Alibaba’s Cloud Subsidiary Opens Beijing Data Center

While all the hype is around Alibaba’s upcoming IPO, the company’s cloud computing subsidiary Aliyun has formally opened a data center in Beijing. The first phase consists of 10,000 servers, primarily serving clients in the Beijing and North China region.

This is the third location focused on global services for Aliyun, which also has data centers in Hangzhou and Qingdao, China Tech News reported. The company is accelerating expansion, reportedly evaluating locations overseas, the U.S. and Southeast Asia being the most likely markets it tackles next.

The provider offers four types of services: cloud servers, relational database, cloud storage and load balancing. More products are anticipated for the future. Its customers range from startups to government research institutions and financial organizations.

Aliyun’s parent company Alibaba is an e-commerce giant in China. Its IPO could mean a valuation of more than $160 billion once the offering completes. Yahoo, which owns nearly a quarter of Alibaba, has been enjoying a jump in the value of its own stock as the market prepares for what is expected to be a blockbuster float.

China remains an extremely compelling and interesting market, not just for homegrown companies, but for U.S. tech giants establishing cloud plays locally, such as Microsoft and Amazon.

There are some government hurdles and politics standing in the way of the market truly opening up, with the Chinese government imposing strict control over both business and the internet. Aliyun being local, it stands a good chance of capturing an increasing amount of the cloud market share.

TOP TEN LEGAL ISSUES IN A DATA CENTER PROJECT

Understanding the fine print on contracts for data center space

Key issues: awareness will help speed the deal

If you are involved in data center projects, an understanding of the key issues which arise from the underlying contractual documentation can assist you to execute deals faster, keep costs lower, reduce liability and future-proof your business. Data center deals vary in scale and complexity and have different legal structures. The issues raised below envisage a customer contracting with a data center operator for the delivery and use of data center space.

1. Basis of the customer’s occupation. This will vary between jurisdictions and it is important to understand the implications. In the UK, for example, occupation will be on the basis of a lease or a licence and there are fundamental differences between the two, with a lease giving the customer greater control, security of occupation and protection in the event of operator insolvency (important factors when infrastructure is supporting mission -critical data) but involving additional cost, including property tax. Flexibility will also be important – including the customer’s ability to install/remove equipment, make other alterations or assign or terminate the contract – and the parties may have competing interests which need to be balanced.

2. Design and delivery. Control over design and specification changes can cause great debate and the parties’ rights and responsibilities need to be clearly stated. Timing and measurement will also be critical and the customer may look for specific damages and ultimately the right to terminate if targets are missed. The ‘when/how/who’ of commissioning and sign-off of works needs to be addressed, with a well-advised customer wanting input into these processes.

3. Construction documentation. The underlying building contract and the professional appointments are key when significant works are involved, with greater importance being attached to the mechanical and electrical installations than on other construction projects. The operator will want to ensure its design/construction obligations to customers are passed down to its construction team wherever possible. A customer should consider requiring the ability to approve the identity of that team and obtaining duties of care from them.

4. Site specifics. Site due diligence is important to establish fundamentals such as rights of access, availability of power and requisite planning consents. Connectivity is also key and customers should ensure they have sufficient rights (and obligations on the operator) to bring in new telecommunications providers.

5. Environmental liability and taxes. The parties need to consider and address risk of potential environmental liability in respect of the site. Consider also relevant carbon emissions trading schemes under which the operator could be primarily responsible for the customer’s emissions, and how associated costs should be re-charged in this situation.

6. Clarity of scope. The contract needs to set out clearly what the operator is obliged to provide in terms of services and how related obligations (such as replacing fuel in generators) work. It is also important that the documentation allows the level of flexibility required throughout the life of the contract.

7. Clarity of price. An obvious point, but the price the customer is paying needs to be clear. Where payments are based on actual power consumed then this is relatively simple, but where they are based on assumed power consumption – perhaps by reference to number of racks installed – then some detailed thinking is needed. Is a rack treated as live once installed or only once drawing power, for example? Is there to be flexibility for the customer to draw or reserve additional power, and how does this affect the operator’s cost and revenue projections?

8. Clarity of service levels. Operators typically commit to service levels around main KPIs such as power, humidity and temperature, which are tied to a service credit mechanism. Various ‘what if’ scenarios need to be considered, a good example being where one service level failure – for example power outage – naturally leads to other service level failures: should multiple service credits arise or should they be limited to the primary failure? And for how long does a service level need to be breached for a credit to arise? A short lived temperature spike may have no major impact, but from the customer’s perspective repeated failures caused by the same problem should not count only as a single failure as otherwise the operator has less direct incentive to fix the issue quickly.

9. Effectiveness of remedies. What if things go wrong? The customer needs the ability to control risk going forward, particularly where the operator has committed a number of minor failures that undermine confidence but don’t necessarily give the customer any significant leverage under the agreement. In these situations a customer may have the right to exercise a degree of management oversight. A more powerful remedy is for the customer to step in and actually perform the services, although this is not always achievable in practice, particularly where plant supports multiple customers.

10. Liability. The parties need to strike a bargain on liability that allocates risk appropriately. Typically the parties will agree exclusions of certain types of loss (e.g. loss of profits) and apply caps on liability that reflect the insurance cover available to the parties.

The extent to which any of these issues are relevant will depend on the circumstances and the nature of the deal, but whatever the circumstances the parties each need to consider the key risks (the ‘what if’ scenarios) and ensure they have measures in place to mitigate them.

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IBM SoftLayer Extends its Cloud to Hong Kong

On March 17 in Hong Kong, IBM and SoftLayer successfully concluded the first of many intimate cloud events. IBM Cloud Event 2014 marked the beginning of the $1.2 billion investment committed towards our global expansion plans.

Growing from 13 to 40 data centers is no mean feat, and Hong Kong is the starting point. Not only does this give our customers data redundancy in Asia-Pacific, but also provides data residency to our Hong Kong-based customers. Quite simply, we are growing where you want to grow.

We’re seeing overwhelming support from our customers.

Not only did we have an opportunity to host our Hong Kong clientele, but many also traveled from cities in Greater China to be a part of this milestone. It was immensely gratifying to see them being vocal advocates of SoftLayer services. Natali Ardianto from Tiket.com, Chris Chun from 6waves and Larry Zhang representing ePRO all shared their brilliant stories with the audience.

Tiket.com’s co-founder, Natali, is especially proud of the fact that the company sold out 6,000 tickets for the K-Pop Big Bang Alive concert in 10 minutes, while their competitor’s site was unable to meet the huge demand and shut down for four hours during the peak period. Tiket.com, founded in 2011, faced TCP, DoS and DDoS attacks and tried hosting unsuccessfully on two different IaaS providers before moving to SoftLayer’s infrastructure services in 2012.

6Waves, a gaming publisher, was started in 2008. Today, built on SoftLayer, 6waves has grown to the #1 third-party publisher on Facebook. 6waves manages 14 million monthly active users and 2 million daily active users. Chris, 6waves’ CTO and co-founder, shared that since 2009 6waves has launched more than 200 games on SoftLayer.

Larry Zhang, ePRO’s senior IT manager and architect, had a similar story to share. The B2C e-commerce platform, part of China-based DX Holdings, supports more than 200,000 items in 15 categories and saw a 66 percent increase in customers from October 2011 to September 2013. ePRO is now looking to cater to the US and Australian markets, and Larry believes that SoftLayer’s aggressive expansion plans will help them meet their goal.

SoftLayer in Hong Kong

There is a vested interest in the SoftLayer-IBM integration roadmap.

Large enterprises are moving towards the cloud. This is not a forward-looking statement, it’s a fact. And from the feedback gathered and the questions put up by these organizations, it is clear that they are investing in leveraging cloud services for improving their internal processes and for bringing services to their end customers more quickly. Lance Crosby presented a SoftLayer-IBM integration roadmap. With SoftLayer forming the foundation of IBM’s cloud offerings—SaaS, PaaS and BPaaS—there is no doubt that we are as invested in this partnership as our clientele.

The strong startup community in Hong Kong is committed to growing with Softlayer.

Catalyst, SoftLayer’s startup incubator, has always had a strong presence in Hong Kong, and the startup spirit was evident on March 17 as well. The dedicated roundtable conducted for the community with Lance Crosby and Casey Lau, SoftLayer’s Catalyst representative for APAC, was the highlight of the day. Lance left us with a powerful thought, “We are here to be an extension to your infrastructure… The question is what can you build on us.”

SoftLayer builds its data centers around the world in a consistent standardized format. The company touted $4.4 billion in cloud revenue in 2013, and has been pumping in more investment as it takes on incumbent Amazon Web Services, as well as increasing pressure from the likes of Rackspace as well as most recently, Cisco, which just committed to investing $1 billion on cloud data centers and service delivery.

SoftLayer combines bare metal, virtual servers, and networking in a single platform. Everything is deployed on-demand and with full remote access and control. Customers can create public, private and hybrid cluds for their applications and workloads.

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