Cloud Services

Alibaba 'Planting a Flag' in US Cloud Market

Alibaba is opening its first international data center in Silicon Valley on Wednesday, making the Chinese e-commerce giant a new potential competitor, partner and customer for US service providers.

Aliyun, Alibaba Group 's technology arm, is "planting a flag in the US" and expanding overseas for the first time, according to a post Wednesday on the Alibaba Group's blog.

Aliyun is the biggest public cloud services company in China with more than 1.4 million customers, but gets only 5% of global public cloud spending and is "little known outside the mainland," the blog says. The company hopes that'll change beginning Wednesday when Aliyun starts selling cloud services to US companies. (See Alibaba Opens Silicon Valley Cloud Data Center.)

Aliyun supports Alibaba Group's vast Chinese e-commerce operations, with data centers in Beijing, Hangzhou, Qingdao, Hong Kong and Shenzhen, Alibaba says. It started offering commercial cloud services in 2009, and provides services to businesses, government agencies and merchants. Aliyun competes in China with US companies, including Amazon Web Services.

Initial services available in the US will be virtual servers, load-balancing, relational database and storage.

Aliyun's "fundamental edge" is that it's one of the few companies selling cloud services in both the US and fast-growing China market, "which could be attractive to American companies with operations in the world's two largest economies," Alibaba says.

The US cloud market is currently dominated by Amazon.com Inc. (Nasdaq: AMZN), Microsoft Corp. (Nasdaq: MSFT) and Google (Nasdaq: GOOG) -- especially Amazon, which has the lion's share of business.

And US carriers are increasingly focused on cloud:

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Cisco Systems Inc. (Nasdaq: CSCO) is making cloud and software its main focus, including its Intercloud hybrid cloud service offered in partnership with carriers. (See Cisco: Software, Cloud to Be 'Main Focus'.)

Alibaba has 23% market share in China, with both native and foreign competition from carriers, including China Telecom Corp. Ltd. (NYSE: CHA) as well as Microsoft and Amazon, Reuters reports.

As Alibaba launches its US cloud business, American businesses and politicians are protesting what they see as China's efforts to limit foreign technology in that country, Reuters notes. Chinese regulations limit foreign competition and disrupt online services, including Google and Amazon, earning criticism from US President Barack Obama. (See China, US Quarrels Could Get Ugly for Telecom.)

— Mitch Wagner, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profileFollow me on Facebook, West Coast Bureau Chief, Light Reading. Got a tip about SDN or NFV? Send it to [email protected]

Mitch Wagner 3/6/2015 | 10:19:30 AM
Re: Security No they do not. And that's an important question. 
Mitch Wagner 3/6/2015 | 10:15:30 AM
Re: Security danielcawrey - Given the state of privacy laws in the US, many companies might have privacy concerns being the customer of an American company too. 
Joe Stanganelli 3/6/2015 | 12:02:41 AM
Re: Security > Even so, I would think that many companies looking at their service would have privacy concerns about becoming a customer of a Chinese company.

Those same companies have privacy concerns about being a customer of a US company, too, though!  That's one of the main reason US cloud providers have trouble attracting even Canadian clients -- ever since the PATRIOT Act, let alone the Snowden revelations.
danielcawrey 3/5/2015 | 11:40:33 PM
Re: Security No surprise at all Alibaba would get into the US cloud game. Even so, I would think that many companies looking at their service would have privacy concerns about becoming a customer of a Chinese company.

Sure, Alibaba doesn't have tight ties to the Chinese government, but there will be some decision makers that are still wary. 
mendyk 3/5/2015 | 4:52:13 PM
Re: Security Mitch -- does Alibaba say who its technology suppliers are?
jbtombes 3/5/2015 | 12:45:38 PM
Re: Security Yes, that's totally legit. Advanced data centers are differentiating themselves in physical terms from the old colo-hotel model (with well-known urban street addresses) in part by stealth and obscurity. How secure/private are the networks and data they house is another question. One worth considering, as you noted above.
Mitch Wagner 3/5/2015 | 10:04:58 AM
Re: Security jtombes - What did you have in mind here? There seem to be legitimate security reasons for not disclosing the location of a data center, to protect physical security. 
jbtombes 3/4/2015 | 8:41:23 PM
Re: Security Aliyun/Alibaba is maybe more focused on another kind of security, which is the justification for their not disclosing an exact location of this planned data center. 
Mitch Wagner 3/4/2015 | 5:18:58 PM
Security The whole security issue is a wildcard. Neither China nor the US has a great reputation for respecting privacy -- hosting a Chinese cloud IN the US might be perceived by customers as the worst of both worlds. 
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