Alibaba’s future is cloud computing, CEO Daniel Zhang says

Cloud computing will become Alibaba’s main business in the future, according to Alibaba Group CEO Daniel Zhang.

Speaking to American business news channel CNBC in his first interview since being announced as the successor to Alibaba Chairperson Jack Ma, Zhang said that cloud is the company’s long-term strategy.

“I think cloud will be the main business of Alibaba in the future,” he told CNBC.

“We strongly believe that every business in the future will be powered by cloud. We are very happy to build this cloud infrastructure in the new digital era and support all the businesses going digital,” he said.

Alibaba has big plans for its cloud services. It’s no surprise given its ambition to help businesses digitize. “It’s all about how to integrate online and offline to transform to a whole digitalized commercial world,” he said.

Alibaba’s cloud computing revenue has increased by a whopping 90% year-on-year, reaching RMB 5.7 billion (around $815 million) for the quarter ending September 30. The company says it launched 600 cloud products and features relating to big data analytics and AI application innovation, security, and IoT service enhancements over the third-quarter.

In an effort to increase its cloud computing and AI capabilities, the company is also developing a dedicated AI chip. The company has also set up a chipmaking subsidiary in its pursuit of dominance in AI cloud computing applications.

“A chip is the core of computing power. If you want to apply AI in the business, it’s not only about the algorithm, but all about computing power,” Zhang said.

Tencent unrolls multibillion dollar bet on the cloud

Alibaba may face increased competition from other enterprise-facing companies. Chinese tech giant Tencent has recently announced it is restructuring, resulting in the creation of two new divisions, including one focused on cloud and smart industries. The company also plans to invest billions of dollars in a push into cloud computing, which forms part of the overhaul.

The move to target enterprises is a result of challenges to its consumer-facing business, including increased regulation in China, leading to slow growth in its gaming division—a business that has traditionally been its biggest revenue generator.