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Alibaba Group Holding Ltd (NYSE:BABA) Enters $1bn Cloud Partnership with Nvidia

Alibaba (BABA)

Alibaba Group Holding Ltd announced a partnership with Nvidia Corporation  that will see the two firms collaborate on development of artificial intelligence and cloud computing technologies. An estimated 1,000 developers will be hired to create a big-data platform over the next three years.

Alibaba (BABA)

The partnership will see the Chinese e-commerce giant, through its subsidiary Alibaba Cloud Computing (AliCloud), invest $1 billion to execute the project. The thinking behind the establishment of the platform is the belief that the demand for the provision of data storage and processing by companies and governments will rise exponentially over the next decade.

Provide 20 Big Data Solutions

Big data is a tech industry term used to refer to large complex amount of information that can be processed using supercomputers to reveal trends, patterns and associations.

AliCloud, formerly Aliyun, will first provide an initial range of 20 solutions and products that cover various facets of the data development chain such as analysis, machine learning and processing, computing engine and data application.

“The Big Data Platform fulfils our vision of sharing our vast data troves that will create immense value to our users,” said Simon Hu, president of AliCloud during the launch on Thursday in Shanghai. “What we want to do at Alibaba is turn the data-processing capacity and data-security capabilities that we’ve accumulated over the last decade into a product, so that data becomes a resource and a service that we can provide our clients”.

The investment is in line with Alibaba’s strategy to cash into information processing, a smart tack since China’s e-commerce market is poised to hit 10 trillion yuan ($1.5 billion) by 2020, according to research by Bain & Co. The rapid growth in demand for cloud computing services influenced Alibaba to launch another data center in California last October and announce plans to open one in Europe.

AliCloud is however venturing into other areas beside cloud-computing services. Last July, it announced plans to set up Alibaba Quantum Computing Laboratory in partnership with the Chinese Academy of Sciences in order to assist secure its network of data centers as well as build new supercomputers that could analyze complex information faster. AliCloud will partner with Nvidia to develop a customer support platform covering aspects such as high-speed computing and deep-learning.

Cloud Market Expected to Hit $120bn

Alicloud mostly relies on fees charged to clients that rely on its computing infrastructure.  A research by Forrester Research estimated that China’s enterprise cloud services market could hit $3.8 billion in the year 2020, compared with $1.8 billion last year. The business is expected to contribute at least $1 billion to Alibaba Group Holding Ltd’s  revenue by 2018, with the global public cloud industry expected to hit $120 billion in the same year, research by SunTrust Robinson Humphrey Inc. shows.

AliCloud’s strategy of going it big in big data places it in direct competition with a subsidiary of Beijing Datatang Technology known as Data Mall, which recently opened an online mall targeted at big data assets. This platform enables independent researchers and service providers to trade the huge trove of information just like regular goods.

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