Alibaba hopes to spread its digital cloud worldwide through Equinix partnership

PUBLISHED : Friday, 05 June, 2015, 5:45pm
UPDATED : Friday, 05 June, 2015, 5:45pm

E-commerce powerhouse Alibaba Group is pushing aggressively to expand its cloud-computing business worldwide through a strategic alliance with Equinix, the world's largest data-centre services provider.

Equinix said on Friday it has signed an agreement to work with Alibaba subsidiary Aliyun, mainland China's biggest cloud services operator, to provide secure and direct access to its cloud platform for companies in both Hong Kong and California's Silicon Valley.

"This is just the first step. We expect this partnership to help Aliyun further expand its reach into other markets around the world," Alex Tam Wing-yiu, the managing director for Hong Kong of United States-based Equinix, told the South China Morning Post.

Cloud services enable companies to buy, lease, sell or distribute software and other digital resources online, similar to how electricity is taken from a power grid and shared.

Such services and applications are hosted and managed by data centres - secure, temperature-controlled facilities that equipped to house large-capacity servers and companies’ data-storage systems. They are supported by multiple power sources and high-bandwidth links to the internet.

The collaboration between Equinix and Aliyun followed the latter’s launch in March of its first overseas-based data centre in Silicon Valley, which is home to many of the world's largest technology companies and thousands of innovative tech start-ups.

The Aliyun facility initially targeted Chinese enterprises with operations in the US.

Equinix, which operates more than 100 data centres in 33 markets around the world, will provide Aliyun with the means to offer cloud services to many companies in Asia-Pacific and North America through the so-called Equinix Cloud Exchange.

"Our cloud exchange is a portal that brings together different cloud services providers with customers and [telecommunications] carriers, enabling them to establish affordable, private and high-performance connections," Tam said.

Conceived of as a melting ground for different groups somewhat akin to an upmarket, online version of the port city in the movie Casablanca, there are plenty of deals to be made on the new exchange.

It is home to more than 500 cloud services providers, including Microsoft, Google and Amazon Web Services.

The direct connections it facilitates are touted as being more secure and reliable than public internet connections with a lower degree of latency.

Melanie Posey, an analyst at technology research firm IDC, said the exchange will empower enterprises "to access Aliyun in a predictable, uncongested and cost-effective manner".

Established in 2009, Aliyun operates the network that powers Alibaba's extensive online and mobile e-commerce operations. It also sells a comprehensive suite of cloud services to support online merchants and other businesses participating in Alibaba's online ecosystem.

Aliyun's cloud services are available on a pay-as-you-go basis. It includes online information storage, content delivery and big-data processing, which involves analysis of various data formats in large volumes for businesses.

The subsidiary is based in Hangzhou, a popular tourist destination for Chinese in east China’s Zhejiang province.

It had 1.4 million clients in mainland China as of June 30 and formed a joint venture last month with Meraas, a diversified holding company that operates out of the United Arab Emirates.

According to the deal, they will offer cloud services to businesses and government institutions in the Middle East and North Africa.

"Our multinational enterprise customers are increasingly asking for access to the Aliyun cloud platform as they deploy cloud-based applications across Asia," said Chris Sharp, the vice-president of cloud innovation at Equinix.

About 75 per cent of companies in the US adopt some form of cloud service nowadays, according to a survey by private equity firm North Bridge. This year, the global cloud computing market is projected to surpass US$150 billion.

In Hong Kong, Equinix expects to provide solid support for Aliyun through its network of data centres in the city, Tam said.

Roughly US$200 million in total investments have been made by Equinix since 2000 to develop its three advanced data centres in Hong Kong.

The company also spent US$230.5 million in 2012 to acquire Hong Kong data centre operator Asia Tone, which has facilities in Shanghai.