Can Alibaba’s Cloud Revenues Increase with Blockchain?
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Can Alibaba’s Cloud Revenues Increase with Blockchain?
By: jumpstarter hk Market Realist | January 9, 2020
• Alibaba Group’s (NYSE:BABA) fintech subsidiary could soon launch Blockchain as a Service, backed by Alibaba Cloud. Sources suggest the move from a live beta to an official release could happen by the end of January.
• We’ll look at Alibaba’s Blockchain as a Service pricing info.
• We’ll unpack Alibaba’s earnings highlights for Q2 of fiscal 2020 and its upcoming earnings outlook.
• Look for updates about Baidu (NASDAQ:BIDU) and Tencent (OTCMKTS:TCEHY) in the crypto domain.
Alibaba’s Blockchain as a Service
Alibaba’s fintech arm, Ant Financial Services Group, could soon launch its Blockchain as a Service (or BaaS) for enterprise solutions. The service plans to use Alibaba Cloud as well as the e-tailer’s private blockchain network. Ant Financial, formerly Alipay, is the fintech arm of Alibaba and was rebranded in October 2014.
Cointelegraph referenced Chinese news agency Bihai123, which claimed that Ant Financial could officially launch the open BaaS sometime this month. The statement was released by Jiang Guofei, the VP of Ant Financial Group and president of Ant’s Smart Technology group.
According to CoinDesk, the beta testing for Ant Blockchain Open Alliance began in November 2019. Its Blockchain as a Service offering would support Hyperledger Fabric, Quorum, and Ant’s in-house blockchain innovations. It plans to address the issues faced by sectors such as healthcare, pharmaceutical, insurance, retail, finance, logistics, and manufacturing. As an add-on feature to secure the network, Alibaba’s BaaS uses chip encryption technology.
Because online media has gained a great deal of focus, Alibaba’s BaaS also caters to enterprises dealing with a digital content library. Alibaba’s blockchain architecture for digital assets has a holistic approach and could house all related parties within the same network. Using this tool, related parties such as content creators, publishers, and distributers in the same network could access the copyright information and other transactional records.
In the event of regulatory scrutiny, it becomes easy to add government authorities and auditors to the network. In a nutshell, the blockchain network is transformed into a decentralized repository for all activities related to the digital assets.
Alibaba’s Blockchain services pricing model
Alibaba’s Blockchain service pricing model is similar to its cloud infrastructure billing model. this is a cost-effective model for a business, primarily because the onus of maintaining the network falls on the service provider. This type of model makes it lucrative for small and medium enterprises to adopt it.
Alibaba’s BaaS support for Hyperledger Fabric is currently available in selected areas of six countries, including the US, China, and Germany. The starter edition costs $623 per month for the test network with 50GB of free storage space. The top-end pack costs $5,254 for the Enterprise edition with 500GB of free storage. When the storage capacity exceeds the limit, the company charges $0.000472 per GB, a pay-as-you-go billing model.
Some additional support offered by Alibaba BaaS includes a presale consultation and around-the-clock tech support.
Alibaba’s last quarterly earnings highlights and Q3 of fiscal 2020 outlook
BABA stock started 2019 at $134.13 and crossed the $200 threshold in the first week of December 2019. Alibaba stock has risen close to 58% throughout the year. In November 2019, Alibaba completed its second listing in Hong Kong, which turned out to be a roaring success—a 6.5% uptick on the first day.
The Chinese tech giant has a good opportunity to raise the benchmarks in the Blockchain business. The company was already making headway in the cloud business and reported a 64% growth in cloud revenues in the previous quarterly earnings release.
The company reported $16.65 billion in revenues in the quarter ended September 2019, of which core commerce contributed 85%. Cloud & Digital Media and Entertainment comprised 14% of its revenues. According to estimates from 27 analysts, the average revenue forecast for the upcoming earnings release is around $22.5 billion. However, it is unclear whether these estimates take into account the recent breakthroughs made by the company.
Alibaba recently announced its plans to enter esports streaming in China after it inked exclusive rights with prominent soccer club Manchester United (NYSE:MANU). The e-tailer also plans to host Manchester United’s club merchandise on its e-commerce portal.
Other Chinese tech companies gaining in Blockchain
Alibaba Group is one of the Chinese tech companies that have the support of President Xi Jinping to innovate in the Blockchain space. He is eyeing the top spot as a Blockchain leader and also plans to launch a centralized Crypto, the digital yuan.
Alibaba is not the only Chinese company to gain ground with these innovations. Some of its Chinese peers in the industry are also making progress in the Blockchain realm.
Baidu, the Chinese version of Google, recently launched the public beta of Xuperchain. Xuperchain uses parallel chain technology, an upgraded version of Blockchain. Xuperchain uses master nodes to overcome the scalability concerns of a P2P (peer-to-peer) blockchain network. Because Xuperchain functions as a centralized network, it has immense benefits from an enterprise point of view.
On the other hand, Tencent and its subsidiaries are trying to establish their presence from a different angle. Coindesk published a series of posts about Tencent’s multiple endeavors. In October, it discussed WeBank, a Tencent subsidiary, trying to set “international blockchain-based invoice standards.” In December, Coindesk reported that Tencent is building a research team dedicated to cryptocurrencies.
Conclusion
Chinese tech companies appear to be taking the lead when it comes to Blockchain applications. In particular, Alibaba, Tencent, and Baidu are leading the movement. President Xi’s backing seems to have inspired their efforts.
US regulators are taking a market-oriented approach with the launch of the Bitcoin futures exchange, Bakkt. The regulated bitcoin futures exchange would safeguard both institutional and retail crypto investors. The US Congress is also trying to streamline the concept of cryptocurrencies in the regulatory framework. A draft bill for the Cryptocurrency Act of 2020 outlines a definition for digital assets and its governing bodies.