Wednesday, July 5, 2017

Keeping an eye on Alibaba Cloud, Aliyun – Part 2

At its investor conference last week in Hangzhou, China, Alibaba's Aliyun cloud business unit disclosed plans to build out new data centres in lock step with the parent company's global e-commerce initiatives. The Asian economies are an area of focus. Another key principle in this overseas expansion is to form strategic partnerships, often the kind that the big U.S. public cloud players have been reluctant to pursue. By leveraging its core business-to-business ecommerce platform, Alibaba believes its cloud operations could attract many small to medium sized enterprises across Asia, particularly those seeking opportunities in China. Like with AWS, there is a focus on getting start-ups to move their operations into the cloud from the outset. For instance, Alibaba is looking to support Indonesia's 1,000 Start-ups Movement initiative, which was launched last year with the aim of nurturing 1,000 ventures by the year 2020.

Simon Hu, SVP of Alibaba Group and president of Alibaba Cloud, commented, "I believe Alibaba Cloud, as the only global cloud services provider originating from Asia, is uniquely positioned with cultural and contextual advantages to provide innovative data intelligence and computing capabilities to customers in this region. Establishing data centres in India and Indonesia will further strengthen our position in the region and across the globe".

Equinix accelerates connectivity into Aliyun

Earlier this month. Aliyun and Equinix, the global interconnection and data centre company, announced a collaboration to provide enterprises with direct, scalable access to Alibaba Cloud via the Equinix Cloud Exchange at its Hong Kong, Silicon Valley, Sydney and Washington DC International Business Exchange (IBX) data centres, with Frankfurt and London due to be added shortly. With the addition of direct access to Alibaba Cloud on Equinix Cloud Exchange in markets across Asia Pacific, EMEA and the Americas, Equinix can offer private access to Alibaba Cloud in five markets. Equinix noted that it previously offered access in its Singapore IBX. Alibaba Cloud is also a colocation customer in Dubai with Emirates Integrated Telecommunications Company (known as du). The deal could expand to other locations. Equinix operates 179 data centres in 44 markets worldwide.

India, Indonesia and Malaysia

Also this month, Aliyun announced plans to establish new data centres in Mumbai, India and Jakarta, Indonesia. Both facilities are expected to open during the current fiscal year, ending March 2018. Aliyun recently announced a data centre in Malaysia. The company said each of the new Asian data centres will offer a full suite of services, providing the flexibility for enterprises and organisations to build their entire IT infrastructure for business on Alibaba Cloud or run mission-critical and core applications on it. This brings the total number of Alibaba Cloud data centres to 17 worldwide, including mainland China, Australia, Germany, Japan, Hong Kong, Singapore, the United Arab Emirates and the U.S.

In India, Alibaba Cloud is working with Global Cloud Xchange (GCX), a subsidiary of Reliance Communications, to directly access Alibaba Cloud Express Connect via GCX's CLOUD X Fusion. In addition, Alibaba Cloud has established a global partnership with Tata Communications to provide direct access to Alibaba Cloud Express Connect via Tata Communications' IZO Private Connect service. In Malaysia, Alibaba signed an MoU with Malaysia Digital Economy Corporation (MDEC), Malaysia's digital economy development agency and the Hangzhou Municipal Government to connect the first e-hubs in the two countries under its Electronic World Trade Platform (eWTP). The MoU seeks to build infrastructure for seamless cross-border e-commerce trade between Malaysia and China. In addition, Aliyun will take part in the Malaysia Multimedia Super Corridor initiatives, with a planned data centre in Malaysia later this year and certification program for local tech talents, to help local SMEs to succeed in the digital age through technology such as big data and Internet of Things (IoT). Aliyun has also been operating a data centre in Singapore since August 2015.

Big plans for Pakistan

In May, Alibaba signed a memorandum with the Trade Development Authority of Pakistan to support ecommerce development of SMEs and financial services. The goal here is for Alibaba and Ant Financial to foster growth of worldwide exports of products by small and medium sized enterprises (SMEs) in Pakistan through ecommerce. The project is supported at the highest levels of the Pakistan government, with Alibaba Group's executive chairman, Jack Ma and prime minister Nawaz Sharif witnessed the signing of the MoU. Aliyun has not built or even announced plans for a data centre in Pakistan, but this would be a logical next step. The nearest already announced Aliyun data centre would be in Mumbai, which is not a viable option for political reasons.

Under its One Belt, One Road initiative, the government of China is heavily involved in building critical infrastructure in Pakistan. For instance, the China Pakistan Economic Corridor, which was announced in 2015, includes the construction of a new deep-water international commercial port at Gwadar on the Arabian Sea in the Pakistan Province of Baluchistan. There are also upgrades to the electrical grid, highway system and airports. If Aliyun were to build a hyperscale cloud data centre in Pakistan, we would expect further upgrades to the telecom infrastructure, including perhaps large capacity terrestrial fibre cables serving the length of the China Pakistan Economic Corridor.

The full-service cloud pitch

While Aliyun continues to add to its portfolio of cloud services, often at a cadence remarkably similar to AWS, the parent company sees a bigger picture. Aliyun's mission is to move from Infrastructure-as-a-Service to Application-enhanced Cloud as a Service as rapidly as possible. There are a lot of Alibaba services under this umbrella, including:


  • Retail Cloud – Alibaba's Taobao.com and TMall application; Aliyun customers will list their products here.
  • Digital Marketing Cloud - Alimama.com, the online marketing service powered by data from Alibaba's core operations, providing customers visibility amongst Alibaba's base of buyers.
  • Logistics Cloud - Cai Niao for moving products to customers across China.
  • Digital Media Cloud - YouKu, the so-called YouTube of China, a video sharing platform and CDN that would be of interest to Aliyun customers as well.
  • Financial Services Cloud - Ant Financial, formerly known as AliPay, services include online payment processing, credit reporting, private banking and wealth management.
  • Customer Service Cloud – TIMI.
  • CityBrain – the company's SmartCity initiative, which aims to leverage AI and cloud scale to municipal traffic management, online utility management and city hall services.
  • Tailored Industry Solutions - Aliyun is working on pre-packaged and customised services for manufacturers, financial companies and hospitals.
Aliyun’s global data centres are also expected to play a role in the delivery of products sold on the Alibaba marketplaces to consumers in local markets. For instance, Alibaba is launching an AliExpress service for cross-border, direct-to-consumer retail from select Chinese manufacturers. AliExpress initially is focusing on buyers in the U.S., Russia, Spain, France, Brazil and the UK. The company claims 60 million active buyers over the past year. A similar Lazada shopping service is launching in Singapore, Malaysia, Thailand, Indonesia, Philippines and Vietnam. All this activity is to meet company goal of growing the gross merchandise volume (GMV) transacted across Alibaba from an estimated $ 547 billion in 2017 to $1 trillion in 2020.

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