Alibaba on cloud nine

Among the lesser-known arms of Chinese e-commerce giant Alibaba Group Holding is a business called AliCloud.

Among the lesser-known arms of Chinese e-commerce giant Alibaba Group Holding is a business called AliCloud, which held a developers’ conference in Alibaba’s home city of Hangzhou on Oct. 17.

AliCloud operates data centers: facilities that house computing equipment such as servers. Companies pay fees to AliCloud to gain access to its data centers and take advantage of its computing resources. The businesses are charged based on how much computing power they consume, much like paying utility bills. Those fees are the main source of revenue for AliCloud, which is a business division of Alibaba.

“We are like the road, and businesses that use our infrastructure are the cars that drive on the road,” said Alibaba Chief Technology Officer Wang Jian, on the sidelines of the conference.

AliCloud is still tiny compared to Alibaba’s giant shopping operations, which run sites like Taobao and Tmall and account for the majority of the company’s revenue.

Wang declined to disclose revenue or earnings figures for AliCloud, and wouldn’t say whether the business is profitable -- describing it only as “very sustainable.”

Wang said AliCloud now has about 1,000 employees — a small part of Alibaba’s 20,000-strong work force.

Wang said that AliCloud is not involved in the management and analysis of the masses of data collected by Taobao and Tmall, or Alibaba’s other units -- nor are there concrete plans to increase collaboration with AliCloud.

AliCloud also has no access to the data being collected by businesses using its cloud-computing resources, Wang said.

Representatives of some of those businesses were among the 10,000 attendees at the AliCloud conference.

One such business was 12308 Network Technology, which runs an online bus-ticket booking service that gathers information from bus terminals across China to help passengers plan their trips more efficiently.

Other than its data center offerings, AliCloud also develops its own operating systems for data centers, smartphones, smart televisions and other devices.

AliCloud’s smartphone OS, called Yun OS, faced challenges in 2012 when Google didn’t allow personal computer maker Acer to launch a new handset using it because it was “non-compatible” with Google 's Android system. Acer is a member of Android’s open handset alliance, which doesn’t allow members to work with an OS that is only partially compatible with Android.

At the conference Friday, Dutch electronics maker Philips showcased a new smartphone powered by Yun OS.

But Yun OS will likely need a lot more than the new Philips phone to make a breakthrough in the market. Philips is a minor player in smartphones, even though it is known for home appliances.

On Friday, Wang declined to comment on the outlook for Yun OS, saying that the company will hold another event soon to provide updates on the mobile OS business.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles