Newspaper article The Christian Science Monitor

Alibaba to Invest $1 Billion in Cloud Computing: Can It Beat Amazon?

Newspaper article The Christian Science Monitor

Alibaba to Invest $1 Billion in Cloud Computing: Can It Beat Amazon?

Article excerpt

Chinese e-commerce giant Alibaba says it plans to catch up with its American competitor Amazon with a robust foray into the cloud computing business.

On Wednesday, the company's chief executive officer Daniel Zhang announced that Alibaba would inject an extra $1 billion into its cloud computing unit Aliyun. The announcement has left many observers speculating whether Alibaba could overtake Amazon in the near future.

"Aliyun competes directly with Amazon Web Services, which is also intent on global growth," wrote Catherine Shu for Tech Crunch. "Its backing from Alibaba, however, means that Aliyun has the ability to experiment with technology like low-power server processors, which might help it save a lot of money on electricity bills as it deploys new infrastructure and give it an edge over AWS."

Alibaba's latest investment is set to expand its data centers into the Middle East, Japan, Singapore, and Europe. Currently, the company boasts of data centers in China, Hong Kong, and Silicon Valley, where it opened a center in March.

"We see that Amazon took 10 years to get to where it is today," Aliyum president Simon Hu said recently. "Aliyun is just past its sixth year and we hope to match or outperform Amazon within three or four years."

But Amazon will be a difficult competitor to beat. The American e- commerce mammoth is on the road to booking more than $7 billion in 2015 from its Amazon Web Services business, more than Salesforce, Microsoft, IBM, and Google combined.

The second-quarter sales for Amazon's Web Services totaled $1.82 billion this year, an 81 percent increase from the previous year. Its operating profit, at $391 million, was five times higher than in 2014.

By March, Alibaba's cloud computing revenue had also increased by more than 80 percent compared to the previous year, but to a sum of just $63 million. …

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