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Summary:

China’s big four internet companies are big — huge, in fact — but they’re not yet technological innovators like their American counterparts. However, scalability is an an issue that knows no borders, which has spurred some cross-continental cooperation. Will it also inspire a Chinese tech awakening?

tencent

Here’s the thing about China: It’s very, very big. And although the Great Firewall cuts its citizens off from many popular U.S. web services, those citizens still exist. In fact, there are more of them than all the citizens of the United States and European Union combined. And they use social media and e-commerce just like the rest of us.

It should come as no surprise, then, that the companies serving the country’s 1.3 billion people with their social media, e-commerce and information-discovery needs are very, very big, too. Here are some statistics that demonstrate their scale.

Alibaba Group

Taobao, the eBay-like e-commerce line of business from Chinese internet giant Alibaba Group, does a lot of business. On a single day — Nov. 11, 2011 — the company did a whopping 19 billion Yuan (or approximately $3.05 billion) in sales. According to Alibaba Group CTO and Alibaba Cloud Computing President Wang Jian, the company site surpassed the 1 trillion Yuan (about $160 billion) mark for 2012 revenue at the end of November. Alipay, the company’s version of PayPal, handles about 3 billion Yuan (about $480 million) in transactions every day.

By comparison, eBay posted $3.4 billion in revenue for the entire third-quarter this year. Amazon.com, with which Taobao also competes (although Alibaba also has a business-to-consumer division called Tmall), closed its third quarter with $13.8 billion in revenue.

The women's shoe department on Taobao

The women’s shoe department on Taobao

Of course, Taobao and Alipay are just two of Alibaba’s expansive portfolio of services, which includes a much-publicized (although recently reduced) partnership with Yahoo.

That type of business means Aliaba needs a lot of servers. In a single year not too long ago, Jian told me, the company bought more servers than it had in previous five years combined. If you charted Alibaba’s server count now versus five years ago, he added, the previous number would look like zero. How big is its database? Enough to store data for more than 800 million items for sale.

Baidu

The Chinese search giant is ranked fifth in the Alexa internet rankings (behind Facebook Google, YouTube and Yahoo), which is evidence of its popularity. All those users, I’m told, result in an annual server growth approximately equal to the previous three years combined. It has been reported that Baidu is planning possibly the world’s largest data center — spanning 120,000 square meters, costing $1.6 billion, housing 100,000 servers (totaling 700,000 CPUs and 3 million cores) and storing 4,000 petabytes of data.

Tencent

Somtimes compared with Facebook in the United States (although it’s actually quite different), Tencent boasted more than 717 million users for its popular QQ messaging service as of September 2011. That number has surely grown. The company says its highest-ever number of concurrent users was more than 176 million, although there are often tens of millions (if not more than 100 million people) using it at any given time. An individual with some knowledge of the company’s infrastructure told me Tencent adds about 100,000 servers per year.

Tencent usage at 5:49 local time on Jan. 10, 2012.

Tencent usage at 5:51 local time on Jan. 10, 2012.

Weibo

Weibo, the Twitter-like platform from internet new-school internet company Sina had more than 400 million users as of April 2012. That’s about twice the number Twitter claims. And the Chinese use Weibo a lot, for everything from micro-blogging to self-publishing. It might actually be a more important tool in China than Twitter is in the United States, sources told me, because while the government can censor official news outlets, it can’t possibly control the stream of information coming off Weibo. And that will mean even more growth.

Not (yet) innovators

However, despite their sheer scale, Chinese internet companies are, by most accounts, less technologically inclined than their American counterparts. The biggest reason — one I heard time and time again — is that these companies tend to view themselves as traditional businesses rather than technology companies, and that employees often strive to work up the management ladder rather than remain career engineers. This inevitably affects R&D budgets, makes companies less willing to take risks and reduces the pool of employees that really, deeply understand complex systems.

As an example, one might look at the server situation within China’s big four internet companies. Alibaba’s Jian told me that although his company is running all white boxes in its data centers now, it had a lot of legacy IBM gear in its data centers five years ago. I heard the same thing about Baidu. Tencent, someone told me, had 10,000 webscale servers fail in six months last year and is considering a move back to traditional boxes.

However, maybe these companies are coming around on innovation beyond just buying more-efficient gear. Tencent, Baidu and Alibaba, for example, are all members of the Facebook-led Open Compute Project for designing webscale hardware. Tencent and Baidu actually created their own rack-design specification, called Project Scorpio, that is being merged into Open Compute’s Open Rack design in 2013. They still don’t build their own servers like Google and Facebook do, preferring instead to push their custom specs on server makers, but many innovative American companies, including eBay, do the same thing.

Power specs of Open Rack

Power specs of Open Rack

One has to assume that a closer working relationship between engineers at American and Chinese internet companies will spur even more changes in the tech culture there. Although technical talent comes relatively cheap in China, perhaps they’ll realize that highly skilled, forward-thinking engineers (and data scientists, for that matter) are something worth hanging onto and rewarding with high salaries.

As Facebook VP Frank Frankovsky told PCWorld in July as the Open Rack designs were unveiled, “We compete with those guys, but on the infrastructure side, if we can make our infrastructure more efficient, it makes everyone that much better. Where we differentiate our business is in the service we provide to our end users.”

That differentiation comes from in large part from an incredible investment in research and technology. If they want to be considered thought leaders in their field — and if they want to expand significantly into cloud computing (as Alibaba and Sina clearly want to do) — China’s internet companies will have to start matching their immense scale with demonstrated technological prowess.

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  1. Computer-Information-Systems Wednesday, January 9, 2013

    Reblogged this on Information-Systems and commented:
    Wow the sheer scale is amazing

  2. “because while the government can censor official news outlets, it can’t possibly control the stream of information coming off Weibo.”

    You’re misinformed there. If they can’t control it, they’ll close it.

    1. hou about your country

  3. Don’t forget:

    Tencent owns WeChat which is essentially Path + Whatsapp +Talkbox. 300 million users and expanding internationally.

    Qzone is mostly predominant in Tier 2-4 cities. The Facebook of China is Renren (college kids) and Kaixin (white collar workers)

  4. Great blog! You’ve just shared the great insights about so called ‘BATS'(Baidu, Alibaba, Tencent and Sina(weibo)) camp – giant internet companies.

    It’s true that they are ‘big’ from business volume perspective but not ‘strong’ from technical innovation perspective compared with counterparts in America. Though they are much agile and innovative compared with local IT and telco companies.

    Talking about cloud computing… i still hold highest expectation on these internet giants based on their capability of technical scale-out, experience of web scale operation, agility of innovation and of course financial advantages… much similar pattern in other countries and regions. This expectation already backed by facts:

    1. Sina SAE(Sina App Engine) is no. 1 public PaaS in China which could be roughly corresponded to Google GAE(Google App Engine). Sina’s cloud ambition is not ended at PaaS… with their active involvement in OpenStack community and Beta SWS(Sina Web Service – AWS alike naming) we can expect their excellent play in IaaS arena.

    2. Alibaba Aliyun is no.1 public IaaS in China which could be corresponded to Amazon AWS… and with the re-org within Alibaba group – merger between Aliyun and Net.cn(the largest DNS and web hoster for SMEs) recently, seems no. 1 IaaS provider in China is firmly laid.

    3. Tencent just released news that they will debut full-blown IaaS & PaaS services.few minutes ago…Tencent was ‘notorious’ for years as ‘startup killer’ and ‘innovation killer':) I will never doubt that Tencent will be one of the major ‘Cloud Killer’ in China.

    Well talking about GFW(Great Firewall)…it’s a little bit complex.
    People don’t like it, ‘Cloudant’ especially! With GFW, we can’t leverage many many great cloud services especially Google services for the well-known reasons. The situation is getting worse due to MIIT regulations on telco VAT license issue… unfortunately cloud services fall into telco VAT. The situation could and might be changed somehow after the Azure’s landing in China as a milestone just one or two months ago… and in that case Microsoft make their cloud way to China with workaround – cooperating with local government and local IDC service provider. JV will be another workaround majorly used by cloud giants from abroad.
    While local CSP(Cloud Service Providers) should thank GFW & regulations and wish it long live as long as possible:) which buy them much time and space to survive or grow big just like what happened in Web and Web2.0 era.

    There will be cloud giants in China just like what happened 10 years back in internet or web era thanks to this huge population and therefore huge market! BTW, would thank all the smart guys and their innovation in silicon valley, diligent and hard working chinese will ‘copy-cat’ again and end up eventually with quite some cloud business giants again:)

  5. well, perhaps we forget that a lot of innovation even in Silicon Valley come from foreigners (many Chinese engineers). And, so, we may want to tone down the superiority of silicon valley. if all the immigrants leave, Silicon Valley might also be copying from India, China and Israel.

  6. More than 800 million users on QQ, to be honest. And a QQ International IM suite in 5 languages which can beat MSN hands down any time. Tencent rocks.

  7. Lawrence Sheed Sunday, January 13, 2013

    I’m a bit wary of numbers like 100,000 servers added in a year.

    Given that I do spend a bit of time going deaf in data centers here in China, I don’t see that being physically possible.

    I can _believe_ they add up to 100,000 virtual machines in a year, which would run on a lesser number of machines – 20,000 would be in the realm of possible, although there really isn’t that much ip space available here, and ip6 is still not really rolled out for the masses yet. If they’re counting those rather overpriced dense blade servers as multiple units, then sure, can do 96 in a 4U, but thats not really playing fair with numbers..

    Hmm… thinking about it
    1000 x 4U @ 96 = 100,000k+- is eminently doable…, although you pretty much have to build your own power infrastructure for that, as data centers here are more concerned about power than bandwidth.. Isn’t strictly speaking 100k servers though.

    I can believe 100k machines assuming heavy blade dense (although I would probably be looking into re-architecting, and making regional / subregional cloud load balancers if I was doing it that way).

    IP Space is the real issue.
    Most of it is being stuck behind load balancers anyway, but even so, we’re pretty much out of ip space here in .cn

    @forestzrd pretty much has it down pat.

    It will be interesting when Alibaba starts promoting their aliyun cloud service more heavily.
    Its either Youku, Alibaba, or Tencent who will aim to become the next amazon web server competitor here.

    Lawrence

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