AliCloud Races to Build Cloud Infrastructure

The city of the future may look a little like this: you swipe your phone to buy a ticket when boarding a bus that runs on a schedule derived from data about passenger loads. When you get to your destination, your phone pushes you offers for restaurants, hotels, and shops nearby while you pay for everything on the go with only your smartphone.

This virtually cashless city where algorithms crunch data to predict your preferences is already becoming reality in Hangzhou, China, where a tie-up between e-payments provider Alipay; AliCloud, the networking and data arm of e-commerce giant Alibaba Group; and the district government has led to the creation of a “big data” zone, where consumers can shop without their wallets at 400 retails and entertainment outlets.

 

Jack Ma, Alibaba Group’s founder and executive chairman, predicted that in five years information technology will shift into an era where the big, life-changing advances will originate from big data and cloud computing industries. AliCloud, responsible for developing data technologies already in use by hundreds of thousands of China’s small businesses, is positioned to benefit from this shift by making big-data analysis accessible and useful to all companies, not just giant corporations.

Last month, AliCloud rolled out a platform that seeks to make it easier and cheaper for any company in China to crunch data using its propriety algorithms. The platform, called an Open Data Processing Service or ODPS for short, was previously only available to Taobao Marketplace and Tmall.com merchants. Companies only need to pay a fee of a few hundred Renminbi each month to use the platform.

ODPS works a bit like an electrical adaptor–companies plug their data into the platform and then key in the parameters they want to analyze. Using ODPS’s cloud computing power and algorithms, they can then extract valuable nuggets of information to use in their businesses.

For example, an apparel company on Tmall can input their historical sales data into ODPS and then select search parameters. “Our algorithms will be able to scan and predict things like future sales, or which products will sell well in the next season,” said Tang Zinan, the AliCloud ODPS product manager.

ODPS’s secret sauce is its sheer computing power. It has the ability to process in six hours 100 petabtyes of data, equivalent about 100 million high-definition movies. Allowing companies to tap this power without heavy capital spending on IT infrastructure is game-changing for smaller companies, Tang said.

AliCloud’s President Ben Wang announced on Tuesday, a plan to build a comprehensive cloud eco-system in China by recruiting thousands of industry partners and experts, in order to wean Chinese companies off the traditional methods of data processing, which require high infrastructure and software costs.

“The high capital costs involved in building data centers or hiring data engineers is not a problem for large companies, but it is not possible for small companies to achieve this,” Tang said. “ODPS allows small companies to be on the same footing as large companies when it comes to the ability to analyze data. We are essentially leveling the playing field for everyone.”

Currently, the main users of the ODPS platform are retailers and advertisers on Taobao Marketplace, Tmall.com,  and Internet marketing service Alimama, who use it predict consumer trends, detect popular keywords and  in other ways to give their businesses an edge.

ODPS is also used by Alibaba’s related companies such as Small and Micro Financial Services Company (SMFSC) and some Chinese insurance companies to assess creditworthiness. For example, the small business enterprise loan unit formerly known as Ali-Loan has been using ODPS to examine the loan applications of thousands of small online businesses, Tang said. By analyzing an applicant’s store transaction data, logistics data and store rating, the loan team is able to see if the applicant is eligible for a loan and what the loan cap should be.

Even Alibaba’s scannable drug technology, which aims to make every package of pharmaceutical drug sold in China traceable electronically, has its underlying technology routed through ODPS.

From loans to pharmaceuticals, Alibaba is placing big bets on big data and cloud technology. But the company’s strategy is not just focused on analysis, but also on storage of data and the creation of synergies between various government institutions, banks and hospitals, to create personalized and more intuitive services for users.

Technology consultancy IDC estimates that cloud spending will jump by 25 percent in 2014 to over $100 billion while spending on big data technologies and services will grow by 30 percent to more than $14 billion as the demand for big data analytics continues to rise.

The commercial district in Hangzhou is the latest addition to the ever expanding service scope of Alipay Wallet, Alipay’s mobile application. Alipay Wallet has been expanding its offline-to-offline functions and integrating it with back-end big data technology to give users a seamless experience. In June, Alipay Wallet started teaming up with hospitals across China to let patients book doctor appointments, receive test results and make hospital bill payments through their mobile phones. Alipay is also working with more Chinese city governments to widen the use of near field communication technology for passenger payments in subways and buses.

“Big data is such a hot trend that every industry hopes to be one driven by data,” Tang said. “ODPS can be that underlying platform to enable business.”.