When you think of the biggest cloud players in the world, one company you might not consider is Alibaba, the Chinese e-commerce giant that held a record $25 billion U.S. IPO in 2014.

Alibabaentered the cloud computing business in 2009, just three years after Amazon launched its cloud division, AWS and Alibabas cloud computing efforts are among the ambitious projects that the Chinese e-commerce giant is pursuing aggressively.

Its impossible not to note the similarities between the two companies. While Alibaba is the premier e-commerce company in China, Amazon is the biggest in the U.S.

The utter dominance of both is proven on paper: NASDAQ-listed Amazons market cap exceeds $400 billion, while Alibabais valued at $250 billion according to its NYSE share price. When it comes to the cloud, the nature of their corebusinesses and the size of their computing requirements both necessitatecomputing on a massive scale. Both believe they can parlay that knowledge and experience into a significant business offering cloud services to others.

Two years ago, Alibaba decided to take the cloud part of its business more seriously and expand outside of China with a billion dollar investment in Aliyun(now known as Alibaba Cloud in English). At the time, Alibaba Clouds president Simon Humade a bold prediction, telling Reuters, Our goal is to overtake Amazon in four years, whether thats in customers, technology, or worldwide scale.

Were at the halfway marknow and while that goal seems unlikely at this point, Alibaba has begun to make itspresence felt, particularlyin China and the rest of Asia. In fact, theres plenty of evidence that Alibaba Cloud can play an important part for Alibabas overall business.

Battling giants

Up until its financial commitment in its cloud businessin 2015, Alibaba was content to use thescale of its e-commerce services which range from a marketplace and branded mall, to payment services and digital banking and count nearly 500 million users to bring in customers for its cloud business in China. Moving out to the rest of the world has far greaterchallenges.

Still, Alibabas cloud unit has been growing at a brisk pace with triple digit year-over-year growth for its last sevenquarters including 115 percent in its most recent report in December. Based on that growth, Alibaba Cloudis probably one or two quarters from reaching break even or profit, but already it has surpassed the $1 billion run rate mark courtesy of $254 million in revenue in its most recent quarter.Not bad, but not close to AWS, which grew at a more modest 47 percent rate for a total income of $3.53 billion for the quarter or a run rate over $14 billion.

Photo: Qilai Shen/Bloomberg via Getty Images

Thats a stark difference and it shows just how far Alibaba has to go in the cloud business to catch AWS.

However, Alibaba might be doing better than you think. According to Synergy Research Group, Alibaba is sixth in the world behind AWS, Microsoft, Google, IBM and Salesforce in infrastructure, platform and hosted private cloud services (this number does not include Salesforces more substantial SaaS business).

For cloud infrastructure services (IaaS, PaaS, Hosted Private Cloud services) Alibaba is now ranked sixth, based on worldwide revenues in Q4. For China specifically, while AWS and Microsoft are in the top five ranking in China, the market is led by Alibaba (a long way out in front) followed by China Telecom. Alibaba market share is running at 40 percent [in China] and has been increasing with time, John Dinsdale, Synergyschief analyst and research director, told TechCrunch.

Alibaba itself says the cloud unitcounts 765,000 paying customers as of the last quarter. That figure represented an increase of about 114,000 on the previousquarter, although there was no equivalent number given out for theprevious year.

Moving beyondChina

While several different analysts agree with Synergys assessment of Alibaba as the clear number one cloud vendor in China,Alibaba Cloud Global GMEthan Yu concedesthat the market is still a few years behind the U.S., and there is plenty of room for growth keeping in mind that China itself represents a massive potential market.

The addressable market is getting bigger in China with only single digit IT spending in the cloud and the rest in on-prem software and hardware spending. There is still enough buy out there to move up to the cloud, Yu said in an interview with TechCrunch. He saw 2015 year as the year it all changed (the same year itinvested the$1 billion into its cloud operation).

Photo: Alibaba

I think in 2015, adopting infrastructure in the cloud, there was suddenly a change, a tipping point where most [Chinese] CIOs found it quite acceptable to use the cloud in some ways, he said. But even as the market shifts in China, the company has made it clear that its ambitions stretch far beyond its home country.

China is a big market, but the cloud market just started to grow, which gave us a good foundation. We think we can do more outside of China, but we are a few years behind. We started our global footprint a couple of years ago. We have 14 global data centers including 8 outside of China, he explained.

Like AWS, Alibaba Cloud began with smaller customers, but as it sets its sights higher in the market, it wants to lure enterprise customers to the platform. The company says that it has proven it can handle the workload from larger customers based on its abilities to handle its own massive e-commerce and financial services businesses.

Of course, landing enterprise customers in the U.S., where the new president has sentsignals of tougher trade relations with China, may prove difficult. Yu said he needs to see how trade talk plays out, but he added, For now, we dont have any comments on that.. but our position is very firm. A friendly commercial relationship will help both parties.

Alibaba might actually find itself better positioned than others in the current climate in the U.S. Executive chairman Jack Ma held a meeting with the (then) president-electin early January which culminated in a promisethat Alibaba would create one million new jobs in the U.S.

Neither man provided details on how they would achieve that, andthe promise looks like little more than grandstanding by Ma or an effort to curry favor with the new administration. Either way, Alibaba will get its first real signal soon enough. Ant Financial, an Alibaba-affiliatedfintechfirm and another ambitious project, is acquiring U.S.-based Moneygram in an $880 million deal that is pegged to close in the second half of this year, assuming that regulators and the government OKit.

The cloud unitand Ant Financial, which is close to raising $3 billion in debt funding for M&A deals, are two areas Ma and Alibaba look to for the future. Meanwhile, Alibabas core e-commerce business is performing above expectations it smashed analyst forecasts for its final quarter of 2016 and raised its expectations for the remainder of the financial year but the e-commerce giant wants to develop businesses that can reduce its reliance on its core services in China.

Those services accounted for 87 percent of theRMB 53.25 billion ($7.67 million) revenue grossed in the last quarter.

Photo: VCG/Getty Images

Alibaba Cloudcontributed just $215 million to that figure with a small$49 million loss but revenue was up 50 percent on the previous quarter alone and 115 percent on the previous year.

Although these growth figures are impressive, it would take years to reach $1 billion per quarter so Alibaba has focused on expanding its geographic footprint, pushing its cloud business into Europe, Australia, Japan and the Middle East byopening of four new data centers last November.The company has also expanded existing sites,recently doubling its capacityin Hong Kong to address increasing demand.

Alibaba isnt just relying on the cloud to generate new revenue, it is investing in what it knows: e-commerce. The company picked up a stake in Paytm, Indias top mobile wallet firm, and an online sales firm, and elsewhere in India, it was linked with a deal for Amazon rival Snapdeal. There have been many rumors but no investment nonetheless, Jack Ma has spoken publicly of his desire to expand into India, and it wouldnt be a shock if he oversawanother deal to ensure that the plan isnt entirely reliant on Paytm.

Elsewhere, last year Alibaba snapped up a controlling share in Lazada, the largest online shopping site in Southeast Asia, a region of more than 600 million consumers and increasing internet connectivity.While a 2016 report co-authored by Google suggested that online commerce in Southeast Asia will rise to reach $88 billion by 2025, the region is another slow burner for Alibaba. Onlineis thought to account for under five percent of commerce in the region, while Lazada hasyet to break even, let alone post a profit.

That really sums up many of Alibabas bets. It is still early days and the reliance remains on Taobao (its marketplace) and T-Mall (its service for brands) in China, but theres enough money in the bank to push its business interests in India, Southeast Asia and the cloud towards a higher chunk of revenue. And Ant Financial is also helping grow its e-commerce footprint abroad with investments in the U.S., Korea, Southeast Asia and beyond. In that respect, the cloud may be Alibabas longest shot or its grandest ambition.

While its not impossible for a company with the resources and reach of Alibaba to make a spirited play for cloud market share outside of Asia, it would take some unlikely shifts in the current balance of power in the marketfor it to reach Simon Hus ambitious goal of catching AWS.

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Ambitious Alibaba takes aim at the kings of cloud computing - TechCrunch

Usually people don't notice the "cloud" unless, that is, it turns into a massive storm. Which was the case Tuesday when Amazon's huge cloud-computing service suffered a major outage.

Amazon Web Services, by far the world's largest provider of internet-based computing services, suffered an unspecified breakdown in its eastern U.S. region starting about midday Tuesday. The result: unprecedented and widespread performance problems for thousands of websites and apps.

While few services went down completely, thousands, if not tens of thousands, of companies had trouble with features ranging from file sharing to webfeeds to loading any type of data from Amazon's "simple storage service," known as S3. Amazon services began returning around 4 p.m. EST, and an hour later the company noted on its service site that S3 was fully recovered and "operating normally."

THE CONCENTRATED CLOUD

The breakdown shows the risks of depending heavily on a few big companies for cloud computing. Amazon's service is significantly larger by revenue than any of its nearest rivals Microsoft's Azure, Google's Cloud Platform and IBM, according to Forrester Research.

With so few large providers, any outage can have a disproportionate effect. But some analysts argue that the Amazon outage doesn't prove there's a problem with cloud computing it just highlights how reliable the cloud normally is.

The outage, said Forrester analyst Dave Bartoletti, shouldn't cause companies to assume "the cloud is dangerous."

Amazon's problems began when one S3 region based in Virginia began to experience what the company called "increased error rates." In a statement, Amazon said as of 4 p.m. EST it was still experiencing errors that were "impacting various AWS services."

"We are working hard at repairing S3, believe we understand root cause, and are working on implementing what we believe will remediate the issue," the company said.

WHY S3 MATTERS

Amazon S3 stores files and data for companies on remote servers. Amazon started offering it in 2006, and it's used for everything from building websites and apps to storing images, customer data and commercial transactions.

"Anything you can think about storing in the most cost-effective way possible," is how Rich Mogull, CEO of data security firm Securosis, puts it.

Since Amazon hasn't said exactly what is happening yet, it's hard to know just how serious the outage is. "We do know it's bad," Mogull said. "We just don't know how bad."

At S3 customers, the problem affected both "front-end" operations meaning the websites and apps that users see and back-end data processing that takes place out of sight. Some smaller online services, such as Trello, Scribd and IFTTT, appeared to be down for a while, although all have since recovered.

The corporate message service Slack, by contrast, stayed up, although it reported " degraded service " for some features. Users reported that file sharing in particular appeared to freeze up.

The Associated Press' own photos, webfeeds and other online services were also affected.

TECHNICAL KNOCKOUTAGE

Major cloud-computing outages don't occur very often perhaps every year or two but they do happen. In 2015, Amazon's DynamoDB service, a cloud-based database, had problems that affected companies like Netflix and Medium. But usually providers have workarounds that can get things working again quickly.

"What's really surprising to me is that there's no fallback usually there is some sort of backup plan to move data over, and it will be made available within a few minutes," said Patrick Moorhead, an analyst at Moor Insights & Strategy.

AFTEREFFECTS

Forrester's Bartoletti said the problems on Tuesday could lead to some Amazon customers storing their data on Amazon's servers in more than one location, or even shifting to other providers.

"A lot more large companies could look at their application architecture and ask 'how could we have insulated ourselves a little bit more,'" he said. But he added, "I don't think it fundamentally changes how incredibly reliable the S3 service has been."

Read the rest here:
When Amazon's cloud storage fails, lots of people get wet - ABC News

Amazon Web Services. Google. IBM. Microsoft. These are just a few of the major tech movers and shakers partnering with researchers and big data providersrecently, the National Oceanic and Atmospheric Administration (NOAA)to invest in a new way of supporting a data-enabled economy: cloud computing.

The advantages and opportunities that come with working in the cloud are potentially significant for researchers, especially in terms of multidisciplinary collaboration, something CU Boulders Earth Lab team discovered firsthand after entering a cooperative research partnership with DigitalGlobe last September. The agreement allows Earth Lab researchers to access and work through DigitalGlobes 80-petabyte, cloud-based library of high-resolution satellite imagery, data and analytics tools.

The ease of access to powerful data on such a massive scale has proven a key catalyst as Earth Lab works to advance Earth and space science research alongside other pillars of CU Boulders Grand Challenge. The experience has sparked an inevitable question: How might cloud computing enhance and streamline the research being performed at CU Boulder campus-wide?

Terri Fiez, vice chancellor for Research & Innovation, has selected a team housed within the Grand Challenge initiative to execute a definition study exploring how research computing on the cloud might benefit CU Boulder and its partners in the future.

"Cloud computing has the potential to enhance existing collaborations and stimulate new ones between CU Boulder and its many research partners, both internal and external," says Fiez. "Discovering how the cloud can best support our researchers will be a key step forward in developing our long-term strategy as the innovation university."

While the need for high-performance computing (HPC) will likely remain in the coming years and beyond, a hybrid strategy that integrates cloud computing is quickly becoming a viable, and even vital, approach. Cloud computing delivers the same resources as a traditional data center at a lower-operational cost, allowing users to rent services on an as-needed basis without the upfront capital expense that comes from provisioning HPC resources.

The flexibility of the cloud platform also promises to maximize the speed, scaleand collaborative output of research partnerships.

Using virtualization approaches like containers in the cloud allows researchers to better collaborate with partners, since they are already using those approaches, says Thomas Hauser, director of research computing for CU Boulder. Containerized computational approaches enable CU researchers to create reproducible research workflows and share those approaches with our collaborators.

Larry Levine, director of Information Technology for CU Boulder, says he expects the campus to eventually move toward a "cloud-first"philosophywhere the cloud is the default (but not the only)answer for investigators computing needs. The question is always: "What isthe most optimized, efficient and cost-effective way to share data and manage access to that data?"

Levine says, "Theres no right or wrong answer. It will depend on [the]type of work people are trying to get done."

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Grand Challenge: Exploring the power of cloud computing for research partnerships - CU Boulder Today

- By Sangara Narayanan

The growth of cloud computing has huge implications for the top vendors of the segment - Amazon (AMZN), Microsoft (MSFT), IBM (IBM), Alphabet's Google (GOOG)(GOOGL) and Oracle (ORCL). The industry has seen a massive amount of growth over the last few years, and there are several indications that the current growth rate may continue for some time before it starts levelling out.

For starters, the infrastructure-as-a-service (IaaS) segment - the bedrock of cloud computing - was estimated to be worth $22 billion in 2016, showing growth of 38% compared to the previous year. Also in 2016, worldwide data center expenses alone were $173 billion, which means the third-party management infrastructure has plenty of room to expand before it can enter a more mature phase of growth.

Secondly, according to Cisco Global Cloud Index, public cloud traffic to data centers is expected to increase by a compound annual growth rate of 30% until 2020, while IDC expects 27% CAGR for the IaaS segment over the next several years.

Next, Amazon and Microsoft both reported their annual cloud revenue run-rates for the most recent quarter were in excess of $14 billion, while IBM said it made $13.67 billion from cloud during 2016. Google and Oracle have a long way to go before they can catch up with the leaders of the segment, but there is still a tremendous growth opportunity for both companies - even a decade after Amazon entrenched itself into the IaaS market.

Lastly, the entire cloud computing segment - from IaaS to SaaS - is still a high-margin business. Amazon Web Services' operating margin surpassed 30% in the most recent quarter. Meanwhile, Microsoft reported a massive 45% operating margin (first-half 2017) from its Productivity and Business Processes segment, which houses its SaaS products such as Office 365 and Dynamics 365. Intelligent Cloud, which contains Microsoft's IaaS services, posted 33.65% operating margin, similar to what Amazon Web Services reported.

From all this evidence, it is clear that the cloud infrastructure market is not only growing, but it is an extremely profitable one to be in.

RightScale, a cloud management solutions company, recently conducted a survey that found several underlying trends that will shape the industry's near-term future as well as the earnings of the top three cloud service providers. Here are the salient points:

In short, private cloud adoption, where companies own their IT infrastructure, is coming down, while 95% of the companies surveyed are running some form of cloud application.

That means most businesses around the world are already trying cloud, but have yet to move fully into it, which we know from the fact that 72% of companies are still on private clouds.

Vendor lock-in is also a threat many companies think about when moving to the cloud because they do not want to be stuck with a single provider.

Case in point, Snap Inc.'s recent IPO filing showed the company has a multicloud strategy, utilizing the services of Google's cloud platform and Amazon Web Services.

The multicloud strategy - where you use more than one cloud service or provider - has already become mainstream, and businesses around the world typically use this approach to avoid being dependent on a single provider.

Considering the current size of IT infrastructure spending worldwide, and the fact the multicloud model is here to stay, all the top vendors in the segment - and their bottom lines - stand to benefit over the next several years.

Investor takeaways

A few key points from this discussion should be noted by investors looking to put money into cloud companies.

These points should help investors better decide their level of exposure to the cloud industry. Right now, there are at least five deep-pocketed companies in this segment, and all of them have the potential to go to the next level. It is merely a matter of time before their combined efforts bring cloud into mainstream enterprise usage.

Disclosure: I have no positions in the stocks mentioned above and no intention to initiate a position in the next 72 hours.

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This article first appeared on GuruFocus.

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What You Should Know About Investing in Cloud Computing - Yahoo Finance

FREMONT, Calif.--(BUSINESS WIRE)--

RackWare, Inc., the leader in enabling comprehensive cloud computing management for the enterprise, today unveiled the latest enhancements to its flagship offering, RackWare Management Module (RMM). RMM 5.4 is the latest version of powerful software from RackWare that enables enterprises to easily and cost-effectively leverage private, public, or hybrid cloud environments without having to change applications or operating systems.

RackWares RMM platform delivers an enterprise disaster recovery solution that provides failover at a fraction of the cost of a fully replicated data center without installing, configuring, or maintaining a complicated, independent infrastructure. RMM uses its image mobility, elasticity features, and policy engine to deliver economical DR capabilities and business continuance by extending the existing IT architecture.

New features and functionality in RackWares RMM 5.4 include:

RackWare RMM can handle and protect large and complex cloud environments, ensuring business continuity across an organization, stated Bryan Gobbett, senior vice president of engineering at RackWare, Inc. The new features of RMM 5.4 further enhance our cloud management and cloud disaster recovery capabilities, which ensures our customers will have seamless access to their applications and data at any time, from any location.

RackWare is a recognized leader in cloud management and cloud disaster recovery. RackWares RMM platform facilitates automated recovery of workloads and a Self-Service DR Wizard to enable enterprises to set up Disaster Recovery-as-a-Service (DRaaS).

About RackWare

RackWare brings intelligence and automation to the cloud, providing greater availability for enterprises, greater flexibility for enterprise IT users, and reduced costs for enterprise IT providers. Computing resourcesphysical, virtual, and cloud machinescan be easily and automatically scaled up or down as demand fluctuates. On average, RackWare customers realize a cost savings of 40 to 50 percent, while getting the highest performance and availability out of their cloud. RackWare was founded in 2009 and is based in Fremont, California.

View source version on businesswire.com: http://www.businesswire.com/news/home/20170223005237/en/

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RackWare Enhances Industry-Leading Cloud Computing ... - Yahoo Finance