Alibaba opens data center in Silicon Valley, eyes US cloud market

Alibaba is expanding its cloud computing services in the US, and the firm's first expansion overseas will be to Silicon Valley.


Alibaba has revealed the launch of a new data center in Silicon Valley, with an eye on taking a slice of the US cloud computing market.

On Wednesday, the Chinese e-commerce giant revealed in a blog post that Alibaba's cloud-computing subsidiary, Aliyun, will be opening the data center in order to tap into the US market.

Situated in Silicon Valley -- home of many of the world's largest tech firms and countless startups -- the data center marks Alibaba's first expansion overseas from the firm's homeland, China.

Aliyun began offering commercial cloud services in 2009, including services such as data storage. The company has data centers placed in Beijing, Hangzhou, Qingdao, Hong Kong and Shenzhen. Alibaba says its subsidiary already serves over 1.4 million customers in China, and according to Sicheng Yu, Aliyun vice president and head of its international business, there is room for more. Yu said:

"If [you] look at the overall cloud market, China represents 5 percent of the (global) public budget. So there is lots of room for us to grow outside of China, we just need to grow in a careful way."

Today, Aliyun will begin touting its services to potential US customers. However, the cloud services market is already full of stiff competition, and Alibaba will be going up against rivals including Amazon, Rackspace, IBM, SAP and Google -- just to name a few.

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This doesn't seem to have dissuaded the Chinese company. Aliyun already competes with Amazon Web Services in China, and when the firm's data center opens for business, Aliyun does not plan to immediately strike at its home-grown rivals. Instead, Aliyun will just be "testing the water," according to the executive.

"We know well what Chinese clients need, and now it's time for us to learn what US clients need," Yu said.

On launch, corporations will be offered a virtual server system, load-balancing services and data processing and storage in the cloud.

Alibaba says the company offers US customers "some unique value," and therefore "there's room for us." The Chinese firm says that Aliyun's data-management platform, one of the largest in the world, could be the selling point that reels in US customers. In addition, some US businesses may be attracted to Aliyun's operations in both the US and China, especially if they too have business interests in both countries.

Expansion into the United States is just the first step in international strategy, Yu said. By the end of 2015, Alibaba plans to expand to both Southeast Asia and Europe.

"We're going to do this step-by-step, in a phased way," Yu said. "The US is already there."

Read on: In the enterprise