets.
Japan has a potential cloud computing market even bigger than that of China, Mr. Yu Sicheng, vice president and international business manager at Alibaba Cloud, said in an exclusive interview with CBN.
The Japanese market is expected to grow to USD3.5 billion next year, according to global market intelligence firm IDC Research Inc. Japanese companies have a very high degree of information technology specialization and used to be a global leader in the field.
With the rise of cloud computing, a growing number of Japanese companies have sought to migrate old computer databases onto 'the cloud.' It is a market sought after by all players, both big and small.
"Alibaba Cloud enjoys a certain degree of pricing competitiveness, however our strategy is not to lower prices, but rather to develop complete cloud computing solutions, and to offer unique services such as big data platforms," said Mr. Yu.
Cloud computing is defined as a 'new engine' at Alibaba. Alibaba Cloud posted 175 percent year-on-year growth in the fourth quarter last year, making it the fastest grower among the '3As' of AWS, Azure and Alibaba Cloud.