Alibaba in big push to take on Amazon in cloud

Alibaba taking aim at US tech
Alibaba taking aim at US tech   

In its strongest push outside of China, Alibaba has struck a series of partnerships to bolster its global cloud offerings, putting it in direct competition with the likes of Amazon, Google and Microsoft.

The deals – including one with Intel – will see Aliyun, Alibaba's cloud division, use existing data centers built by the partner companies to push its own services.

By not building new data centers Alibaba will save money and through the partnership be able to localize its cloud offering and tap potentially new markets.

"There are more and more storage problems and more and more clients are in need for bigger storage capabilities," Simon Hu, President of Aliyun, told CNBC by phone.

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The executive said Alibaba's move is aimed at giving small and medium-sized business the right infrastructure needed to harness the power of data and analytics.

"We want to be the enabler of other businesses. We want to change the industry," Hu said.

Alibaba has a total of seven partners including U.S. data center company Equinix and Singapore telecoms giant Singtel. The partnerships allow Alibaba to get a global reach for its cloud business.

Competition

Why Alibaba is moving further into the cloud
Why Alibaba is moving further into the cloud   

But the New York-listed e-commerce giant faces stiff competition from the likes of Amazon, Google, IBM and Microsoft, the dominant players in the $16 billion cloud computing market, according to Synergy Research Group.

And all of those companies show no signs of slowing down. Amazon's chief technology officer Werner Vogels, told CNBC earlier this year, that Amazon Web Services (AWS) – the company's cloud division – could overtake its retail business in 10 years. And at a number of keynote speeches, Microsoft CEO Satya Nadella has talked up the company's focus on the cloud.

But Alibaba's own revenue from cloud is growing fast too, jumping from 213 million yuan ($34 million) in the three months to the end of March 2014, to 388 million yuan in the same period this year, an 82 percent rise. Still, it only makes a tiny fraction of the company's overall revenue.

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Hu is not worried by the competition and said that the success of Aliyun's U.S. rivals will only help the company.

"They are great role models for Aliyun we want to learn from their strengths. At Aliyun we want to benefit from technology profits and help society create a better balance and increase efficiency," Hu told CNBC.

Aliyun did not unveil what the pricing would look like but Hu said it would depend on the locality.

This is not Aliyun's first foray out of China however. Earlier this year, Alibaba opened a data center in Silicon Valley, its first on U.S. turf. But the latest partnerships signal Alibaba's intent to expand rapidly without the costly burden of building more data centers in different countries.