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Alibaba Teams With Nvidia in $1 Billion Bet on Cloud Computing

Alibaba Group Holding Ltd. will work with Nvidia Corp. on cloud computing and artificial intelligence, and plans to enlist about 1,000 developers to work on its big-data platform during the next three years.
By
  • Bloomberg

HANGZHOU, China — Alibaba Group Holding Ltd. will work with Nvidia Corp. on cloud computing and artificial intelligence, and plans to enlist about 1,000 developers to work on its big-data platform during the next three years.

The arm of China’s biggest e-commerce operator, known as AliCloud, will boost investment in data analysis and machine learning, it said in a statement Wednesday. AliCloud is staking $1 billion on the belief that demand for processing and storage from governments and companies will boost growth during the next decade as its tries to compete with Amazon.com 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 ($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, prompted Alibaba to open its 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.”

Quantum Computing

AliCloud is now 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 $1 billion of Alibaba’s revenue by 2018 and the public cloud presents a $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 $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.

By Amanda Wang, Lulu Yilun Chen; editors: Michael Tighe, Edwin Chan.

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