Around 3.6 million websites across 464,000 distinct domains were taken offline after the major fire at an OVHcloud datacenter site in Strasbourg overnight.
More than 18% of the IP addresses attributed to OVH in Netcraft’s most recent Web Server Survey — which took place two weeks ago — were no longer responding at 06:00-07:15 UTC this morning.
Thankfully, everybody is safe; but OVH said the fire in its SBG2 datacenter was not controllable and no data is likely to be recoverable. Part of its SBG1 datacenter has also been destroyed. Firefighters were protecting SBG3 throughout the night, and although there was no direct fire impact on SBG4, it was also unavailable due to the whole site being isolated. Consequently, all services in SGB1-4 have been offline.
Websites that went offline during the fire included online banks, webmail services, news sites, online shops selling PPE to protect against coronavirus, and several countries' government websites.
Examples of the latter included websites used by the Polish Financial Ombudsman; the Ivorian DGE; the French Plate-forme des achats de l’Etat; the Welsh Government’s Export Hub; and the UK Government’s Vehicle Certification Agency website, which got a new SSL certificate by 10am and is now back online with a UK hosting company.
Unsurprisingly for a French hosting company, the most affected country code top-level domain (ccTLD) is
.fr, which had 184,000 knocked-out websites spread across 59,600 distinct domain names – these account for 1.9% of all
.fr domains in the world. In comparison, there were only 24,100
.uk websites hosted in the affected datacenters, across just 8,700 unique domains. Most of the affected websites use the generic
.com top-level domain, amounting to 880,000 websites across 180,000 domains.
As the Cloud Wars heat up, the Chinese Alibaba Group has overtaken DigitalOcean to become the second largest hosting company in the world. Netcraft's July 2017 survey found nearly 432,000 web-facing computers hosted by Alibaba.
Alibaba has clearly made significant progress in the web hosting battleground over the last five years. Its Aliyun cloud hosting service accounted for the majority of its web-facing computers in 2013, and made it the largest hosting company in China by 2015.
Since then, Aliyun's international website has been rebranded as Alibaba Cloud, and now offers even more features than before – seemingly in an attempt to take on the might of Amazon, which still reigns as the world's largest hosting company.
Cloud Wars: Episode II?
All three of the world's largest hosting companies – Amazon, Alibaba Group, and DigitalOcean – have achieved their positions by offering relatively low-cost cloud computing resources. While there is unavoidable overlap between the features offered by each company, a comparison of Amazon's pricelist and a list Alibaba Cloud's new offerings reveals some striking similarities.
For instance, Alibaba's general purpose virtual servers are known as Elastic Compute Service (ECS) instances, while Amazon Web Services offers similarly capable Elastic Compute Cloud (EC2) instances. Alibaba and Amazon also both offer private inter-instance networking, load balancing, auto scaling, cloud content delivery, and elastic IP addresses. Alibaba's ApsaraDB for RDS service provides features similar to Amazon's own Relational Database Service (Amazon RDS), and its Object Storage Service (OSS) is akin to Amazon's Simple Storage Service (S3).
This trend – where Alibaba Cloud appears to be implementing very similar features to those provided by Amazon Web Services – ought to be of great concern to Amazon. In a cloud hosting market with few distinguishing features amongst the leading providers, success could ultimately boil down to which one is cheapest.
Alibaba Cloud ready to grow its international customer base
Accessibility and ease of use can also play an important part in the success of a hosting provider, and Aliyun had some fundamental limitations that held back its earlier growth. Most notably, its virtual machines could only be hosted in China, which meant that they could not be bought by many customers outside China, and it was unsuitable for hosting websites that had an international audience.
Any customer who wanted to buy a virtual server at Aliyun had to go through an identity verification process that required them to be a national of China or one of a few other Asia-Pacific countries, or to represent a Chinese company. Also, all websites hosted in China were – and still are – required by law to obtain an ICP licence.
Flaky cross-border internet connectivity, along with potential interference by the Great Firewall of China, also made China a poor location to host any website that has an international audience. The aliyun.com website itself was also hosted in China, resulting in a very poor user experience from outside China – many international requests were unreasonably slow, and some did not succeed at all:
Alibaba Cloud has resolved these connectivity issues by opening overseas data centres and hosting the international version of its website – alibabacloud.com in Singapore. Singapore has numerous submarine cables that provide links throughout Asia, Australia, the Middle East, Europe and the US. This connectivity results in faster, more consistent international response times, with very few requests failing.
Alibaba Cloud's new data centers
In addition to its six data centers in mainland China, Alibaba Cloud now operates several others located in Hong Kong, Japan, Singapore, Australia, Dubai, Germany and the United States. It is also planning to open more in India and Indonesia by March 2018.
These additional hosting locations effectively eliminate the regulatory issues that were associated with hosting websites in China, and also resolve performance issues. Not only is the connectivity to these countries significantly more reliable, but a customer also has the opportunity to get faster connection times by choosing a data center that is closer to its primary audience.
To facilitate growth in the world market, https://www.alibabacloud.com/ automatically presents international visitors with an English-language version of the site. Logged-in users can control their products via an international version of Alibaba Cloud's control panel at https://home-intl.console.aliyun.com, and a ticket-based support system is also available in English. Previously, the Aliyun website, control panel and technical support were only available in Chinese.
Conversely, Amazon's support for Chinese customers has also improved, and after broadening its operating relationship with the Beijing Sinnet Technology Co., it has been able to comply with Chinese telecom regulations and simplify its billing and fapiao invoice processes.
Alibaba Cloud's new international site features interactive background animations, headline offers, and detailed information about each Alibaba Cloud product. However, there are still problems to be ironed out, which become evident before a user has even managed to create an account. For example, signing up for a free Alibaba Cloud account via the international site requires the prospective customer to verify his email address by entering a number that is sent to the address; however, no such emails were received by Netcraft following several signup attempts during July.
Clicking the "Not receiving an email?" link takes the user to a help page that advises, "If you still fail to receive an email, please contact us via email@example.com." This merely routes the prospective customer down another frustrating dead-end: The server at alicloud.com does not accept SMTP connections, and Alibaba has failed to configure an MX record for the alicloud.com domain, and so any emails to this address will never be delivered.
Problems like these could immediately deter – or simply prevent – customers from signing up in the first place, although they may just be teething problems caused by Aliyun's international rebranding to Alibaba Cloud. This transition was still in progress while this article was being written, with some pages on https://intl.aliyun.com/ later redirecting to equivalent pages on https://www.alibabacloud.com.
Alibaba Cloud's enormous potential
Netcraft's July 2017 survey found that 93% of Alibaba's web-facing computers use IP addresses that are allocated to China, followed by 6% in the United States.
Considering how massive Alibaba Cloud is in China alone, it has enormous potential if it can attract similar levels of custom from the rest of the world. It is also a testament to how big a player China is on the internet – not only does it have more than twice as many internet users as the United States, but a company with most of its servers in China is now ranked #2 in the world.
Connectivity-wise, there seems to be no reason why Alibaba Cloud should not do well outside of China. For example, here is a performance chart of one of its smallest ECS instances hosted in Germany, collocated in a data center owned by Vodafone:
Should Amazon be afraid?
Amazon currently hosts more than 836,000 web-facing computers, which is nearly twice as many as Alibaba Group; although Amazon has had a considerable head start over both DigitalOcean and Alibaba, which are both relative newcomers.
Amazon has been the largest hosting company since September 2012, before the first DigitalOcean droplet had even appeared in Netcraft's survey. While this goes to demonstrate the impressive speed of DigitalOcean's growth over the past four years, Amazon is now growing at an even faster pace:
Although Alibaba is far from threatening Amazon's lead, its operations outside of China are arguably still in their infancy. In fact, the 402,000 web-facing computers it hosts from China-allocated IP addresses would alone be sufficient to make Alibaba the second largest hosting company in the world today.
By starting off in China, Alibaba has made significant progress and gained considerable experience in a market it understands well. Alibaba Cloud has used this experience to develop and refine its products, and time will tell if it is able to enjoy similar success across the global market.
Both Amazon and Alibaba have the financial might to drive future growth and develop (or copy) new cloud hosting innovations. Unlike DigitalOcean – which is purely a cloud hosting company – Amazon and Alibaba both attract billions of dollars of revenue from their online retail operations. These provide easily accessible surety for their hosting subdivisions, while DigitalOcean has been funded by lines of credit and investment capital.
Alibaba Cloud is finally price competitive
Another factor that held back Aliyun in the past was its relatively high pricing compared with its competitors. In 2013, its cheapest cloud instance was almost twice the cost of Amazon's cheapest, and the subsequent rise of DigitalOcean made Aliyun even less competitive. By 2015, DigitalOcean's $5/month droplets worked out less than a third of the cost of an equivalent instance at Aliyun.
But Alibaba Cloud has worked towards addressing these pricing discrepancies. Today, it is much more price competitive, with many services being cheaper than Amazon AWS. While it is difficult to make a direct comparison between competing specifications, Alibaba Cloud's regular pricing is also much closer to DigitalOcean's for some instance types – and some of its current promotional offers make it significantly cheaper.
In a move to capture new customers, one of Alibaba Cloud's headline promotional offers is an SSD cloud server for only $30 per year, which is 84% less than its regular pricing. These single-core instances come with 1GB memory, a 40GB SSD Cloud Disk, and 1TB/month data transfer, which gives them a higher spec than DigitalOcean's cheapest $60/year instances, while having the same amount of SSD storage as DigitalOcean's $240/year instances.
Alibaba Cloud accepts PayPal
Amazon AWS and Alibaba Cloud both accept credit cards as payment methods, but Alibaba also accepts PayPal, which is likely to work in its favour. Some people perceive PayPal payments to be less risky and more convenient, but Alibaba's history with PayPal raises the question of whether it will always remain a payment option at Alibaba Cloud.
For instance, Alibaba's international AliExpress online marketplace used to accept PayPal, but it no longer does. AliExpress customers are instead given a multitude of other payment options, which includes credit cards, bank transfers, Webmoney, Yandex.Money, and Western Union. Similarly, Amazon does not allow PayPal as a payment method – either for AWS or on its main online retail site – perhaps because it operates its own competing service in the form of Amazon Pay.
Notably, Alibaba also operates its own third-party online payment platform called Alipay, which is also a payment option on AliExpress, but not on Alibaba Cloud. It would be surprising if this payment method were not also made available on Alibaba Cloud in the future, as payments funded by a sufficient Alipay wallet balance would presumably be free to handle, or certainly cheaper to handle than a credit card payment. Alipay is still the primary payment method for Chinese cloud customers on cn.aliyun.com.
Alibaba's prior experience with several other payment methods on AliExpress also suggests that it could easily introduce additional payment methods for Alibaba Cloud in the future.
Who is using Alibaba Cloud?
Chinese companies are still the most prominent users of Alibaba Cloud, which is no surprise given that most of its web-facing computers are still hosted in China.
Although Alibaba has the second largest number of web-facing computers, it has a relatively low presence among the world's top million websites – only 6,560 are hosted by Alibaba, compared with 13,000 at DigitalOcean and 79,800 at Amazon. Alibaba's lower turnout is not too surprising, as many of the sites hosted in China are likely only intended for Chinese audiences, and therefore end up with a lower global rank.
Some of the highest ranked websites hosted in Alibaba's US data centers – and therefore more readily accessible by an international audience – belong to Alibaba Group companies. This includes several hostnames used by its AliExpress online retail service, which allows Chinese retailers to sell to international customers. Customers in mainland China are not allowed to buy from AliExpress; instead, they would use Alibaba's Taobao marketplace, which is hosted in China.
Other high-ranking sites hosted outside of mainland China include those operated by the academic publisher IVY, which specialises in the publication of international Chinese journals. China's biggest video site, Youku – which was acquired by Alibaba Group in 2016 – also has a reliable international presence by virtue of using the Alibaba Cloud CDN, which has 530 edge nodes around the world.
As with Amazon AWS, the cloud computing instances provided by Alibaba Cloud give customers plenty of control over not just what software is installed on them, but also which operating systems they use. This consequently results in a diverse ecosystem of operating systems within its cloud. Windows Server has always been big in China, and indeed, this is reflected by 37% of web-facing computers at Alibaba running Windows.
Alibaba Cloud also provides several Linux operating systems for its ECS instances, including various versions of Ubuntu, Debian, CoreOS, CentOS, FreeBSD, OpenSUSE, SUSE Linux, and its own Alibaba Cloud Linux; however, CentOS is the recommended distribution.
These Linux operating systems make up 58% of the web-facing Alibaba Cloud, and cost less than Windows instances, which incur a premium of roughly $5 per core per month to cover the cost of Windows licensing. For example, a 4-core Generation II ecs.n1.large instance costs $107.20/month when running Linux, or $127.94/month when running Windows Server 2016 Data Center Edition 64-bit English Edition.
Surprisingly, one of the Windows versions that was still available for new instances earlier this month was the end-of-life Windows Server 2003 R2, although customers had to explicitly acknowledge that they had understood the risks of running an operating system that is no longer supported by Microsoft, and agree to Alibaba's Agreement on Application for Continuing Using Windows Server 2003 Image Service. This agreement was only available in Chinese, again demonstrating that Alibaba Cloud has not yet fully transitioned to a global market.
Despite the risks of running unsupported operating systems, around 6% of the web-facing computers hosted by Alibaba are using Windows Server 2003. This proportion will soon decrease, as Alibaba made its Windows Server 2003 images unavailable to new ECS instances from 20 July 2017.
Alibaba Cloud has implemented many products and services that are similar to those provided by Amazon AWS, and it is now making a concerted effort to expand its cloud hosting operations outside of China by providing data centers in several other countries.
Despite an impressive feature set, Alibaba Cloud's growth outside China is not yet as impressive as it has been in China. Possible reasons for this include better promotional offers for new users at Amazon AWS, cheaper regular pricing (and simpler cloud instances) at DigitalOcean, and a website that is not completely ready for an international audience. Furthermore, developers who have already invested time and effort into launching services on AWS or DigitalOcean are unlikely to jump ship to a new and unfamiliar platform unless there are significant advantages.
Some prospective customers may simply be put off by the fact that Alibaba Group is a Chinese company. The Chinese government is notorious for censoring what its citizens can see on the internet, and so there may be fear and uncertainty over whether such control could also extend to customer content hosted by Alibaba in other countries.
Perhaps with more aggressive promotional offers, or successful case studies of non-Chinese companies using Alibaba Cloud, it may be able to accelerate its worldwide growth. The infrastructure is already in place, so it could ultimately be marketing that makes Alibaba Cloud a serious contender in the Cloud Wars. It has already overtaken DigitalOcean in terms of web-facing computers, and stands every chance of catching up with Amazon if it plays its cards right.
Netcraft's web survey techniques provide an independent view with a consistent methodology on the number of web-facing computers at each hosting location worldwide. For more information, see our Hosting Provider Server Count.
Posted by Paul Mutton in Hosting
Since being seized, the btc-e.com domain has pointed to a different web server, hosted by 1&1 Internet in the United States. It now displays nothing more than a customary seizure notice, announcing that it has been seized as part of a joint law enforcement operation involving the FBI, IRS, DoJ, FDIC, Homeland Security and the Secret Service.
But evidently, hosting a 383 KB PNG image on a static HTML page is harder than it might seem. Most requests to the new site either fail to connect, or are very slow – much slower than when the site was still operating as an exchange for Bitcoins and other cryptocurrencies. Back then, btc-e.com was served via the Cloudflare content delivery network, which explains the relatively stellar performance in the run-up to its seizure.
The seizure of btc-e.com relates to a large-scale money laundering operation, which included Bitcoins stolen from the now-defunct Mt.Gox exchange. It is not clear whether the poor performance of the new site is simply being caused by an unsuitable hosting platform, or by deliberate protest attacks from aggrieved parties. Users who had Bitcoins tied up in BTC-e may never get them back.
More than 600,000 web-facing computers — which host millions of websites — are still running Windows Server 2003, despite it no longer being supported.
Extended support for Windows Server 2003 ended on July 14, 2015. Crucially, this means that Microsoft will no longer be issuing security updates for any version of Windows Server 2003. US-CERT warns that these unsupported installations of Windows Server 2003 are exposed to an elevated risk of cybersecurity dangers, such as malicious attacks or electronic data loss.
Windows Server 2003 was originally launched over 12 years ago, with the latest major update being released 8 years ago in the form of Service Pack 2. This update was particularly beneficial for web servers, as it added the Scalable Networking Pack (SNP), which allowed for hardware acceleration of network packet processing.
Fifth of the internet still running Windows Server 2003
Netcraft's July 2015 Web Server Survey found 175 million websites that are served directly from Windows Server 2003 computers. These account for more than a fifth of all websites in the survey, making the potential attack surface huge.
Most of these sites (73%) are served by Microsoft Internet Information Services 6.0, which is the version of IIS that shipped with Windows Server 2003 and the 64-bit edition of Windows XP Professional; however, it is rare to see the latter being used as a web server platform.
The remaining Windows Server 2003-powered sites use a variety of web server software, with GSHD 3.0, Safedog 4.0.0, Apache 2.2.8 (Win32), kangle 3.4.8, NetBox Version 2.8 Build 4128 and nginx/1.0.13-win32 being amongst the most commonly seen Server headers. While vulnerabilities in these software products can be addressed by applying patches or updates, future vulnerabilities in the underlying Windows Server 2003 operating system may never be fixed.
14 million of the sites did not send a Server header at all, so it was not apparent whether the web server software used by these sites could be updated, but the underlying computers could still be identified as running Windows Server 2003. Netcraft determines the operating system of a remote web server by analysing the low-level TCP/IP characteristics of response packets, and so it is independent of whichever server software the site claims to be running.
Backend servers might also be exploitable
In addition to the 175 million websites that are served directly from Windows Server 2003 computers, a further 1.7 million sites served from other operating systems sent the Microsoft-IIS/6.0 Server header. This indicates the presence of backend Windows Server 2003 machines behind load balances and similar devices that are not running Windows.
For example, if the TCP/IP characteristics of a web server's response indicate that it is running Linux, but the HTTP Server header reports it is using Microsoft-IIS/6.0, then the Linux machine is likely to be acting as a reverse proxy to a Windows Server 2003 machine running IIS 6.0. Although the Windows Server 2003 machine is not directly exposed to the internet, it may still be possible for a remote attacker to exploit certain Windows and IIS vulnerabilities.
How many Windows Server 2003 installations are exposed to the web?
Netcraft has developed a technique for identifying the number of unique computers that act as web servers on the internet. The 175 million sites that use Windows Server 2003 make use of 1.6 million distinct IP addresses. However, an individual computer running Windows Server 2003 may have multiple IP addresses, which makes this an unsuitable metric for determining how many installations there are.
Further analysis of the low-level TCP/IP characteristics reveals a total of 609,000 web-facing computers running Windows Server 2003. This is over 10% of all web-facing computers, and shows the true potential cost of migration, as software licensing is typically charged on a per-machine rather than per-IP address basis.
Who's still using Windows Server 2003?
China and the United States account for 55% of the world's Windows Server 2003 computers (169,000 in China and 166,000 in the US), yet only 43% of all other web facing computers.
Within China, more than 24,000 of these computers are hosted by Alibaba Group. Nearly half of these are hosted by HiChina, which was acquired by Alibaba in 2009, while 7,500 are hosted at its rapidly growing cloud hosting unit, Aliyun.
One of the most prominent companies still using Windows Server 2003 on the internet is LivePerson, which is best known for the live chat software that allows its customers to talk to their visitors in realtime. Its main site at www.liveperson.com uses Microsoft IIS 6.0 on Windows Server 2003, and several other sites related to its live chat functionality — such as sales.liveperson.net — also appear to use IIS 6.0 on Server 2003, but are served via F5 BIG IP web-facing devices.
Even some banks are still using Windows Server 2003 and IIS 6.0 on their main sites, with the most popular ones including Natwest, ANZ, and Grupo Bancolombia. These sites rank amongst the top 10,000 in the world, and hundreds of other banking sites also appear to be using Windows Server 2003.
ING Direct and Caisse d'Epargne are also using IIS 6.0, but these sites appear to be served through F5 BIG-IP or similar devices, rather than having Windows Server 2003 machines exposed directly to the internet. Even some security and antivirus software vendors are still running IIS 6.0 on public-facing sites, including Panda Security and eScan.
While Microsoft does not officially offer any support beyond the extended support period ("Once a product transitions out of support, no further support will be provided for the product"), reports suggest that some companies who have not migrated in time have arranged to pay millions of dollars for custom support deals.
PCI compliance: Automatic failure
Companies still using unsupported operating systems like Windows Server 2003 in a cardholder data environment should migrate immediately. All organisations and merchants who accept, transmit or store cardholder data must maintain a secure PCI compliant environment.
The Payment Card Industry Data Security Standard (PCI DSS) provides a baseline of technical and operational requirements designed to protect cardholder data and sensitive authentication data. PCI DSS Requirement 6.2 requires all system components and software to be protected from known vulnerabilities by installing vendor-supplied security patches. This will not be possible with Windows Server 2003, as no more security updates will be made available by Microsoft.
Additionally, merchants and service providers who handle a large enough volume of cardholder data must have quarterly security scans by a PCI SSC Approved Scanning Vendor (such as Netcraft) in order to maintain compliance. ASVs are required to record an automatic failure if the merchant's cardholder data environment uses an operating system that is no longer supported.
In some cases, the PCI SSC can allow for risks to be mitigated through the implementation of suitable compensating controls, but these are unlikely to be sufficient for an unsupported web-facing operating system – especially one which will become less secure as time goes by, as new vulnerabilities are discovered.
Consequently, many merchants still using Windows Server 2003 is likely to be noncompliant, and could face fines, increased transaction fees, reputational damage, or other potentially disastrous penalties such as cancelled accounts.
Microsoft advises that any datacenter still using Windows Server 2003 needs to protect its infrastructure by planning and executing a migration strategy. Some possible options suggested by Microsoft include switching to Windows Server 2012 R2, Microsoft Azure or Office 365. To help customers migrate, Microsoft has provided an interactive Windows Server 2003 Migration Planning Assistant, which, incidentally, is hosted on Microsoft Azure.
Finding out more
Netcraft's techniques provide an independent view with a consistent methodology on the number of web-facing computers at each hosting location worldwide. For more information, see our Hosting Provider Server Count, or contact us at firstname.lastname@example.org for bespoke datasets.
For more information about Netcraft's Automated Vulnerability Scanning for PCI Compliance, please contact us at email@example.com.
[Read this article in English]
Posted by Wenxiao Yuan (苑文筱) in Hosting
Chinese cloud hosting company Aliyun is growing faster than ever, with more than 8,000 more web-facing computers found in the May 2015 survey than in April's. This growth has launched Aliyun's parent company, Alibaba Group, into position as the 4th largest hosting company in the world, as well as the largest in China.
This reflects a positive change in Aliyun's fortunes, whose earlier impressive growth had started to stagnate towards the end of 2013. However, growth later resumed in earnest, coinciding with Aliyun's partnership with rival cloud computing company Inspur in July 2014. The growth has continued ever since, with the largest absolute growth being seen between April 2015 and May 2015.
Aliyun now accounts for 38% of the web-facing computers hosted by Alibaba Group, while 44% are operated by HiChina, which was acquired by Alibaba in 2009. If the latest growth trends continue, Aliyun will soon account for the majority of web-facing computers at Alibaba.
All of the web-facing computers at Aliyun are located in China, which offers significant advantages for the local market. Hosting a website close to its end-users generally results in faster page loads, but increased reliability is the most crucial factor in this case. Connectivity between China and other countries is often slow, unstable or even blocked, making China the most practical location for hosting websites aimed at local consumers.
However, this also means that Aliyun would be a troublesome choice for any company that has a significant user base outside of China. This is exemplified by the following graph, which shows the performance and reliability of www.aliyun.com when accessed from the Netherlands:
This connectivity problem has so far proven to be insurmountable, and is likely to be a showstopper for most companies with customers outside of China. Unfortunately, this problem only seems to be getting worse: Nearly half of the requests made from the Netherlands over the past 20 days failed, whereas only 4% failed during a similar 20-day period in 2013.
Globally, Amazon continues to dominate the hosting arena with nearly three times as many web-facing computers as Alibaba Group. DigitalOcean recently usurped OVH Net to become the second largest hosting company. Amazon, DigitalOcean and Aliyun are all similar in that they provide relatively low-cost virtual servers, but Aliyun's growth is likely restricted by the impracticalities of using it to serve content outside of China.
Considering this rather significant restriction, it is impressive that Aliyun's current growth rate is almost on par with DigitalOcean's (in fact, Alibaba Group as a whole exceeded DigitalOcean's absolute growth in May 2015). This growth perhaps demonstrates the scale of the Chinese market, and if it were practical to use Aliyun to host websites for a global audience, Aliyun could well give Amazon a run for its money.
Amazon and DigitalOcean are likely to remain ahead for a fair while, particularly as they both provide a variety of hosting locations in several different countries. This gives customers flexibility over where a website can be hosted, providing not just performance benefits, but also regulatory ones — for example, German data protection laws limits where companies can store personal data, in particular making it unappealing to do so outside of Germany or the EU.
Amazon is perhaps still best known for its retail operations, but recently surprised some analysts by announcing that its Amazon Web Services segment is profitable. This segment generated sales of $1.57bn in the first quarter of 2015, and operating income of $265m, demonstrating that it can now operate without having to fall back on Amazon's other revenue streams.
Aliyun operates under a similar safety net, with its parent, Alibaba Group, having significant revenue from other business areas, including business-to-business trading via alibaba.com and an eBay-like consumer-to-consumer marketplace on taobao.com. Both Aliyun and Amazon Web Services have had opportunities to grow in this relatively risk-free environment, where – if necessary – they can be supported by the parent group's other business areas.
With this safety net in place, Aliyun is well placed to continue its growth within China, and could even contemplate adding datacenters abroad. Notably, its ability to invest in new datacenters is not likely to be a problem: Alibaba Group (NYSE:BABA) has a higher market capitalisation than Amazon (NASDAQ:AMZN).
Aliyun has already tried to attract foreign customers by offering support and site content in English, and aliyun.com also mentions that it is "preparing to support more languages to improve user experience". New customers must provide their phone number when creating an Aliyun account, which is verified by text message in the 23 supported countries. Customers in other countries can also register an Aliyun account by following a slower offline registration process.
However, any plans for global expansion could be scuppered unless Aliyun can solve the connectivity issues and also match the low prices offered by DigitalOcean, where the cheapest virtual machine costs only $5/month, including up to 1TB of data transfer. A somewhat-similar Elastic Compute Service instance at Aliyun (1-core, 512MB memory, 20GB storage, bandwidth limited to 3Mbps) costs ¥109/month, making it more than three times as expensive. This instance costs only ¥38/month if the customer chooses Aliyun's pay-as-you-go option for bandwidth (which would cope better with bursts of traffic), but this could work out far more expensive for heavy users — at ¥0.80 per GB of outbound public network traffic, 1TB of traffic would cost over $120 at Aliyun, whereas it is included in the price of DigitalOcean's $5 droplet.