Alibaba comes stateside

If you thought cloud competition couldn’t get hotter, think again

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Chinese e-commerce giant Alibaba has opened a data center hub in Silicon Valley, adding yet another gigantic player to a growing, but already hotly-contested cloud computing market.

Aliyun, Alibaba’s cloud computing arm, has been likened to’s Amazon Web Services unit and you can bet that [company]Amazon[/company], as well as [company]Google[/company] and [company]Microsoft[/company], are watching this development closely. Those American cloud giants are focused on boosting business and operations outside the U.S. — Microsoft and Amazon have presence in China, for example, and now Aliyun will return the favor with its first US-based data center.

The initial plan is for the Aliyun data center, the exact location of which was not disclosed, to target Chinese companies based in the U.S. and to expand from that base. In a statement Aliyun VP Ethan Sicheng Yu said:

… the ultimate objective of Aliyun is to bring cost-efficient and cutting-edge cloud computing services to benefit more clients outside China to boost their business development.

The U.S. expansion comes at an interesting time politically as well — relations are tense between the Chinese and U.S. governments and both sides have accused the other of spying on each other and using native tech companies to help in this effort.

Aliyun’s current data centers are in Hangzhou, Qingdao, Beijing, Shenzhen and Hong Kong.

5 Responses to “If you thought cloud competition couldn’t get hotter, think again”

  1. ewalsh5

    Not quite as surprising, is it? Enterprise cloud delivery has gained traction in recnet times, as bigger brands continue to adopt them the security concerns have eased – In addition, with deluge of connected devices (thanks, IoT!) you can’t avoid virtual space for app development and storage, even testing out your pilots. – Eamon Walsh, commenting on behalf of IDG and Red Hat

  2. When I was in China at the end of last year, I visited a Startup Incubator in Shanghai fully supported by AWS and providing mentoring, offices, hiring and other general business support. AWS is using a very similar playbook in China compared to when it launched in the USA – build the ecosystem of developers, tools and startups with a view to selling into larger companies later.

    AWS launched a Beijing data centre in early 2014 but it is still in limited preview and requires a Chinese business entity to register for an account, entirely separate from their global operations. They appear to be targeting local Chinese customers rather than allowing existing non-Chinese customers to deploy infrastructure inside China. Provision of data centre services can be tightly controlled by business license requirements, which may explain these restrictions.

    Aliyun is taking an opposite approach – it has an established customer base in China and is now opening a facility in the USA specifically to help Chinese companies who want to enter the USA. For now it is ignoring US companies.

    Aliyun is taking existing customers and helping them enter a new market whereas AWS is entering a foreign market and trying to attract foreign customers. Although AWS are well regarded as an innovative market leader, within China there may be shadow of poor relations around security, spying and the Snowden disclosures all of which are causing problems for Western consumer companies trying to sell to China.

    This makes AWS’s China strategy somewhat risky. They are fighting a well known, local Chinese company in unfavourable local conditions, and may risk Aliyun taking Chinese customers who want to launch outside of China. Given how difficult it can be for foreign businesses to enter China, why are they not taking advantage of their global reputation and trying to help those businesses deploy infrastructure within China? Or equally, helping Chinese businesses deploy outside of China?

    Of course this is 100% better than the Google Cloud strategy of simply not existing in China and actually charging more for bandwidth into China!

    • for big cloud companies (aws goog etc) a data center is actually a group of connected data cetners or a data center farm. i thought hub might convey that better — but alibaba didn’t disclose a ton of detail so we don’t really know the size/configuration or even exact locality of what they opened up.