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Alibaba expands cloud to US to challenge Amazon, AWS

Brandon Butler | June 10, 2015
The international cloud battle is on.

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Alibaba the Chinese ecommerce giant is expanding its IaaS cloud offering named Aliyun into the United States and in doing so will take on America's largest ecommerce company, Amazon and its cloud computing division Amazon Web Services.

Alibaba and Amazon each dominate their countries ecommerce markets, and they both lead the IaaS markets in their respective nations as well. Now, each company is looking to move on to each others' home turf.

Alibaba has embarked on a grand expansion of Aliyun, including opening a data center in Silicon Valley last year and partnerships with US hosting providers and chip makers in recent weeks.

Meanwhile Amazon, along with competitor Microsoft, has pushed into the Chinese cloud market too. But U.S. companies are finding it difficult to offer services directly to Chinese customers because of legal regulations in the country.

All these dynamics mean that the international IaaS cloud battle is on.

Aliyun the Chinese cloud
Alibaba Group is a holding company started in 1999 executive chairman Jack Ma that has grown to be arguably the largest ecommerce company in the world, according to the Wall Street Journal. It had the largest initial public offering in history last year and has companies across a variety of industries including wholesale and commercial trade, as well as finance and marketing divisions. In 2009 Alibaba started Aliyun, a cloud computing service to meet the needs of the company's digital business.

Today Aliyun operates in six regions of the world, including five in China and its most recent location in Silicon Valley. A seventh region is under construction in Dubai. Alibaba says it has 1.4 million customers; its fourth annual developer conference last year attracted 10,000 attendees and in the fourth quarter of last year Aliyun had revenues of $147 million.

Forrester cloud analyst Frank Liu, who is based in China, agrees with the company's projection that it is the market leader in China's public cloud market. The company offers a range of IaaS cloud services including elastic compute, storage databases, content delivery, security and analytics products. Aliyun hosts Alipay, the company's payment arm and in November 2014 it managed record traffic for a Chinese shopping event named 11.11 in which it processed a peak of 80,000 transactions for Alibaba per second.

Aliyun comes to America
In recent months Alibaba has made a concerted effort to expand Aliyun into the U.S. But analysts who track this company say the moves, at least initially, are not aimed directly at taking on AWS and other major U.S. IaaS vendors like Microsoft and Google. "Aliyun has global ambitions just like other Chinese Internet giants," says IDC analyst Melanie Posey. "They want a foothold in the U.S. to serve other Chinese companies with global ambitions (and those of their parent company) and to be global, you need to have presence in the US."


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