Alibaba adds Philips, provincial governments as cloud customers

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(Oct 17): Alibaba Group Holding Ltd. is adding corporate and government clients for its cloud services as China’s biggest e-commerce operator seeks new growth drivers after a record initial public offering.

Aliyun, the company’s cloud business, is working with Royal Philips NV and the provincial Chinese governments of Zhejiang and Guizhou, Wang Jian, Alibaba’s chief technology officer, said today at a conference in Hangzhou, where Alibaba is based.

Alibaba is competing against Inc. and Tencent Holdings Ltd., as more businesses replace their servers and broadband subscriptions with cloud computing technology to cut costs. Alibaba started its cloud business in 2009 to handle rising data needs of its e-commerce platforms and is now serving 1.4 million clients directly and indirectly.

“Our customers cover every province in China, even in the very remote areas,” said Wang. “In the early days only small startups and the Internet companies would use the cloud, but today you can have Fortune 500 companies and even government.”

Alibaba, which completed the largest ever initial public offering last month, got about $125 million in revenue in the year ended March from cloud services as it catered to third party customers, according to the company’s IPO filing.

Aliyun generates revenue by charging clients a fee for using its cloud computing infrastructure.

Royal Philips will use Alibaba’s cloud technology to meet customer needs, Chen Shengyu, vice president of unit Philips China Investment Co., said at the conference.

Provincial Government

China’s Guizhou province will store and share data about transport, tourism and the environment on Alibaba’s cloud platform Ma Ningyu, vice director of the province’s economic and information technology commission, said at the conference.

Alibaba’s cloud computing processing capability reached 3.6 million transactions per minute as of December last year, according to a Sept. 18 filing to the U.S. Securities and Exchange Commission.

Alibaba began offering a mobile operating system in July 2011. The company said five handset makers in China adopted the system, which was known as AMOS, in April 2013.

The company renamed the system YunOS and said it would integrate the service into Alibaba’s cloud computing offerings, according to its filing. Yun means cloud in Chinese and can also be a play on billionaire founder and Chairman Jack Ma’s Chinese name, Ma Yun.

Alibaba said at the time it announced its mobile system that it would pay handset makers a fee of 1 yuan (16 cents) a month for every phone they sell using its software as long as the owner continues using it, according to the Alizila website, operated by Alibaba. The company is also encouraging developers to create applications for the operating system through a 1 billion-yuan fund using revenue sharing and other incentives.