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Alibaba Group Holding Ltd (BABA)’s Aliyun Is Gigantic: Jack Clark

Alibaba Group Holding Ltd (NYSE:BABA)’s own cloud may actually be bigger than Amazon.com, Inc. (NASDAQ:AMZN)‘s Amazon Web Services (AWS) cloud.

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That revelation was made by Bloomberg’s Jack Clark in a report that quotes Sicheng Yu, vice president of Aliyun, the cloud business of Alibaba Group Holding Ltd (NYSE:BABA), saying that the business has over 1.4 million customers. By contrast, Amazon.com, Inc. (NASDAQ:AMZN) says that AWS has over 1 million users.

That’s is also considering that Alibaba Group Holding Ltd (NYSE:BABA)’s cloud is relatively younger than Amazon’s. Amazon has been operating AWS for nine years while Aliyun has been in business for about six years.

According to Yu, Aliyun is poised to grow even more as less than 10% of the IT spending in China is for cloud computing while the company grows from its data centers out of Beijing, Hangzhou, Qingdao, Hong Kong, and Shenzhen.

“The cloud IT infrastructure grows much faster, or 10 times faster, than the legacy IT spending,” Yu is quoted by Bloomberg as saying.

Furthermore, the firm is opening data centers outside of China. The business publication notes that just last month, Alibaba Group Holding Ltd (NYSE:BABA) opened its first overseas data center in Silicon Valley. At the time of the opening, Alibaba divulged that it served 22.8% of the Chinese infrastructure-as-a-service industry during the first six months of 2014.

Moreover, Alibaba has an advantage in China, Clark notes, as it is “woven into China’s bureaucracy”.

Nonetheless, it should be noted that AWS is no slouch.

Amazon recently revealed for the first time data about AWS. As discussed by analyst Daniel Ernst in an interview with CNBC, AWS’ trailing twelve months was reported to be $5.2 billion with an operating margin of 16%, something the analyst says he did not expect because of how low the business has been pricing its product. AWS is also said to have grown 48% year-over-year which may make it win over Aliyun if the Alibaba business does not match or exceed this growth rate.

Stanley Druckenmiller’s Duquesne Capital owned 253,900 shares in Alibaba Group Holding Ltd (NYSE:BABA) by the end of the last quarter of 2014. Duquesne Capital increased its stake in the Chinese Internet giant by a massive 2,439% quarter over quarter. The Stake made up 2.58% of the whole Duquesne Capital portfolio.

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