27 October 2016
Alibaba and Nvidia are joining forces to speed up a cloud computing platform with the scale to compete with Amazon. Photo:
Alibaba and Nvidia are joining forces to speed up a cloud computing platform with the scale to compete with Amazon. Photo:

Alibaba makes US$1 bln push against Amazon in cloud computing

Alibaba Group Holding Ltd. is working with Nvidia Corp. to ramp up development of cloud computing and artificial intelligence.

The Chinese e-commerce giant is planning to hire 1,000 developers to work on the platform in the next three years, Bloomberg reports.

AliCloud is staking US$1 billion on the belief that demand for processing and storage from governments and companies will boost growth during the next decade as it tries to compete with Inc. in computing services.

The investment also reflects Alibaba’s own appetite for information processing as China’s online retail market grows to 10 trillion yuan (US$1.5 billion) by 2020, according to Bain & Co.

The push into of cloud computing, where software and services are provided to customers via remote data centers the size of American football fields, drove the decision to open Alibaba’s second data center in Silicon Valley in October and prepare its first in Europe.

“AliCloud’s rate of growth is one of the fastest among global peers,” Simon Hu, the division’s president, said during a presentation in Shanghai.

“Apart from being fast-expanding in Asia, we will also maintain our growth in Europe and the Middle East.”

AliCloud is extending its scope beyond basic cloud-computing services.

It co-founded a quantum computing laboratory with the Chinese Academy of Sciences to help secure its data centers and develop machines capable of even faster calculations.

The company will team up with Santa Clara, California-based Nvidia to provide customer support in the areas of deep-learning and high-performance computing, AliCloud said in a statement.

AliCloud generates revenue mostly by charging clients a fee for using its computing infrastructure.

For now, it contributes a mere sliver of total revenue, with computing and Internet infrastructure accounting for 3.1 percent of sales in the June quarter according to data compiled by Bloomberg.

The business could account for more than US$1 billion of Alibaba’s revenue by 2018 and the public cloud presents a US$120 billion global market opportunity, according to SunTrust Robinson Humphrey Inc.

By comparison, Amazon Web Services’ revenue rose a better-than-expected 78 percent to US$2.1 billion in the third quarter.

Microsoft Corp. and Google Inc. also are competing to rent the data storage and computing power that are the building blocks of Internet-based systems.

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