Alibaba Group announced today that it will invest a further $1 billion into Aliyun, its cloud computing unit. The capital will be used to expand Aliyun, which currently has data centers in China, Hong Kong, and Silicon Valley, into other international markets.
The company plans to target the Middle East, where it recently formed a joint venture with Dubai-based holding company Meraas, Singapore, Japan and Europe.
Aliyun, which spun off from Alibaba in 2012, also disclosed that it formed a new strategic partnership with Yonyou Software, which claims to be the largest software vendor in China, as well as the largest independent enterprise software vendor in the Asia-Pacific region. Working with Yonyou can help Aliyun score more enterprise customers in Asia who need cloud computing, big data, digital marketing, and e-commerce solutions.
Another strategy of global expansion is Aliyun’s Marketplace Alliance Program, which is designed to reach new clients in North America, Asia, Europe, and the Middle East through partnerships with other tech companies. These currently include Intel, Singtel, Meraas, Equinix, PCCW, LINKBYNET, and Towngas.
Aliyun competes directly with Amazon Web Services, which is also intent on global growth. Its backing from Alibaba, however, means that Aliyun has the ability to experiment with technology like low-power server processors, which might help it save a lot of money on electricity bills as it deploys new infrastructure and gives it an edge over AWS.
Aliyun is a reminder that Alibaba’s scope goes far beyond being China’s largest e-commerce company. In addition to providing services for other companies, Aliyun powers projects like what it calls the first “cloud hospital” in China. If these initiatives succeed, it means Alibaba and its units may eventually hold a sizeable stake in almost every aspect of daily life for Chinese consumers, from grocery delivery to healthcare.
Of course, not all of Alibaba’s gambits have worked out. Aliyun’s first product, a mobile operating system meant to compete with Android, has not gained significant traction despite continued investments like a recently purchased minority stake in smartphone maker Meizu.
In a statement, Alibaba Group CEO Daniel Zhang said, “Aliyun has become a world-class computing service platform that is the market leader in China, bearing the fruits of our investment over the past six years. As the physical and digital are becoming increasingly integrated, Aliyun will serve as an essential engine in this new economy. This $1 billion investment is just the beginning; our hope is for Aliyun to continually empower customers and partners with new capabilities, and help companies upgrade their basic infrastructure.”