Alibaba and Softbank Team Up to Build Japanese Cloud

May 13, 2016, 3:53 PM UTC
Photograph by Jewel Samad — AFP

Alibaba Group, the gigantic Chinese retailer and cloud services provider is working with Japan’s SoftBank Group to offer public cloud services in Japan.

Specifically, Softbank’s telecom subsidiary and Alibaba (BABA) Cloud, also known as Aliyun, launched a new venture called SB Cloud which will offer Amazon Web Services-like capabilities to business customers “from startups to multinational companies,” according to a statement released on Friday.

Alibaba will own 60% of the venture, Softbank 40%, but financial terms were not disclosed and it wasn’t clear when these Japanese cloud services would become available.

Alibaba ponies up $1 billion for its cloud push

This pairing of two tech giants is focusing on a big market—by some estimates Japan is the second largest market for cloud services in the world after the U.S.

Seattle-based Amazon (AMZN) Web Services pioneered the public cloud computing market, in which customers rent the computing power, storage, and networking they need from a provider that amasses huge amounts of that technology. The attraction for companies is they can pay for what they need and not have to build out their own data center capacity for what might be intermittent or “spiky” computing needs. A retailer, for example, could rent excess capacity on big sales days.

Amazon remains the market leader by far and it hosts a data center region in Tokyo and more than a dozen more worldwide. Microsoft Azure, the second largest public cloud network, has data centers in Tokyo and Osaka. But Alibaba is challenging Amazon abroad, as well as in the U.S., where last year it launched cloud facilities of its own for use by companies in the U.S.

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Public cloud computing is a global market with Amazon, Microsoft (MSFT), IBM (IBM) and others adding data centers around the world to better serve local companies. Earlier this week Microsoft, for example, announced plans for two new data center regions in South Korea.

While public cloud is all about supplying information technology services remotely, it’s important to put data centers close to the customers because distance adds latency, or delay, to operations. That’s why in cloud computing, as in real estate, location is everything. So expect the global land grab for data centers to continue.