Alibaba Founder Jack Ma Steps Down as Industry faces Uncertainty

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Beijing: A Chinese giant multinational Conglomerate Industry founder and chairman “Jack Ma” steps down from its position on Tuesday especially at a time when its fast-changing e-commerce company faces uncertainty amid Tariff war between USA and China.

Ma, is one of the china’s wealthiest entrepreneurs gave up from his post on his 55th birth anniversary. However, he will be associated as Alibaba partnership, a 36 member board with the right to nominate the majority of the company’s board of directors.

Jack ma who worked as a former teacher founded ‘Alibaba’ in 1999 that connects Chinese exporters to American retailers.

The company now shifts its focus to serve china’s growing consumer market and expands into online banking entertainment as well as cloud computing. The Domestic business accounted for 66% out of its $16.7 billion revenue in the quarter ending in the month of June.

The total amount of goods that were sold across the globe from Alibaba’s E-Commerce Platform rose by 25% last year to up to $853 billion comparing to the biggest U.S eCommerce company i.e Amazon.com Inc. that reports $277 billion.

Alibaba Founder Jack Ma steps Down as Industry faces Uncertainty

Alibaba Founder Jack Ma steps Down as Industry faces Uncertainty

A New Chairman of Alibaba Group Daniel Zhang

Soon after stepping down of Jack Ma from his chairman post, the committee and mentor get the clues about Daniel Zhang as a new chairman of the company, who has been serving Alibaba Group as a CEO by now.

Inside the company, Daniel Zhang is known as Xiaoyaoz (A character in Chinese martial arts novel that has the meaning “the unfettered” and hence this implies that he would stay out of the battle and the focus will mainly be on training others.

As per the new at Alibaba, Zhang is known as the main architect behind the biggest sales bonanza.

Cloud Computing may Overtake the Next Frontier for Alibaba Group

With the start as an e-commerce site in 1999, The Alibaba Groups branched into payments, bricks, and mortar stores, streaming services including food delivery giant. But it is the Cloud Computing that holds the most promise.

It was only in September 2009 when Cloud computing was launched and is now the biggest player in China. Additionally, in the June quarter itself, the division brought in the revenue of 7.79 billion Yuan or $1.13 billion as per the exchange rate during that time which was 66% year-on-year growth.

Daniel Ives, the managing director of equity research at Wed bush security told CNBC “Cloud is the next frontier for Alibaba, in my opinion”.

“The company has essentially owned the e-commerce world in China and consumer moat. Now, it’s about going after the $100 billion market opportunity among enterprises moving to cloud in China. This remains the golden goose for Alibaba as Ma sails into the sunset,” he further adds.

Alibaba’s Cloud Dominance

Freeman says that cloud computing will be the biggest “flywheel-driven business or a growth engine” of Alibaba groups.

He further adds an operating margin of AWS which is in between the twenties, can go further high and believed to take a turn for Alibaba too.

“The growth, evolution, and operating margin profile of Alibaba’s cloud services are following and should continue to follow, the same path. At present, AWS represents only about 1/9th of Amazon revenue but generates over 60% of its operating profit. There is little reason to believe that “Alibaba’s cloud business” will somehow veer off trajectory and be different,” Freeman said.

He also adds that Alibaba has two advantages in china, one is that it is less competitive comparatively and second is that the company can move more easily to the cloud as they don’t have decade-old IT infrastructure.

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