September 3, 2014, 4:36 PM

Alibaba expands its cloud computing business

More than 1.4 million clients use the service, which is similar to Amazon Web Services.

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Just as Amazon.com Inc. has turned its large online infrastructure into a business called Amazon Web Services, providing computer power and data storage to other organizations, China’s leading e-commerce player has created a similar revenue-generating unit, which is growing steadily.

Alibaba Group Holding Ltd. calls its networking and data arm, Alibaba Cloud Computing, and the business unit, often called AliCloud, is growing rapidly. AliCloud last week opened its fifth data center, in Shenzhen, China. The Shenzhen data center hosts approximately 10,000 servers. The other four AliCloud data centers are in Hangzhou, Beijing, Qingdao and Hong Kong.

Founded in 2009, AliCloud provide online technology and services supports for all Alibaba Group’s businesses, including processing 14.5 billion orders in 2013 between 70,000 merchants and 279 million customers on Alibaba’s two big consumer-facing marketplaces Taobao.com, Tmall.com.

The company also provides services to other companies. Those clients range from mobile app providers, Internet gaming companies, health care organizations, educational institutions and financial organizations.

“The services of AliCloud are similar to the services of public electric power networks. Without these public utilities, you may have to spend lots of money on buying a generator for making electricity. Our cloud services enable our clients to only pay for their present demand and save on initial investments, just like we use electricity today,” according to AliCloud.     

AliCloud boasts its service’s reliability and scalability, as it successfully processed 254 million orders in 24 hours during the Alibaba Group Singles Day promotion on Nov. 11, 2013, last year’s biggest online shopping day in China.

AliCloud says more than 1.4 million clients use its services. The revenue of AliCloud increased 26.2% to 650 million Yuan ($104.84 million) in 2013 from 515 million Yuan ($83.06 million) in 2012, according to financial data released by Alibaba, which is preparing for an initial public offering of stock on the New York Stock Exchange in coming weeks.

Besides providing traditional features of an e-commerce platform, such as online storefronts and an order management system, Alibaba hopes to provide more in-depth support for online merchants from its Cloud platform.

For example, AliCloud last month introduced a data mining and analytics product it calls Open Data Processing Service, or ODPS. The company says it can provide e-retailers with analytical data about web site activity at low cost. The average charge for a company is about $100 per month.

“After merchants input their sales data, our algorithm is able to scan and predict things like future sales, or which products will sell well in the next season,” AliCloud ODPS product manager Tang Zinan says.

“The high capital costs involved in building data centers or hiring data engineers is not a problem for large companies, but it is not possible for small companies to achieve this.ODPS allows small companies to be on the same footing as large companies when it comes to the ability to analyze data,” Tang adds.

Alibaba developed its own web-based, or cloud, platform, which it calls Apsara platform. It relies heavily on servers from such Chinese domestic manufacturers as Huawei Technologies Co. and Inspur Worldwide Services Ltd, Alibaba says.

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