Alibaba Group Holding opens its second data center in the United States

Alibaba Group Holding opens its second data center in the United States

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Alibaba Group Holding Ltd (NYSE:BABA) launched its 2nd data center in the U.S. as it spends $1 billion in its cloud computing division worldwide to compete for customers with Amazon.com, Inc.(NASDAQ:AMZN).

Ethan Yu at the company’s AliCloud unit said the new facility will target clients on the United States West Coast over the next three to five years. Yu is leading the overseas expansion of AliCloud unit. Yu said that the company is also looking forward to open its first data center in Europe in 2016.

Alibaba is relying on Web-based computing and huge data to drive growth in future. According to SunTrust Robinson Humphrey Inc, AliCloud could represent more than $1 billion of the company’s revenue by 2018 and public cloud accounts for a worldwide market opportunity of $120 billion.

Yu said in expansion, Alibaba frequently come across Amazon Web Services as the two companies are addressing a rapidly-growing market. As a rival, there are several things the company could learn from AMZN, but there are also many other ways Alibaba can differentiate itself.

The cloud business only represents a minor portion of Alibaba’s overall sales, with computing and Internet infrastructure generating 2.6 percent of revenue in June quarter.

AliCloud opened its first data center in the U.S. back in March that also marked the beginning of its global expansion. A couple of months ago, the company disclosed an investment plan of $1 billion to increase its international presence. Besides the U.S., the target regions include Europe, Japan, Singapore and Middle East.

AliCloud is comparatively smaller than few of its peers such as Amazon Web Services, but analysts rates it as the biggest provider of cloud services in China, and has the chance to grow its business in Asia and other regions as few of its Chinese clients expand their businesses outside China.

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