Can Alibaba Cloud acquire Changting to seize the opportunity?
Editor’s note: This article is from the WeChat public account “US Stocks Research Institute” (ID: meigushe), Author US Stock Research Institute.
Alibaba is on the cloud service for another city. According to media reports, Alibaba Cloud intends to acquire Changting Technology. The main business of Changting Technology is focused on network security. After the acquisition, it will remain independent. Alibaba Group will fully support the business development of Changting, and Changting will also be Alibaba. The Group provides services to promote the development of Alibaba’s cloud services business. It is conceivable that Aliyun may take this opportunity to further enhance his technical level and market competitiveness.
This may increase Alibaba’s market share and lay the foundation for surpassing Microsoft in the future. But at the same time, we can also notice that Tencent Cloud is rapidly emerging, and its growth rate is the highest in the world. Although Tencent Cloud has not yet threatened Alibaba Cloud’s market position, it may become the biggest enemy of Alibaba Cloud in the future. After all, Alibaba Cloud’s market is mainly concentrated in East Asia, and Tencent’s power in East Asia is not lost to Alibaba.
Therefore, this acquisition may be one of the means by which Alibaba is responding to the rise of Tencent Cloud. However, its purpose is more likely to be the rising B-end market. With the success of Alibaba, Alibaba’s strength in the B-end market is growing. As domestic companies increase, the number of companies coming to China increases. Alibaba’s The B-end cloud service market will be a good business. In addition, Alibaba Cloud’s acquisition of Changting Technology may also be for its own development. The US Stock Research Institute will continue to pay attention to the follow-up development of the event.
Cooperate to improve technology level and solve security problems to increase market share
This acquisition is a cost-effective deal for both parties. For Changting Technology, he needs Alibaba Cloud technology and financial support. For Alibaba, he needs Changting Technology’s technology research and development in network security, and as a springboard into the network security market, this market size has already triggered the interest of the Ali Group. In addition, Alibaba Cloud can also solve the network security problem and prepare to further expand its market share in cloud services.
(1) Changting Technology Security Technology is second to none, Aliyun takes the opportunity to improve security services
Acquisition of Changting BranchThere are two main reasons for technology. Perhaps the most important reason is technology. Alibaba has gradually transformed into a technology, data-based company, so the technical requirements are getting higher and higher, this acquisition of Changting Technology will help Alibaba improve its technical level. According to media reports, as a new force in the network security industry, Changting Technology is more advanced in the web application firewall. In the past few years, Changting Technology has continuously innovated and upgraded products, forming a series of solutions for various scenarios, and successively released. The solution involves multiple directions such as finance, blockchain, internet, and cloud security.
Alibaba Cloud will also use this acquisition to further improve its security services. In the Internet age, network security has become the focus of research and development of various technologies. In particular, Alibaba Cloud is not only for its own use, but also provides cloud services for many enterprises. This makes security issues particularly important. The relevant data shows that among the public cloud vendors in China, the number of attacks against Alibaba Cloud is the highest, reaching 55.32%. The number of attacks against Tencent Cloud ranked second, at 27.34%.
(2) The network security market continues to grow, and Alibaba Cloud or expand the market share of cloud services
Another major reason for the acquisition may be to expand market share. One is the network security market. In October 2019, the China Cyber Security Industry White Paper (2019) released by China Information and Communication Research Institute shows that China’s network security industry maintains a rapid development trend. In 2018, China’s network security industry reached 51.092 billion yuan. , an increase of 19.2% compared with 2017, and is expected to reach 63.129 billion yuan in 2019. Alibaba Cloud used this acquisition to expand its competitiveness and influence in the network security market. Changting Technology has performed well in network security, or has become a springboard for Alibaba to enter this market.
The other is the cloud services market. IDC International Data Corporation predicts that the global cloud computing market revenue will reach US$141 billion in 2019. The US and European cloud computing markets will all grow by 20%, and the Chinese cloud computing market will grow by 46%. It can be seen that the cloud service market is large, and Alibaba Cloud will use this acquisition to further increase its market share in China and even in Asia.
Alibaba Cloud service faces fierce competition, and Tencent Cloud rises or becomes the biggest threat
This acquisition is also in order to deal with competition. The competitive pressure comes mainly from two major rivals, one is the international giant and the other is the domestic enterprise. Alibaba Cloud is currently performing well in East Asia, but still in the global market.Far behind Amazon and Microsoft. In China, it also faces competition from many rivals, such as Huawei Cloud, Baidu Cloud, etc., among which Tencent Cloud may become the biggest rival of Alibaba Cloud.
(1) Alibaba Cloud occupies the East Asian market, but the international market is still far behind
The competitive pressure of international giants has forced Alibaba Cloud to upgrade its strength. At present, Alibaba Cloud has developed well and has become the world’s top three public cloud service providers in Asia Pacific. But this does not mean that Alibaba Cloud can sit back and relax. At present, Alibaba Cloud’s power is mainly concentrated in China and even Asia, and it is still behind Amazon, Microsoft and so on in the international market. In 2018, Amazon accounted for 47.8% of the infrastructure-as-a-service public cloud services market, followed by Microsoft 15.5% and Alibaba 7.7%, showing the gap between Ali and Amazon, Microsoft.
The above mentioned Alibaba Cloud’s acquisition is conducive to improving the technical level and solving some security problems. This will gradually enhance the competitiveness of Alibaba Cloud, and prepare for Aliyun’s competition from the giants, increase market share, and even surpass Microsoft.
(2) Tencent Cloud rises rapidly or becomes the biggest rival of Alibaba Cloud, and the competition between the two giants is intensified
Alibaba Cloud faces competition from international giants, but his biggest rival is Tencent in China. We have noticed that the competition between Alibaba and Tencent has gradually become hot. The two have launched fierce competition in various aspects. Of course, cloud services are no exception. At present, Alibaba Cloud has the upper hand, but Tencent Cloud is also developing at a high speed. According to media reports, in October 2018, Tencent made major adjustments to its organizational structure and established a new cloud and smart industry business group. Tencent Cloud’s growth rate in IaaS and IUS reached 128% in 2018, and its overall market share increased from 18th in 2017 to 6th in the world in 2018, ranking first in the world.
Because of the high degree of overlap between the two businesses, the competition is fierce. At present, Alibaba Cloud’s main market is in East Asia, and Tencent’s main business is concentrated in East Asia, so the threat from Tencent is higher than that of international giants. Tencent is able to quickly expand its cloud services with the help of WeChat, QQ, and its own advantages in games and media. This acquisition may also be to relieve the pressure from Tencent.
The rise of the B-end market has attracted attention, cloud services or the basic architecture of the future enterprise
Acquisition is not just to deal with competition, biggerThe purpose is to benefit. From the current performance of Alibaba Cloud, the acquisition of Changting Technology Development Cloud Service is to serve the B-end enterprise on the one hand. After all, the B-end market has expanded rapidly in recent years, on the other hand, for its own development, with the expansion of the Group’s business, Alibaba needs strong cloud service technology to serve itself and support the development of the group.
(1) The B-end market is developing rapidly, and Alibaba Cloud expands corporate cooperation
Alibaba Cloud’s big goal in recent years may be the B-end market. Zhang Jianfeng, president of Alibaba Cloud Intelligence, believes that today Aliyun should learn to change from the original Internet company to the service company of To B. In June of this year, the nail was merged into the Alibaba Cloud Intelligence Group, which was positioned as the platform for digital operation and management of the enterprise. This is considered by the outside world to be an important signal for Alibaba’s code to B. And Alibaba’s Taobao, Tmall and many companies, business docking, naturally has a larger B-end market advantage. This will be one of the future directions of Alibaba Cloud.
And Alibaba Cloud can also develop overseas B-end market. On the one hand, it can expand domestic enterprises that have sea-going needs, and on the other hand, can cooperate with overseas companies. According to media reports, Amazon’s acquisition of the US retail giant whole food is a case of accelerating AWS penetration by means of capital intervention in the context of the implementation of cloud services in the same industry.
(2) Cloud services or the basic structure of Ali, the acquisition of Changting to escort business development
The Ali Group develops cloud services not only to serve others but also to serve themselves. Future cloud services may become the infrastructure of the enterprise. Zhang Jianfeng, president of Alibaba Cloud Intelligence, believes that Alibaba Cloud Intelligence will be upgraded to become an infrastructure that will carry all the external technology output of the Alibaba economy. In the future, e-commerce, logistics and other businesses will be carried out on the cloud. Building a corporate office process through cloud services will benefit the development of the entire group of Alibaba.
According to media reports, the sales volume of double eleven 168.2 billion yuan, the order number of orders for the whole day is 812 million, and the peak value of the transaction is 325,000 pens/second. They all rely on Alibaba Cloud’s technology to protect them. These big traffic challenges and security. Offensive and defensive service support, as well as intelligent customer service, voice recognition, image recognition, smart dispatch and other applications based on big data and artificial intelligence are one of Alibaba Cloud’s performance. If there is a problem with Alibaba Cloud services, or if it is unable to keep up with the development of the times, it will limit the development of the Ali Group.
Overall, this time Alibaba Cloud acquired Changting Technology for a comprehensive consideration. It is to improve its technical level and to expand its market share. At the same time, in order to cope with the competition from international and domestic rivals, occupy the B-end market to improve its service level. This acquisition is more important for Alibaba Cloud, which may become the starting point for Ali to focus on developing cloud services in the future.The research community will continue to pay attention to the subsequent development of the event.