Alibaba emerges as AWS challenger after US datacentre opening

Chinese internet giant outlines US datacentre plans as it prepares for cloud battle with AWS, Microsoft and Google

Aliyun, the cloud computing arm of Chinese internet firm Alibaba, is opening its first overseas datacentre in the US, and plans to step up its presence in the country in the second half of 2015.

A statement announcing the move said the Silicon Valley-based facility will initially be used to provide cloud services to Chinese companies operating in America while it works out how best to position its off-premise wares to the wider US market.

Ethan Sicheng Yu, vice-president of Aliyun, said the company’s services will be priced competitively as it prepares to go head-to-head with cloud giants Amazon Web Services (AWS), Google and Microsoft in the US.

“Aliyun hopes to meet the needs of Chinese enterprises in the US, and 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,” he said.

Despite holding the record for the largest initial public offering (IPO) in history and being China’s biggest online retailer, Alibaba remains relatively unknown outside its home country.

The company claims 1.4 million people in China use its cloud services, while IDC has it pegged as the country’s largest infrastructure-as-a-service (IaaS) provider with about 23% of the market.

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The IPO, which raised $25bn in September 2014, was geared towards changing that, with the proceeds from the sale widely expected to be invested in building out its presence overseas.

William Fellows, vice-president of research at IT market watcher 451 Research, said Aliyun has the potential to be a hugely disruptive force in the overseas cloud market, but winning over US business users will not be without its challenges.

“They’re a new player, they don’t do much in the US and are clearly a foreign-owned entity, even if they are listed locally [in the US],” he said. “There are going to be all kinds of challenges to overcome of a non-technical and pricing nature when folks come to consider Alibaba as a viable cloud service provider.”

As well as having a US datacentre, users will also want assurances about how the company will handle outages, for example, said Fellows. Will it have the backing of local tech support, or will this be handled by its Chinese HQ? 

“Potential customers will be thinking about all these things, which will be barriers to entry even if Alibaba does have the money to create the datacentre estate needed to support its cloud plans in the US and overseas,” he added. 

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