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Alibaba Partners Softbank to Offer Cloud Solutions in Japan

Alibaba Group Holding Limited BABA is expanding its cloud presence beyond its stronghold, China and is going about it quite aggressively.

In its latest step toward international expansion, Alibaba has partnered with SoftBank Corp. to launch cloud computing solutions in Japan.  SoftBank is the Japan-based telecom subsidiary of SoftBank Group Corp.

The two companies have formed a joint-venture cloud services company called SB Cloud Corporation, targeting the competitive cloud computing market in Japan.

Per this partnership, SB Cloud will open a data center in Japan and offer Alibaba's cloud security services, data storage and processing solutions, and enterprise middleware offerings to various companies ranging from startups to multinationals.

In return, Alibaba will be able to access SoftBank's existing Japanese business customer base that consists of several global organizations.

Alibaba did not disclose the financial terms of the deal but indicated that most of the allotted funds will be spent initially on the data center.

Vice President of Alibaba Cloud Sicheng Yu said, “We are proud that Alibaba Cloud can leverage its cloud computing expertise in the joint venture with SoftBank. We look forward to helping more Japanese companies grow their business with our secure, scalable and innovative cloud computing services.”

Representative Director, CEO of SB Cloud and Executive Vice President of SoftBank, Eric Gan said, “I’ve really enjoyed working with the Alibaba Cloud team on the joint venture over the past few months. During the business planning discussions, I quickly felt that we were all working very much as one team with one goal. I believe the JV team can develop the most advanced cloud platform for Japanese customers, as well as for multinational customers who want to use the resources we have available in Japan.”

As Alibaba focuses on international expansion, its efforts are mostly directed toward South East Asia, Europe and the Middle East instead of the U.S.

Recently, it partnered with Accenture and SAP China to not only strengthen its foothold in China but also expand in South East Asia.  It has also tied up with Korea-based SK Holding C&C to provide cloud services to Korean and Chinese companies. Its partnership with NVIDIA Corp. is aimed at enlisting1,000 developers to work on its big-data platform during the next three years.

This indicates that the company chooses to expand in relatively less-tapped markets and build its presence there rather than competing in places where Amazon.com, Inc. AMZN, Alphabet Inc. GOOGL and Microsoft Corporation MSFT are already well established.

Given the growing position of Alibaba’s cloud business in China and aggressive international expansion strategies, we believe that cloud computing will be one of its major growth drivers in the long run.

At present, Alibaba carries a Zacks Rank #5 (Strong Sell).

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