Alibaba Subsidiary to Open Cloud Data Center in Silicon Valley update from March 2015

Alibaba's cloud services arm Aliyun is preparing to open its first overseas cloud data center in Silicon Valley. The Chinese tech giant is making a global push, with the data center a first important step.

The data center in Santa Clara, California, announced Wednesday, will provide a variety of cloud computing services. It will initially focus on Chinese companies based in the U.S., with the plan to gradually expand services and products to international clients later this year.

Alibaba has a robust set of cloud services, including Amazon Web Services-like Infrastructure-as-a-Service offerings, as well as big data analytics software for online marketers, also delivered as a service.

While details are scarce, the company is likely to have taken some amount of wholesale data center space from one of the Valley's big providers. As we reported earlier this month, there is a lot more demand for data center space in the area than there is supply, and much of that demand is coming from internet companies in Asia.

“Aliyun hopes to meet the needs of Chinese enterprises in the United States, and the ultimate objective of Aliyun is to bring cost-efficient and cutting-edge cloud computing services to benefit more clients outside China to boost their business development,” Ethan Sicheng Yu, Aliyun vice president, said in a statement.

Aliyun’s existing cloud data centers are in Hangzhou, Qingdao, Beijing, Shenzhen, and Hong Kong. Alibaba's cloud division has been growing quickly, adding a data center in Beijing, in Hong Kong, and Shenzhen all last year. The company hinted at North American expansion last August.

As of the end of June 2014, 1.4 million customers were using Aliyun services directly or indirectly through independent software vendors. A recent report from research firm IDC placed Aliyun as the largest Infrastructure-as-a-Service provider in China with close to a quarter of the market.

During a recent Shopping Festival, Aliyun handled peak order creation volumes of 80,000 orders per second, a testament to its ability to scale and the company’s network.

The company also touted its cloud security, citing successfully fending off a hacker attack on a Chinese gaming app company that is believed to be the largest DDoS (Distributed Denial of Service) attack recorded on the mainland. The attack in late December lasted 14 hours with peak attack traffic reaching 453.8 gigabytes per second.

A recent report from CDN provider Akamai on DDoS found that China is the largest emerging market for DDoS, accounting for 20 percent of attack origination. U.S. is first in terms of attack origination.

Alibaba shares are at their lowest point since the company's blockbuster IPO in September 2014. Its Rival JD.com reported better-than-expected results. The company is also in the midst of a filing controversy and a “brushing” controversy. The Wall Street Journal reported Alibaba merchants were paying people to pretend to be customers in a practice dubbed “brushing.”