Alibaba’s IPO: time to splash some cash on the cloud

moneyAlibaba finally announced plans to list on the stock market on Sunday after months of speculation and protracted discussions with the Hong Kong stock exchange.

A lot of the column inches devoted to this piece of news have focused on the firm’s decision to chose the US, rather than Hong Kong to IPO, and while it will be a blow to the SAR, there really wasn’t much it could do.

The bottom line is that Alibaba wanted to continue electing the majority of its board even after going public and the HKSE has a very strict one-shareholder-one-vote rule, which it could not break. End of story.

Of course, its decision to go Stateside doesn’t hurt Alibaba’s attempts to globalise its brands and attract more big name investors from the US. It will certainly be pretty happy with the way things turned out.

However, it would be wrong to interpret the move as an attempt to internationalise, even given the following statement from the firm:

This [IPO] will make us a more global company and enhance the company’s transparency, as well as allow the company to continue to pursue our long-term vision and ideals.

As numerous industry analysts have told me this week, the IPO is all about raising funds (as much as $15bn if rumours are to be believed) to grow its business in China.

Yes, it’s still China that dominates Alibaba’s thinking and it’s easy to see why. In terms of e-commerce the likes of Amazon and eBay will make it very difficult to compete outside the Middle Kingdom, while inside there is still a huge amount of growth going on.

China is poised to become the world’s biggest market for online commerce by 2015-16. “Growth will double in the next five years so the market is definitely big enough for two or three major providers,” Gartner analyst Jane Zhang told me.

This is just as well, as arch rival Tencent is breathing down its neck with its recent JD.com deal and could present a significant challenge to Ali in the future, Zhang added.

Not that Alibaba has taken its eye off the ball with mobile, investing in Sina, AutoNavi and extending Taobao to the mobile sphere, but its Laiwang messaging service has been a bit of a stinker and really pales in comparison to WeChat’s success.

A lot of the IPO money, Zhang told me, will go on growing its cloud and hybrid infrastructure, as Alibaba takes a leaf out of Amazon’s book and goes into business of providing IT infrastructure as a service in earnest.

Frost & Sullivan analyst Marc Einstein echoed these thoughts.

“Alibaba has some global ambitions but obviously competition is too severe in the US and emerging markets would be more likely targets,” he told me. “Therefore I think that they will continue to diversify into new businesses and mirror companies like Google and Amazon rather than trying to compete head on.”

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China’s mobile cyber crime underground…and me on the Beeb

chinese flagI was on BBC Newsday, a World Service breakfast programme, on Wednesday talking about the Chinese cyber mobile underground story I wrote up for The Reg this week.

It’s based on a Trend Micro report The Mobile Cybercriminal Underground Market in China – published this week by its Forward Looking Threat Research Team, which reveals once again the sophistication and commercialisation of the underground networks via which cyber criminals trade goods and service.

Although the report itself doesn’t throw up a huge amount of new data it’s interesting to see evidence that such networks exist in China, selling common attack kits like premium service abusers, SMS Forwarder Trojans and spam.

Typically, being broadcast journalism we were kept strictly to 5 minutes of short, sharp soundbursts by the BBC which allowed for little meaningful discussion of the topic besides “what’s the Dark Web”? “How do I get on it?” and Who’s behind these attacks?”. I had a better chat with the researcher the night before.

That said, it’s an important topic to air publically.

Although we didn’t cover this in as much detail as I’d have liked, the real message to listeners of the program – which apparently has among the highest audience numbers on the planet – is to be more vigilant when downloading apps online and make sure they install basic AV on smartphones.

In China, where unregulated third party Android stores are the norm and mobile AV is rare, the cyber criminals have it made.

The only light I can see on the horizon in this part of the world is for the government to follow through with its planned regulation  of the mobile app space. This would force industry to self-regulate and clamp down on malicious apps either pre-loaded onto phones or uploaded to web stores.

The only problem is that any new regulations are also likely to restrict content deemed “offensive” to Beijing – in other words censorship by the back door.