NEW YORK (TheStreet) -- Chinese Internet giant Alibaba (BABA - Get Report) recently said it wants to beat Amazon (AMZN - Get Report) in the cloud services business, but at this point, it's looking like a David vs. Goliath-type battle.
Announcing a billion-dollar investment this week, Simon Hu, president of Aliyun, Alibaba's cloud services division, declared that the company's goal is to "overtake Amazon in four years, whether that's in customer technology or worldwide sales."
Currently, however, Alibaba's cloud revenues are paltry compared to Amazon's. For the quarter ending in March, Alibaba reported $63 million in revenue from cloud services, compared to $1.82 billion for Amazon in its most recent quarter. Amazon Web Services has become a significant revenue driver for Amazon in the last two quarters.
For its part, Alibaba seems to be focused on the untapped Asian market. It has already outlined plans to establish data centers in Asian countries such as India and Japan over the next eight months, and to grow its partner list to 2,000, from 200, by 2018.
In other markets, commentators expect Alibaba to help multinational companies as well as small businesses sell to Chinese consumers.
But Alibaba has a long road ahead of it. Amazon is on track to hit $6 billion in sales from its cloud division this year. Alibaba will also have to overtake other established technology behemoths before challenging Amazon. According to Synergy Research, Amazon has the biggest share of the cloud infrastructure industry, with 28% of the total global market. It is followed by Microsoft (MSFT - Get Report), IBM (IBM - Get Report), and Google (GOOG - Get Report) with 10%, 7%, and 5% respectively.
Amazon also trumps its competitors for the sheer scale and variety of its offerings. Gartner's Magic Quadrant cloud report states that Amazon Web Services has more than 10 times the computing capacity of the next 14 cloud providers.
R.J. Hottovy, a research analyst with Morningstar, calls Amazon's cloud services a "fairly misunderstood" business.
As an example, Hottovy pointed to Amazon's deal with the CIA, which happened despite a cheaper bid by IBM, as proof of breadth of the retail giant's cloud offerings.
There is also the synergy between the cloud unit and Amazon's increasing forays into content and devices, such as tablets, that adds value to the retail giant's bottom line. Hottovy said Amazon can "leverage" the web services business by using the cloud infrastructure to provide a better customer experience for streaming or providing content on its digital devices.
Finally, the Asia-Pacific market -- which is Aliyun's focus -- still comprises just a fraction of the total cloud computing market. According to Gartner forecasts, revenues from the region are expected to hit $11.5 billion in 2018, a small portion of the projected total global spend of $210 billion by 2016 for Infrastructure-as-a-Service, the fastest growing area of public cloud services.
The situation is further complicated by absence of reliable estimates from China, which makes it difficult to accurately predict revenues.
A SunTrust analyst recently predicted that Alibaba could earn $1.2 billion from its cloud business by 2018. But Hottovy is wary of such predictions. "It is tough to estimate the market for China" for cloud services, he said. "China is where we were a couple of years ago" in terms of maturity of market.