Alibaba launches first data centre in Silicon Valley amid ramped-up US expansion

E-commerce giant opens first overseas data centre in Silicon Valley, hoping to initially attract Chinese firms with US operations

PUBLISHED : Wednesday, 04 March, 2015, 4:19pm
UPDATED : Thursday, 16 April, 2015, 12:10pm

Alibaba Group, the world's biggest e-commerce services provider, is ratcheting up its business expansion in the United States, with the launch yesterday of its first overseas-based data centre in California's Silicon Valley.

The new facility run by Aliyun, the cloud computing operation of Hangzhou-based Alibaba, faces stiff competition in a vast market where the likes of Equinix, Rackspace, Digital Realty, Century Link Technology Solutions, AT&T, Verizon, IBM and Amazon Web Services are among the leading providers of data hosting, co-location and cloud-computing platform services.

Cloud services enable companies to buy, lease, sell or distribute software and other digital resources online, just like electricity from a power grid. Data centres host and manage cloud services and applications.

Ethan Yu Sicheng, a vice-president at Aliyun, said the firm's new data centre would initially target Chinese enterprises with operations in the US. "Aliyun offers top-notch cloud-computing products and services at competitive prices," he said.

Data centres are secure, temperature-controlled facilities built to house large-capacity servers and data-storage systems, as well as have multiple power sources and high-bandwidth internet connections.

A survey by private equity firm North Bridge shows that 75 per cent of companies in the US adopt some form of cloud service. This year, the global cloud computing market is predicted to be worth more than US$150 billion.

"The ultimate objective of Aliyun is to bring cost-efficient and cutting-edge cloud computing services to benefit more clients outside China," Yu said.

Aliyun, which had 1.4 million clients on the mainland as of June 30 last year, declined to provide its US data centre's exact location or technical specifications due to "privacy and security concerns".

New York-traded Alibaba's foray into the US data centre market marked its most direct new service expansion in the country. Alibaba last year made a series of investments in various US companies, including video messaging app provider Tango and smartphone-based ride-hailing service Lyft.

Ricky Lai, a research analyst at Guotai Junan International, said Alibaba "clearly shows continued confidence in the US economy", despite increasing trade friction between Washington and Beijing.

Founded in September 2009, Aliyun has existing data centres in Hangzhou , Qingdao , Beijing, Shenzhen and Hong Kong. A report from technology analyst firm IDC estimated that Aliyun was the mainland's largest cloud infrastructure-as-a-service provider, with a 22.8 per cent market share in the first half of last year.