On November 11th China’s Alibaba, the nation’s largest provider of cloud infrastructure, posted record sales of over $25 billion in a single day – known in China as “Singles Day,” a national holiday dedicated to the nation’s singles population. The e-commerce shopping site hyped the day extensively, with 15 million products available from over 140,000 brands of merchandise. They processed over 800 million orders, at rates said to be on the order of 175,000 transactions per second.
That’s a big deal, reminding us why the cloud is a big deal too.
Alibaba dominates the Chinese cloud, with about 60% of that market, but U.S. firms still lead globally, led by Amazon Web Services and Microsoft. China won’t issue data center licenses for foreign customers, which gives local firms like Alibaba and Tencent Holdings a big leg up there. And it shows.
Last year Chinese automaker Geely, which runs its operations in Alibaba’s cloud, ran a one-hour marketing promotion that resulted in the sale of more than 2,000 vehicles. Clients like Geely know that Alibaba will spin up a lot of servers on short notice when they need the computing power. They can make 10,000 computers available in a half hour. Think about that. Even if you owned 10,000 PCs, it would take you longer than that just to switch them on!
If anyone doubts the coming dominance and rapid build-up of cloud infrastructure, take note that Alibaba is just one of a number of companies with a massive investment in a state-of-the-art data center on the banks of a huge artificial lake. It’s a massive complex that looks like a bit like a giant server itself. It sucks and pumps water from the lake to cool down its seemingly countless servers. Eventually the water runs through a canal and back to the lake. In winter, that water is actually used to heat the office. Amazon employs a similar approach in Seattle and also in Switzerland. Data centers in Scandinavia, Iceland and Greenland are or will be employing their geothermal landscapes to much the same purpose, keeping those servers cool and humming non-stop.
As to why it’s a big deal: this is how people shop now. China’s Singles Day event is proof of concept, where 500 million consumers now comprise its middle class. That will only grow. It’s already a $5 trillion market. And within about 4 years, it is predicted that China will account for about 60% of global e-commerce. Win China, and as Forbes Magazine recently noted, you win the world.