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For information on OpenStack provided earlier on this blog see:
– Disaggregation in the next-generation datacenter and HP’s Moonshot approach for the upcoming HP CloudSystem “private cloud in-a-box” with the promised HP Cloud OS based on the 4 years old OpenStack effort with others, ‘Experiencing the Cloud’, Dec 10, 2013
– Red Hat Enterprise Linux OpenStack Platform 4 delivery and Dell as the first company to OEM it co-engineered on Dell infrastructure with Red Hat, ‘Experiencing the Cloud’, Feb 19, 2014
To understand the OpenStack V4 level state-of-technology-development as of June 25, 2015:
– go to my homepage: https://lazure2.wordpress.com/
– or to the OpenStack related part of Microsoft Cloud state-of-the-art: Hyper-scale Azure with host SDN — IaaS 2.0 — Hybrid flexibility and freedom, ‘Experiencing the Cloud’, July 11, 2015
May 19, 2016:
With OpenStack in tow you’ll go far — be it your house, your bank, your city or your car.
Just look at all of the exciting places we’re going:
From the phone in your pocket
The telecom industry is undergoing a massive shift, away from hundreds of proprietary devices in thousands of central offices accumulated over decades, to a much more efficient and flexible software plus commodity hardware approach. While some carriers like AT&T have already begun routing traffic from the 4G networks over OpenStack powered clouds to millions of cellphone users, the major wave of adoption is coming with the move to 5G, including plans from AT&T, Telefonica, SK Telekom, and Verizon.
We are on the cusp of a revolution that will completely re-imagine what it means to provide services in the trillion dollar telecom industry, with billions of connected devices riding on OpenStack-powered infrastructure in just a few years.
To the living room socket
The titans of TV like Comcast, DirecTV, and Time Warner Cable all rely on OpenStack to bring the latest entertainment to our homes efficiently, and innovators like DigitalFilm Tree are producing that content faster than ever thanks to cloud-based production workflows.
Your car, too, will get smart
Speaking of going places, back here on earth many of the world’s top automakers, such as BMW and the Volkswagen group, which includes Audi, Lamborghini, and even Bentley, are designing the future of transportation using OpenStack and big data. The hottest trends to watch in the auto world are electric zero emissions cars and self-driving cars. Like the “smart city” mentioned above, a proliferation of sensors plus connectivity call for distributed systems to bring it all together, creating a huge opportunity for OpenStack.
And your bank will take part
Money moves faster than ever, with digital payments from startups and established players alike competing for consumer attention. Against this backdrop of enormous market change, banks must meet an increasingly rigid set of regulatory rules, not to mention growing security threats. To empower their developers to innovate while staying diligent on regs and security, financial leaders like PayPal, FICO, TD Bank, American Express, and Visa are adopting OpenStack.
Your city must keep the pace
Powering the world’s cities is a complex task and here OpenStack is again driving automation, this time in the energy sector. State Grid Corporation, the world’s largest electric utility, serves over 120 million customers in China while relying on OpenStack in production.
Looking to the future, cities will be transformed by the proliferation of fast networks combined with cheap sensors. Unlocking the power of this mix are distributed systems, including OpenStack, to process, store, and move data. Case in point: tcpcloud in Prague is helping introduce “smart city” technology by utilizing inexpensive Raspberry Pis embedded in street poles, backed by a distributed system based on Kubernetes and OpenStack. These systems give city planners insight into traffic flows of both pedestrians and cars, and even measure weather quality. By routing not just packets but people, cities are literally load balancing their way to lower congestion and pollution.
From inner to outer space
The greatest medical breakthroughs of the next decade will come from analyzing massive data sets, thanks to the proliferation of distributed systems that put supercomputer power into the hands of every scientist. And OpenStack has a huge role to play empowering researchers all over the globe: from Melbourne to Madrid, Chicago to Chennai, or Berkeley to Beijing, everywhere you look you’ll find OpenStack.
To explore this world, I recently visited the Texas Advanced Computing Center (TACC) at the University of Texas at Austin where I toured a facility that houses one of the top 10 supercomputers in the world, code named “Stampede
But what really got me excited about the future was the sight of two large OpenStack clusters: one called Chameleon, and the newest addition, Jetstream, which put the power of more than 1,000 nodes and more than 15,000 cores into the hands of scientists at 350 universities. In fact, the Chameleon cloud was recently used in a class at the University of Arizona by students looking to discover exoplanets. Perhaps the next Neil deGrasse Tyson is out there using OpenStack to find a planet to explore for NASA’s Jet Propulsion Laboratories.
Where should we go next?
Mark Collier is OpenStack co-founder, and currently the OpenStack Foundation COO. This article was first published in Superuser Magazine, distributed at the Austin Summit.
May 9, 2016:
From OpenStack Summit Austin, Part 1: Vendors digging in for long haul by Al Sadowski, 451 Research, LLC: This report provides highlights from the most recent OpenStack Summit
THE 451 TAKE OpenStack mindshare continues to grow for enterprises interested in deploying cloud-native applications in greenfield private cloud environments. However, its appeal is limited for legacy applications and enterprises sold on hyperscale multi-tenant cloud providers like AWS and Azure. There are several marquee enterprises with OpenStack as the central component of cloud transformations, but many are still leery of the perceived complexity of configuring, deploying and maintaining OpenStack-based architectures. Over the last few releases, processes for installation and upgrades, tooling, and API standardization across projects have improved as operators have become more vocal during the requirements phase. Community membership continues to grow on a global basis, and the supporting organization also depicts a similar geographic trend.
… Horizontal scaling of Nova is much improved, based on input from CERN and Rackspace. CERN, an early OpenStack adopter, demonstrated the ability for the open source platform to scale – it now has 165,000 cores running OpenStack. However, Walmart, PayPal and eBay are operating larger OpenStack environments.
May 18, 2015:
Walmart‘s Cloud Journey by Amandeep Singh Juneja
May 19, 2015:
OpenStack Update from eBay and PayPal by Subbu Allamaraju
May 18, 2015:
Architecting Organizational Change at TD Bank by Graeme Peacock, VP Engineering, TD Bank Group
TD Bank uses cloud as catalyst for cultural change in IT
May 9, 2016: From OpenStack Summit Austin, Part 1: Vendors digging in for long haul continued:
While OpenStack may have been conceived as an open source multi-tenant IaaS, its future success will mainly come from hosted and on-premises private cloud deployments. Yes, there are many pockets of success with regional or vertical-focused public clouds based on OpenStack, but none with the scale of AWS or the growth of Microsoft Azure. Hewlett Packard Enterprise shuttered its OpenStack Helion-based public cloud, and Rackspace shifted engineering resources away from its own public cloud. Rackspace, the service provider with the largest share of OpenStack-related revenue, says its private cloud is growing in the ‘high double digits.’ Currently, 56% of OpenStack’s service-provider revenue total is public cloud-based, but we expect private cloud will account for a larger portion over the next few years.
October 21, 2015:
A new model to deliver public cloud by Bill Hill, SVP and GM, HP Cloud
December 1, 2015:
May 9, 2016: From OpenStack Summit Austin, Part 1: Vendors digging in for long haul continued:
As of the Mitaka release, two new gold members were added: UnitedStack and EasyStack, both from China. Other service providers and vendors shared their customer momentum and product updates with 451 Research during the summit. Among the highlights are:
- AT&T has cobbled together a DevOps team from 67 different organizations, in order to transform into a software company.
- All of GoDaddy’s new servers are going into its OpenStack environment. It is also using the Ironic (bare metal) project and exploring containers on OpenStack.
- SwiftStack built a commercial product with an AWS-like consumption model using the Swift (object storage) project. It now has over 60 customers, including eBay, PayPal, Burton Snowboards and Ancestry.com.
- OVH is based in France and operates a predominately pan-Europe public cloud. It added Nova compute in 2014, and currently has 75PB on Swift storage.
- Unitas Global says OpenStack-related enterprise engagements are a large part of its 100% Y/Y growth. While it does not contribute code, it is helping to develop operational efficiencies and working with Canonical to deploy ‘vanilla’ OpenStack using Juju charms. Tableau Software is a client.
- DreamHost is operating an OpenStack public cloud, DreamCompute, and is a supporter of the Astara (network orchestration) project. It claims 2,000 customers for DreamCompute and 10,000 customers for its object storage product.
- Platform9 is a unique OpenStack in SaaS startup with 20 paying customers. Clients bring their own hardware, and the software provides the management functions and takes care of patching and upgrades.
- AppFormix is a software startup focused on cloud operators and application developers that has formed a licensing agreement with Rackspace. Its analytics and capacity-planning dashboard software will now be deployed on Rackspace’s OpenStack private cloud. The software also works with Azure and AWS.
- Tesora is leveraging the Trove project to offer DBaaS. The vendor built a plug-in for Mirantis’ Fuel installer. The collaboration claims to make commercial, open source relational and NoSQL databases easier for administrators to deploy.
April 25, 2016:
AT&T’s Cloud Journey with OpenStack by Sorabh Saxena SVP, Software Development & Engineering, AT&T
OpenStack + AT&T Innovation = AT&T Integrated Cloud.
AT&T’s network has experienced enormous growth in traffic in the last several years and the trend continues unabated. Our software defined network initiative addresses the escalating traffic demands and brings greater agility and velocity to delivering features to end customers. The underlying fabric of this software defined network is AT&T Integrated Cloud (AIC).
Sorabh Saxena, AT&T’s SVP of Software Development & Engineering, will share several use cases that will highlight a multi-dimensional strategy for delivering an enterprise & service provider scale cloud. The use cases will illustrate OpenStack as the foundational element of AIC, AT&T solutions that complement it, and how it’s integrated with the larger AT&T ecosystem.
As the Senior Vice President of Software Development and Engineering at AT&T, Sorabh Saxena is leading AT&T’s transformation to a software-based company. Towards that goal, he is leading the development of platforms that include AT&T’s Integrated Cloud (AIC), API, Data, and Business Functions. Additionally, he manages delivery and production support of AT&T’s software defined network.
Sorabh and his organization are also responsible for technology solutions and architecture for all IT projects, AT&T Operation Support Systems and software driven business transformation programs that are positioning AT&T to be a digital first, integrated communications company with a best in class cost structure. Sorabh is also championing a cultural shift with a focus on workforce development and software & technology skills development.
Through Sorabh and his team’s efforts associated with AIC, AT&T is implementing an industry leading, highly complex and massively scaled OpenStack cloud. He is an advocate of OpenStack and his organization contributes content to the community that represents the needs of large enterprises and communication services providers.
April 25, 2016: And the Superuser Award goes to… AT&T takes the fourth annual Superuser Award.
AUSTIN, Texas — The OpenStack Austin Summit kicked off day one by awarding the Superuser Award to AT&T.
NTT, winners of the Tokyo edition, passed the baton onstage to the crew from AT&T.
AT&T is a legacy telco which is transforming itself by adopting virtual infrastructure and a software defined networking focus in order to compete in the market and create value for customers in the next five years and beyond. They have almost too many OpenStack accomplishments to list–read their full application here.The OpenStack Foundation launched the Superuser Awards to recognize, support and celebrate teams of end-users and operators that use OpenStack to meaningfully improve their businesses while contributing back to the community.
April 1, 2016: Austin Superuser Awards Finalist: AT&T
The legacy telecom is in the top 20 percent for upstream contributions with plans to increase this significantly in 2016.
It’s time for the community to determine the winner of the Superuser Award to be presented at the OpenStack Austin Summit. Based on the nominations received, the Superuser Editorial Advisory Board conducted the first round of judging and narrowed the pool to four finalists.
Now, it’s your turn.
The team from AT&T is one of the four finalists. Review the nomination criteria below, check out the other nominees and cast your vote before the deadline, Friday, April 8 at 11:59 p.m.Pacific Daylight Time. Voting is limited to one ballot per person.
How has OpenStack transformed your business?
AT&T is a legacy telco which is transforming itself by adopting virtual infrastructure and a software defined networking focus in order to compete in the market and create value for customers in the next five years and beyond.
- Virtualization and virtual network functions (VNFs) are of critical importance to the Telecom industry to address growth and agility. AT&T’s Domain 2.0 Industry Whitepaper released in 2013 outlines the need as well as direction.
- AT&T chose OpenStack as the core foundation of their cloud and virtualization strategy
- OpenStack has reinforced AT&T’s open source strategy and strengthened our dedication to the community as we actively promote and invest resources in OpenStack
- AT&T is committing staff and resources to drive the vision and innovation in the OpenStack and OPNFV communities to help drive OpenStack as the default cloud orchestrator for the Telecom industry
- AT&T as a founding member of the ETSI ISG network functions virtualization (NFV) helped drive OpenStack as the cloud orchestrator in the NFV platform framework. OpenStack was positioned as the VIM – Virtual Infrastructure Manager. This accelerated the convergence of the Telco industry onto OpenStack.
OpenStack serves as a critical foundation for AT&T’s software-defined networking (SDN) and NFV future and we take pride in the following:
- AT&T has deployed 70+ OpenStack (Juno & Kilo based) clouds globally, which are currently operational. Of the 70+ clouds 57 are production application and network clouds.
- AT&T plans 90% growth, going to 100+ production application and network clouds by the end of 2016.
- AT&T connects more than 14 million wireless customers via virtualized networks, with significant subscriber cut-over planned again in 2016
- AT&T controls 5.7% of our network resources (29 Telco production grade VNFs) with OpenStack, with plans to reach 30% by the end of 2016 and 75% by 2020.
- AT&T trained more than 100 staff in OpenStack in 2015
AT&T plans to expand to expand its community team of 50+ employees in 2016 As the chosen cloud platform OpenStack enabled AT&T in the following SDN and NFV related initiatives:
- Our recently announced 5G field trials in Austin
- Re-launch of unlimited data to mobility customers
- Launch of AT&T Collaborate a next generation communication tool for enterprise
- Provisioning of a Network on Demand platform to more than 500 enterprise customers
- Connected Car and MVNO (Mobile Virtual Network Operator)
- Mobile Call Recording
- Internally we are virtualizing our control services like DNS, NAT, NTP, DHCP, radius, firewalls, load balancers and probes for fault and performance management.
Since 2012, AT&T has developed all of our significant new applications in a cloud native fashion hosted on OpenStack. We also architected OpenStack to support legacy apps.
- AT&T’s SilverLining Cloud (predecessor to AIC) leveraged the OpenStack Diablo release, dating as far back as 2011
- OpenStack currently resides on over 15,000 VMs worldwide, with the expectation of further, significant growth coming in 2016-17
- AT&T’s OpenStack integrated Orchestration framework has resulted in a 75% reduction in turnaround time for requests for virtual resources
- AT&T Plans to move 80% of our Legacy IT into the OpenStack based virtualized cloud environment within coming years
- Uniform set of APIs exposed by OpenStack allows AT&T business units to leverage a “develop-once-run-everywhere” set of tools OpenStack helps AT&T’s strategy to begin to adopt best of the breed solutions at five 9’s of reliability for:
- Internet-scale storage service
- Putting all AT&T’s workloads on one common platform Deployment Automation: OpenStack modules have enabled AT&T to cost-effectively manage the OpenStack configuration in an automated, holistic fashion.
- Using OpenStack Heat, AT&T pushed rolling updates and incremental changes across 70+ OpenStack clouds. Doing it manually would be take many more people and a much longer schedule.
- Using OpenStack Fuel as a pivotal component in its cloud deployments AT&T accelerates the otherwise consuming, complex, and error-prone process of deploying, testing, and maintaining various configuration flavors of OpenStack at scale. AT&T was a major contributor towards Fuel 7.0 and Fuel 8.0 requirements. OpenStack has been a pivotal driver of AT&T’s overall culture shift. AT&T as an organization is in the midst of a massive culture shift from a Legacy Telco to a company where new skills, techniques and solutions are embraced.
OpenStack has been a key driver of this transformation in the following ways:
- AT&T is now building 50 percent of all software on open source technologies
- Allowing for the adoption of a dev ops model that creates a more unified team working towards a better end product
- Development transitioned from a waterfall to cloud-native CICD methodologies
- Developers continue to support OpenStack and make their applications cloud-native whenever possible.
How has the organization participated in or contributed to the OpenStack community?
AT&T was the first U.S. telecom service provider to sign up for and adopt the then early stage NASA-spawned OpenStack cloud initiative, back in 2011.
- AT&T has been an active OpenStack contributor since the Bexar release.
- AT&T has been a Platinum Member of the OpenStack Foundation since its origins in 2012 after helping to create its bylaws.
- Toby Ford, AVP AT&T Cloud Technology has provided vision, technology leadership, and innovation to OpenStack ecosystem as an OpenStack Foundation board member since late 2012.
- AT&T is founding member of ETSI, and OPNFV.
- AT&T has invested in building an OpenStack upstream contribution team with 25 current employees and a target for 50+ employees by the end of 2016.
- During the early years of OpenStack, AT&T brought many important use-cases to the community. AT&T worked towards solving those use-cases by leveraging various OpenStack modules, in turn encouraging other enterprises to have confidence in the young ecosystem.
- AT&T drove these following Telco-grade blueprint contributions to past releases of OpenStack:
- VLAN aware VMs (i.e. Trunked vNICs) – Support for BGP VPN, and shared volumes between guest VMs
- Complex query support for statistics in Ceilometer
- Spell checker gate job
- Metering support for PCI/PCIe per VM tenant
- PCI passthrough measurement in Ceilometer – Coverage measurement gate job
- Nova using ephemeral storage with cinder
- Climate subscription mechanism
- Access switch port discovery for bare metal nodes
- SLA enforcement per vNIC – MPLS VPNaaS
- NIC-state aware scheduling
- Toby Ford has regularly been invited to present keynotes, sessions, and panel talks at a number of OpenStack summits. For instance: Role of OpenStack in a Telco: User case study – at Atlanta Summit May 2014 – Leveraging OpenStack to Solve Telco needs: Intro to SDN/NFV – Atlanta Summit May 2014 – Telco OpenStack Roadmap Panel Talk – Tokyo Summit October 2015 – OpenStack Roadmap Software Trajectory – Atlanta Summit May 2014 – Cloud Control to Major Telco – Paris Summit November 2014.
- Greg Stiegler, assistant vice president – AT&T cloud tools & development organization represented the AT&T technology development organization at the Tokyo Summit.
- AT&T Cloud and D2 Architecture team members were invited to present various keynote sessions, summit sessions and panel talks including: – Participation at the Women of OpenStack Event – Tokyo Summit 2015 – Empower Your Cloud Through Neutron Service Function Chaining – Tokyo Summit Oct 2015 – OPNFV Panel – Vancouver Summit May 2015 – OpenStack as a Platform for Innovation – Keynote at OpenStack Silicon Valley – Aug 2015 – Taking OpenStack From Zero to Production in a Fortune-500 – Tokyo Summit October 2015 – Operating at Web-scale: Containers and OpenStack Panel Talk – Tokyo Summit October 2015 * AT&T strives to collaborate with other leading industry partners in the OpenStack ecosystem. This has led to the entire community benefiting from AT&T’s innovation.
- Margaret Chiosi gives talks worldwide on AT&T’s D2.0 vision at many Telco conferences ranging from Optics (OFC) to SDN/NFV conferences advocating OpenStack as the de-facto cloud orchestrator.
- AT&T Entertainment Group (DirecTV) architected multi-hypervisor hybrid OpenStack cloud by designing Neutron ML2 plugin. This innovation helped achieve integration between legacy virtualization and OpenStack.
- AT&T is proud to drive OpenStack adoption by sharing knowledge back to the OpenStack community in the form of these summit sessions at the upcoming Austin summit:
- Telco Cloud Requirements: What VNFs Are Asking For
- Using a Service VM as an IPv6 vRouter
- Service Function Chaining
- Technology Analysis Perspective
- Deploying Lots of Teeny Tiny Telco Clouds
- Everything You Ever Wanted to Know about OpenStack At Scale
- Valet: Holistic Data Center Optimization for OpenStack
- Gluon: An Enabler for NFV
- Among the Cloud: Open Source NFV + SDN Deployment
- AT&T: Driving Enterprise Workloads on KVM and vCenter using OpenStack as the Unified Control Plane
- Striving for High-Performance NFV Grid on OpenStack. Why you, and every OpenStack community member should be excited about it
- OpenStack at Carrier Scale
- AT&T is the “first to market” with deployment of OpenStack supported carrier-grade Virtual Network Functions. We provide the community with integral data, information, and first-hand knowledge on the trials and tribulations experienced deploying NFV technology.
- AT&T ranks in the top 20 percent of all companies in terms of upstream contribution (code, documentation, blueprints), with plans to increase this significantly in 2016.
- Commits: 1200+
- Lines of Code: 116,566
- Change Requests: 618
- Patch Sets: 1490
- Draft Blueprints: 76
- Completed Blueprints: 30
- Filed Bugs: 350
- Resolved Bugs: 250
What is the scale of the OpenStack deployment?
- AT&T’s OpenStack based AIC is deployed at 70+ sites across the world. Of the 70+ 57 are production app and network clouds.
- AT&T plans 90% growth, going to 100+ production app and network clouds by end of 2016.
- AT&T connects more than 14 million of the 134.5 million wireless customers via virtualized networks with significant subscriber cutover planned again in 2016
- AT&T controls 5.7% of our network resources (29 Telco production grade VNF) with a goal of high 80s by end of 2016) on OpenStack.
- Production workloads also include AT&T’s Connected Car, Network on Demand, and AT&T Collaborate among many more.
How is this team innovating with OpenStack?
- AT&T and AT&T Labs are leveraging OpenStack to innovate with Containers and NFV technology.
- Containers are a key part of AT&Ts Cloud Native Architecture. AT&T chairs the Open Container Initiative (OCI) to drive the standardization around container formats.
- AT&T is leading the effort to improve Nova and Neutron’s interface to SDN controllers.
- Margaret Chiosi, an early design collaborator to Neutron, ETSI NFV, now serves as President of OPNFV. AT&T is utilizing its position with OPNFV to help shape the future of OpenStack / NFV. OpenStack has enabled AT&T to innovate extensively.
The following recent unique workloads would not be possible without the SDN and NFV capabilities which OpenStack enables: * Our recent announcements of 5G field trials in Austin * Re-launch of unlimited data to mobility customers * Launch of AT&T Collaborate * Network on Demand platform to more than 500 enterprise customers * Connected Car and MVNO (Mobile Virtual Network Operator) * Mobile Call Recording New services by AT&T Entertainment Group (DirecTV) that would use OpenStack based cloud infrastructure in coming years: * NFL Sunday Ticket with up to 8 simultaneous games * DirecTV Streaming Service Without Need For satellite dish
In summary – the innovation with OpenStack is not just our unique workloads, but also to support them together under the same framework, management systems, development/test, CI/CD pipelines, and deployment automation toolset(s).
Who are the team members?
- AT&T Cloud and D2 architecture team
- AT&T Integrated Cloud (AIC) Members: Margaret Chiosi, distinguished member of technical staff, president of OPNFV; Toby Ford, AVP – AT&T cloud technology & D2 architecture – strategy, architecture & pPlanning, and OpenStack Foundation Board Member; Sunil Jethwani – director, cloud & SDN architecture, AT&T Entertainment Group; Andrew Leasck – director – AT&T Integrated cloud development; Janet Morris – director – AT&T integrated cloud development; Sorabh Saxena, senior vice president – AT&T software development & engineering organization; Praful Shanghavi – director – AT&T integrated cloud development; Bryan Sullivan – director member of technical staff; Ryan Van Wyk – executive director – AT&T integrated cloud development.
- AT&T’s project teams top contributors: Paul Carver, Steve Wilkerson, John Tran, Joe D’andrea, Darren Shaw.
April 30, 2016: Swisscom in Production with OpenStack and Cloud Foundry
Swisscom has one of the largest in-production industry standard Platform as a Service built on OpenStack. Their offering is focused on providing an enterprise-grade PaaS environment to customers worldwide and with various delivery models based on Cloud Foundry and OpenStack. Swisscom embarked early on the OpenStack journey to deploy their app cloud partnering with Red Hat, Cloud Foundry, and PLUMgrid. With services such as MongoDB, MariaDB, RabbitMQ, ELK, and an object storage, the PaaS cloud offers what developers need to get started right away. Join this panel for take-away lessons on Swisscom’s journey, the technologies, partnerships, and developers who are building apps everyday on Swisscom’s OpenStack cloud.
May 23, 2016: How OpenStack public cloud + Cloud Foundry = a winning platform for telecoms interview on ‘OpenStack Superuser’ with Marcel Härry, chief architect, PaaS at Swisscom
Swisscom has one of the largest in-production industry standard platform-as-a-service built on OpenStack.
Their offering focuses on providing an enterprise-grade PaaS environment to customers worldwide and with various delivery models based on Cloud Foundry and OpenStack. Swisscom, Switzerland’s leading telecom provider, embarked early on the OpenStack journey to deploy their app cloud partnering with Red Hat, Cloud Foundry and PLUMgrid.
Superuser interviewed Marcel Härry, chief architect, PaaS at Swisscom and member of theTechnical Advisory Board of the Cloud Foundry Foundation to find out more.
How are you using OpenStack?
OpenStack has allowed us to rapidly develop and deploy our Cloud Foundry-based PaaS offering, as well as to rapidly develop new features within SDN and containers. OpenStack is the true enabler for rapid development and delivery.
An example: after half a year from the initial design and setup, we already delivered two production instances of our PaaS offering built on multiple OpenStack installations on different sites. Today we are already running multiple production deployments for high-profile customers, who further develop their SaaS offerings using our platform. Additionally, we are providing the infrastructure for numerous lab and development instances. These environments allow us to harden and stabilize new features while maintaining a rapid pace of innovation, while still ensuring a solid environment.
We are running numerous OpenStack stacks, all limited – by design – to a single region, and single availability zone. Their size ranges from a handful of compute nodes, to multiple dozens of compute nodes, scaled based on the needs of the specific workloads. Our intention is not to build overly large deployments, but rather to build multiple smaller stacks, hosting workloads that can be migrated between environments. These stacks are hosting thousands of VMs, which in turn are hosting tens of thousands of containers to run production applications or service instances for our customers.
What kinds of applications or workloads are you currently running on OpenStack?
We’ve been using OpenStack for almost three years now as our infrastructure orchestrator. Swisscom built its Elastic Cloud on top of OpenStack. On top of this we run Swisscom’s Application Cloud, or PaaS, built on Cloud Foundry with PLUMgrid as the SDN layer. Together, the company’s clouds deliver IaaS to IT architects, SaaS to end users and PaaS to app developers among other services and applications. We mainly run our PaaS/Cloud Foundry environment on OpenStack as well as the correlated managed services (i.e. a kind of DBaaS, Message Service aaS etc.) which are running themselves in Docker containers.
What challenges have you faced in your organization regarding OpenStack, and how did you overcome them?
The learning curve for OpenStack is pretty steep. When we started three years ago almost no reference architectures were available, especially none with enterprise-grade requirements such as dual-site, high availability (HA) capabilities on various levels and so forth. In addition, we went directly into the SDN, SDS levels of implementation which was a big, but very successful step at the end of the day.
What were your major milestones?
Swisscom’s go-live for its first beta environment was in spring of 2014, go live for an internal development (at Swisscom) was spring of 2015, and the go-live for its public Cloud Foundry environment fully hosted on OpenStack was in the fall of 2015. The go-live date for enterprise-grade and business-critical workloads on top of our stack from various multinational companies in verticals like finance or industry is spring, 2016, and Swisscom recently announced Swiss Re as one of its first large enterprise cloud customers.
What have been the biggest benefits to your organization as a result of using OpenStack?
Pluggability and multi-vendor interoperability (for instance with SDN like PLUMgrid or SDS like ScaleIO) to avoid vendor lock in and create a seamless system. OpenStack enabled Swisscom to experiment with deployments utilizing a DevOps model and environment to deploy and develop applications faster. It simplified the move from PoC to production environments and enabled us to easily scale out services utilizing a distributed cluster-based architecture.
What advice do you have for companies considering a move to OpenStack?
It’s hard in the beginning but it’s really worth it. Be wise when you select your partners and vendors, this will help you to be online in a very short amount of time. Think about driving your internal organization towards a dev-ops model to be ready for the first deployments, as well as enabling your firm to change deployment models (e.g. going cloud-native) for your workloads when needed.
How do you participate in the community?
This year’s Austin event was our second OpenStack Summit where we provided insights into our deployment and architecture, contributing back to the community in terms of best practices, as well as providing real-world production use-cases. Furthermore, we directly contribute patches and improvements to various OpenStack projects. Some of these patches have already been accepted, while a few are in the pipeline to be further polished for publishing. Additionally, we are working very closely together with our vendors – RedHat, EMC, ClusterHQ/Flocker, PLUMgrid as well as the Cloud Foundry Foundation – and work together to further improve their integration and stability within the OpenStack project. For example, we worked closely together with Flocker for their cinder-based driver to orchestrate persistency among containers. Furthermore, we have provided many bug reports through our vendors and have worked together with them on fixes which then have made their way back into the OpenStack community.
We have a perfect solution for non-persistent container workloads for our customers. We are constantly evolving this product and are working especially hard to meet the enterprise- and finance-verticals requirements when it comes to the infrastructure orchestration of OpenStack.
Härry spoke about OpenStack in production at the recent Austin Summit, along with Pere Monclus of PLUMgrid, Chip Childers of the Cloud Foundry Foundation, Chris Wright of Red Hat and analyst Rosalyn Roseboro.
May 10, 2016: Lenovo‘s Highly-Available OpenStack Enterprise Cloud Platform Practice with EasyStack press release by EasyStack
What will happen in 2014 on the U.S. e-commerce market as a consequence of that?
This is something new to you? I suggest to read first my previous three analyses:
– The Upcoming Mobile Internet Superpower [Aug 13, 2013]
– The value of Taobao.com and TMall.com in China, as well as outside [Sept 2, 2013]
– Alibaba to secure “centuries” of the future of an already “US$150 billion ecosystem of consumers, merchants and business partners” via an internal partnership (rejuvenated each year) of top executive owners (with just 10% of shares) also controlling the board [Oct 3, 2013]
If still in doubt read Amazon Vs. Alibaba: Game On [Seeking Alpha, Dec 26, 2013]
1. In 2013 the following strategic investments were already done in the U.S.:
2. Also because Jack Ma [is] Person of the Year by the Financial Times [CCTV News YouTube channel, Dec 30, 2013] for very good reasons
According to the Financial Times Person of the year: Jack Ma [Dec 12, 2013] this was given for a number of reasons from which I will quote only the following two excerpts:
Alibaba’s sales now exceed those of eBay and Amazon combined and make up about 2 per cent of China’s gross domestic product. Seventy per cent of all Chinese package deliveries come from Alibaba sales. Roughly 80 per cent of Chinese ecommerce transactions are conducted through Alibaba’s sites. And this is probably just the beginning, considering more than half of China is still offline. With 600m people using the internet and counting, China will soon overtake the US as the world’s biggest ecommerce market.
That 2% of China’s GDP would be about US$177 billions (given the forecast of 7.6% growth for 2013 and US$ 8230 billion for 2012 as per http://www.tradingeconomics.com/china/gdp). According to China’s economy projected to grow steadily, dynamically: economists [Xinhua, Jan 6, 2014]: “China was likely to maintain steady growth of 7.5 percent to 8 percent in real terms in 2014”. This means that Alibaba’s sales only (i.e. without Alibaba’s financial services, see below) contribution to China’s 2014 GDP could easily surpass US$200 billions by the end of this year.
Mr Ma is now setting his eyes on a new goal: shaking up Chinese finance. This has sent shockwaves through the staid, state-dominated financial sector and shows that his ambitions extend well beyond online retail.
3. Indeed, these January 2014 quotes from the Chinese media are providing extraordinary evidence regarding Jack Ma’s new goal of shaking up Chinese finance:
Tuning up for 2014 reform (2) [Jan 5]:
Carr at North Square Blue Oak … points out that e-commerce giant Alibaba Group’s Yu’ebao fund lured 100 billion yuan($16.5 billion) away from the country’s bank deposits in just four months.
“New innovative financial products such as this are already causing quite a lot of disruption to the financial system,” she says.
Last year was widely seen as “ground zero for Chinese Internet finance,” partly because of the phenomenon involving “Yu’E Bao (Leftover Treasure)”, a personal online finance product introduced in June by Internet giant Alibaba. It allows users to place their driblet savings — no less than one yuan — into a money market fund.
As of the end of 2013, Yu’E Bao had 43.03 million users with aggregate deposits of 185.3 billion yuan (30.4 billion U.S. dollars), the biggest single public fund in China. Internet finance has for the first time become part of life for many Chinese people.
China will set up three to five fully private banks on a trial basis this year in a bid to further open up the banking sector to domestic and foreign capital, China’s banking regulator said Monday.
Private capital will be introduced to restructure current banking institutions or set up new ones bearing their own risks, the China Banking Regulatory Commission (CBRC) said in a work meeting.
Strict procedures and standards will be set for the pilots, with demanding set-up criteria, limited licenses, enhanced supervision and a risk handling system, according to the CBRC.
The CBRC will try to relax the threshold for foreign capital to enter China’s banking sector and ease Renminbi operation requirements, while more policies will be issued to support banking reform in the Shanghai free trade zone and financial reform pilot zone.
The reform plan China’s central government released in November 2013 allows qualified private investors to set up banks.
Shanda, the veteran online gaming company, is the first Internet company that settled in the newly established Shanghai Free Trade Zone, planning to build Internet-based financial business and a joint bank there.
3rd payment firms enter the fray [Jan 7]:
Third-party payment companies, after a decade of fast development, are providing not only payment services but also services traditionally provided by banks, such as loans.
Among these companies, Alibaba Group Holding Ltd – China’s largest e-commerce company – has gone further than others. Alibaba plans to set up Alibaba Small and Micro Financial Services Group to consolidate its online payment and micro loan businesses, and provide financial services for consumers and small and micro enterprises – those with an annual turnover of less than 30 million yuan (4.8 million U.S. dollars).
The company has made it clear that its two main business arms will be e-commerce and financial services based on its huge e-commerce data. The latter is thought to be a challenge to banks and may change the financial industry landscape due to the use of Internet technology and the huge amount of data that records users’ history and habits.
“For the past 13 years, Alibaba hasn’t thought of challenging anyone, but creating something new instead,” Alibaba’s Chairman Jack Ma said at an industry forum late March when asked whether his company aims to challenge banks.
“Banks are getting a bit nervous. But I think that getting nervous is good, and it would be strange if they aren’t,” Ma said.
“If banks weren’t nervous, China’s small and micro businesses would be nervous,” Ma added, hinting that banks fail to provide enough services to help small and micro enterprises raise funds.
It takes only one click to transfer the balance in an Alipay account to Yuebao on either the website or the mobile app, Alipay Wallet. The mutual fund is managed by THFund, a mutual fund company Alibaba bought a controlling stake in in 2013 — THFund raised to the second biggest mutual fund company in terms of the total assets under management in 2013, up from lower than 50th one year ago, thanks to Yuebao. Users can use the money in Yuebao for online shopping anytime they like.
Yuebao’s slogan is “14 times of the return from banks”. It sounds attractive, but Yuebao doesn’t perform better than the average mutual funds. The convenience must be a key factor in attracting users. Another attractiveness is Yuebao shows returns daily.
Apart from running a mutual fund by using user’s balance, there’s a bigger picture for Alipay.
Before long, several Chinese Internet companies launched online mutual funds and gave them similar names, such as Suning’s Yifubao, but none could be the same with Yuebao.
Alipay itself was established for Alibaba’s e-commerce marketplaces. When one user uses money in Yuebao for shopping on Alibaba’s platforms, that will be translated into transaction-based commission to Alibaba. If Yuebao is widely recognized and users would always deposit money into it, users don’t have to make payments through banks anymore. When it comes to the mutual fund itself, the more users on board and more money tansferred into it, the lower, theoretically, the risk.
Fan Zhiming, president of Alifinance for Domestic Market, said at an event last month that they’d possibly make Yuebao a default that any balance in an Alipay account would buy the mutual fund automatically.
Alifinance, the finance arm of Alibaba Group, has already disrupted China’s finance sector with services like Alipay and small loans for online retailers.
Instant messaging app WeChat has helped Chinese internet giant Tencent become the first company to secure a position in the mobile internet market, but it is expected to face greater competition from rivals, the Shanghai-based First Financial Daily reports.
One of the chief rivals is the Alibaba Group. An employee of the e-commerce business leader told the newspaper that the company was planning to target WeChat in four areas — telecom services, its own IM app Laiwang [with a free data plan], vendors on its online platforms, and through the celebrities using the Sina Weibo microblogging service.
Sina launched a payment solution, Weibo Payment, together with Alipay today. It is already available with the 4.2 version of Sina Weibo app released yesterday. Fan Zhiming , head of Alifinance for Domestic Market, made it clear that Weibo Payment is aimed at WeChat Payment when it comes to the convenience of making payments online or offline, and social shopping. He asked the audience to “forget about WeChat Payment” at the press conference today, saying Weibo Payment will perform better.
From now on all the items from Alibaba’s Taobao and Tmall shared or shown as ads on Sina Weibo will have a “buy” button that will lead users to make payments directly with Alipay.
4. No wonder that Alipay has made significant inroads into the U.S. market during 2013:
- Airlines, hotels and other travel enterprises can now easily connect to the more than 800 million Chinese account holders on the Alipay platform via the UATP Network.
- “Alipay is dedicated to meeting the needs of China’s vast and growing pool of keen overseas travelers by making it easier for them to pay for air tickets, book hotels, rent cars and make other travel-related purchases online from the world’s leading airlines and accredited travel agencies.”
- Among the U.S. online retailers that’s begun accepting Alipay this year is iHerb Inc., No. 204 in the Internet Retailer. In the first six months of accepting the Chinese payment method, iHerb’s sales on the cn.iHerb.com subdomain of its web site aimed at Chinese consumers increased 244.52% compared with the prior six-month period and 684.15% compared with the same period a year earlier
- Without disclosing the total number of U.S. sites accepting Alipay … there are about 10 web sites in the U.S. that already are generating more than 100 Alipay transactions per day. They include the e-commerce sites of retailers Gap Inc. Direct, No. 19 in the 2013 Top 500, and Forever 21, No. 353; travel site Travelzoo; web domain registrar GoDaddy and peerTransfer, which handles tuition payments for international students.
- Meantime Alibaba Microfinance Service Group’s share structure revealed [Xinhua, Nov, 2013] which will clearly help in capitalisation of Alipay for U.S. expansion as well:
HANGZHOU, Nov. 1 (Xinhua) — Jack Ma, founder of Chinese e-commerce giant Alibaba Group, holds less than 7.3 percent of shares in the newly founded Alibaba Microfinance Service Group, revealed a shareholding structure report on Friday.
Forty percent of the shares are held by over 20,000 staff of the Alibaba Group and the Alibaba Microfinance Service Group, said the report.
That 40 percent, part of an incentives scheme to make “all staff shareholders,” includes Ma’s shares.
Ma also holds 7.3 percent of shares in the Alibaba Group.
The other Alibaba Microfinance shares are expected to be acquired by strategic investors in the future, according to the report.
Alibaba set up the Microfinance Service Group in March to integrate its payment and micro payment businesses.
The Alibaba Microfinance Group is not included in the portfolio of Alibaba Group’s much-discussed initial public offering.
5. As in addition to all that and according to How Alibaba Views International Expansion and Mobile: A Discussion With Joe Tsai [Forbes, Dec 11, 2013]
One man who was with Jack from the beginning was Joe Tsai. Alibaba’s longtime CFO, Joe recently moved up to Vice Chairman of the group and is actively involved in the group’s recent strategic investments.
I spoke to him recently about Alibaba’sinternational expansion plans and how it’s adapting its e-commerce platform for the mobile age we now live in.
1. Up until now, most Americans think about Alibaba Group as a Chinese-focused company. What are your thoughts on international expansion for the group?
We think of international by what we can do in a cross-border context. It’s one thing to think of exporting from China, which is what we have done a lot to date. But it’s another to situate ourselves in other countries. We’re just starting to do that.
We’ve always had a cross-border B2B business.
We also have AliExpress which is growing and scaling nicely. The concept for AliExpress is to bring Chinese manufacturers online and make a global B2C marketplace. eBay has done a cross-border marketplace well. AliExpress focuses on consumer markets in developing countries. For example, we are the largest e-commerce site in Russia. We are also looking a lot at South America right now.
The next cross-border opportunity: there are millions of overseas Chinese in North America, Europe and Australia. They all want to buy from Taobao. How do we bring them back? Every overseas Chinese consumer is like 3-4 native Chinese consumers in terms of purchasing power. There’s no language problem with them coming to our website, but we have to work on payment and logistics.
And on the flipside, we want to bring hundreds of millions Chinese to shop in the United States. This is something which American merchants get excited about. With AliPay, we can enable Chinese consumers sitting in their home country to shop on, say, Saks Fifth Avenue, pay us in RMB, and we make sure merchants get the currency of their choice and handle logistics.
For us, international means starting with the cross-border opportunity. By analogy, if you look at how Facebook has grown in different countries, they started with cross-border as well. Facebook early adopters in foreign countries were all friends with people in the US. That’s how they built a critical mass of Brazilian early adopters who had friends in the US. Later on, those early adopters pulled in other Brazilians to the platform and Facebook suddenly hit critical mass around the world.
2. Recently, Alibaba made key investments in Sina Weibo, AutoNavi, and ShopRunner in the US. Tencent is rumored to be making an investment in Snapchat and has been seeing great success with WeChat. Baidu has bought 91 Wireless. The online video space is extremely hot right now in China. How does Alibaba think about taking your core e-commerce services to mobile and dealing with such threats as the proliferation of Android and messaging platforms?
E-commerce is one segment that’s perhaps the most complex when it comes to mobile. You not only have to deal with browsing and selection but logistics and payment, which implies issues of reliability and security. Mobile adoption in e-commerce is a lot slower than in other consumer Internet verticals. For example 50% of GMV on Amazon and eBay is not from mobile. It’s more like 15%-20% – even though in the social networking context, like facebook, more than 50% of the users access the service from mobile devices. Today, we are seeing high teens mobile penetration from mobile GMV in China.
We could sit here and be complacent about the rise of mobile because Taobao and Tmall have very good positions having captured large shares in mobile commerce, but we’re feeling the opposite. We’re seeing the future and we feel a strong sense of urgency when it comes to mobile.
Mobile commerce could really disrupt the traditional marketplaces in the PC environment. In mobile, there’s not a lot of screen room. E-commerce marketplaces are conducive to larger screens. People want to save time on a mobile small screen. Therefore, the whole model could be disruptive.
So, with mobile, we are shifting from a model of pulling users to pushing messages out to users. Ebay’s web site is a destination. That’s pull. In contract, mobile enables every merchant to push whatever message to a huge audience.
Alibaba Bet On Wireless Business With ALL IN Strategy, Aiming At 30% Market Share For Laiwang [TechNode, Oct 21, 2013]
Alibaba takes Laiwang, an IM tool released 4.0 version this September, as a breakthrough point for wireless business. The market share of Laiwang is expected to reach 30% in a bid to guarantee better user experience and to facilitate the expansion of other services.
Different to similar IM tools of WeChat and EasyChat, Laiwang targeted at pure friend interaction platform by introducing new features such as, burn after reading, an automatic message eliminating service, and the right to establish groups with up to 500 members. The company has launched large-scale promotion activities for Laiwang both internally and externally.
To complete the product lineup, the company will also zero in on Mobile Taobao, Ali OS as well as an imminent O2O [Online to Offline] service. The newly added users of Mobile Taobao exceeded 100 million in the first half of this year, while number of active users tripled that of the same period of last year. Sina Weibo account of Mobile Taobao-like Weitao recorded more than 50 million visitors.
Because of the disruptive elements of mobile, we’re not standing still. We have to move out of our comfort zone of e-commerce. We have to be more eclectic. While the Taobao app is already one of the most popular apps in China with hundreds of millions mobile users, you will see us doing our own messaging platform. We have something competitive to WeChat. It has a lot to do with e-commerce, if you make it large enough. Within the Taobao app we also have a “mini-app” that enable merchants to stay connected to their customers who subscribe to get feeds. This is a very good tool for merchants to retain their existing customers, which lowers their cost of churn and ultimately lowers their cost of having to acquire new customers to replace the churn.
YunOS 2.3 云OS (Aliyun OS 2.3)
[Multicorechina.com YouTube channel, Dec 16, 2013]Introducing the YunOS 2.3
Alibaba merges two cloud subsidiaries [WantChinaTimes.com, Jan 8, 2013]
Aliyun and net.cn [http://www.net.cn (万网 – WAN network or universal net) which is known as HiChina (en.hichina.com) in English], two cloud computing internet service companies under China’s largest internet company Alibaba Group, will be merged as a new company retaining the Aliyun name. … Net.cn’s services will remain unchanged, offering its users cloud computing and cloud emails with the continually upgrading system. The website is the largest domain name system provider and virtual server industry leader in China. …
Telecom licenses granted by MIIT [Global Times, Dec 26, 2013]
China’s top telecommunications watchdog issued licenses to the first batch of domestic mobile virtual network operators on Thursday, an attempt to further reshape the country’s telecom industry.
This move enables a total of 11 private firms – including e-commerce platform jd.com, cloud computing service provider net.cn, and Beijing-based communication service company DiXin Tong – to purchase mobile telecom services from the three State-owned telecom carriers and resell the services to consumers under their own brands, according to a statement released Thursday by the Ministry of Industry and Information Technology (MIIT).
As the parent company of net.cn, e-commerce giant Alibaba said in an e-mail sent to the Global Times Thursday that the license will help the company to offer customized telecom services to online shoppers and retailers, allowing it to further extend its e-commerce ecosystem.
We’re also doing an operating system for smartphones. The core strategy is to give users an experience that connects their hardware device to content and services in the cloud. It’s an alternative to Android where an Android device is isolated from cloud-based services.
In mobile, the boundaries between e-commerce, communications, social networking, etc., become blurred.
Sina Weibo, often known as the Twitter of China, is a way for merchants who have Taobao store-fronts to stay in touch with their customers and for consumers to share what they like on Taobao, and that’s in part what drove our strategic investment in Weibo. AutoNavi is not just a provider of navigation and map services. They have one of the most popular “local services” apps in China that enable users to find restaurants and entertainment based on their locations. Local services will play a big role in e-commerce in the future.
We will continue to find all kinds of new ways to reach our users in ways that best suit this new mobile environment we operate in.
6. Also Alibaba spinoff moves further into the cloud [People’s Daily, Dec 25, 2013]
A division of the e-commerce giant readies to take on US competition
E-commerce conglomerate Alibaba Group Holding Ltd will extend its cloud-computing services to overseas markets in March, as it attempts to grab a share of the public cloud arena from archrivals such as Amazon.com Inc and Microsoft Corp.
Aliyun, Alibaba’s spinoff cloud-computing division, is scheduled to set up data centers outside China to provide cloud-computing services to local enterprises and Chinese companies’ overseas operations, the company announced on Tuesday.
By building platforms for companies to manage and store data in the cloud, Aliyun will become the first Chinese company to reach out to the foreign public cloud segment, days after its US counterpart Amazon announced the launch of a similar services in China.
“After five years of development and three years of commercialization, Aliyun is able toprovide sustainable services to customers, backed by its resourceful parent, Alibaba,” said Aliyun director Zhang Jing.
The service recently gained the world’s first gold certification for cloud security from the British Standards Institute, a business standards company, which further guarantees its reliability, Zhang noted.
Zhang declined to disclose the first destination for Aliyun’s global outreach. But he implied two options: the United States (Amazon’s birthplace) or Southeast Asia, thanks to its proximity to domestic businesses.
As the country’s largest cloud-computing platform, Aliyun provides cloud computing services for hundreds of thousands of Chinese websites and e-commerce vendors, banks, game developers and others.
Three-fourths of the 188 million orders generated from the Nov 11 online sales day were processed by the Alibaba cloud-computing system.
Alibaba has made a consistent push into domestic cloud- computing enterprises. InSeptember, Alibaba acquired personal cloud storage service Kanbox.
In August, ChinaSoft International Ltd announced a strategic agreement with Aliyun and the Lishui municipal government for a State-funded cloud project in Zhejiang province.
Aliyun may team up with local telecom carriers to avoid local regulatory restrictions, Zhang noted.
7. Finally, as the result of extreme lucrativeness of organic growth in 2014 Alibaba to extend $8 billion loan to end 2014, buying more time for IPO: sources [Reuters, Dec 11, 2013]
Alibaba Group Holding Ltd said on Wednesday it is seeking to extend the draw-down period of an $8 billion loan from January next year, a move people familiar with the e-commerce company’s plans said would buy it more time to launch an IPO.
The original expiry date of the draw-down period on the loan was January 30 of next year, according to the deal terms. Alibaba wants to extend that to December 31, 2014, sources familiar with the discussions said.
“We have plenty of cash on the balance sheet and there is no need to draw down at this time, so we are extending the availability of funds to maintain flexibility,” the company said, without specifying a new date.
Alibaba said the funds will be used for corporate purposes. It has already used $5 billion from the loan facility to refinance its debt.
The $8 billion loan is a key part of Alibaba’s IPO plan, and the extension to the end of next year signals that the public float is remains a long way off.
China’s biggest e-commerce firm has struggled to reach an agreement with Hong Kong regulators over a partnership structure it hopes to use as part of an initial public offering (IPO), a deal that expected to be worth around $15 billion and which may take place next year.
Public comments by its founder Jack Ma and a statement from the Hong Kong Stock Exchange in recent months, however, have raised the possibility of a Hong Kong listing.
The company has yet to outline a date or venue for the IPO. Under an agreement with its second biggest shareholder Yahoo Inc., Alibaba has incentives to complete an IPO before December 2015. [Note that Yahoo! Inc. is required to sell its 208mn shares of Alibaba concurrent with the IPO.]
All 22 lenders involved with the loan must agree to the extension.
The banks have until December 20 to respond to the extension request, and those responding in favor before Friday will get an “early bird” fee of $50,000 from the company if the move succeeds.
Note that there is no information yet on whether the banks extended their loans to Alibaba. The delay of the IPO is, however, so lucrative to the company that I would be rather surprised if it won’t be done. According to a latest analysis What’s the Best Way to Play 2014’s Hottest IPO? [The Motley Fool, Jan 6, 2014] “it’s not unrealistic to foresee a $200 billion valuation” even as Alibaba stands today. With all those extraordinary opportunities in Chinese finances, telecom etc. (described above) that valuation could increase significantly during the year. This means that the Alibaba Group will have much more new capital coming under Jack Ma’s control. And that is even more threat to Jef Bezos (Amazon) et al.
It is also important that Alipay is not part of that Alibaba Group IPO, so getting the strategic investors’ money (60%) will also significantly increase the additional capital that will come under Jack Ma’s control.
Details about Jack Ma and his strategic moves for the U.S. market in 2013
So his devotion to the problems of the society is a quite inherent thing which was driving his life and still will continue to do so, as evidenced by this part of Jack Ma’s Last Speech as Alibaba CEO [Tech in Asia, May 13, 2013]:
Moving forward, I will be doing things that I’m interested in, such as working on education and the environment. Besides work, let’s work hard together to improve China. Let the water be clear, the sky be blue, and the food be safe. Everyone, please! (Jack Ma kneels down to the audience).
According to the Financial Times Person of the year: Jack Ma [Dec 12, 2013]:
But there is another reason for choosing Mr Ma this year: his decision in May to step down as Alibaba’s chief executive at the age of 48 to devote himself to tackling some of China’s biggest problems – in particular its looming environmental disaster.
The Resignation Speech of Jack Ma, the CEO of Alibaba Group [TofuSquare YouTube channel, May 15, 2013]
According to Jack Ma TNC Board in China [The Nature Conservancy’s China Program, June 3, 2013]
Amid much fanfare, on May 10 Jack Ma stepped down as CEO from Alibaba, the business he built from scratch in his hometown of Hangzhou that is now one of the biggest companies in the world. On the very next day, May 11, he assumed the role of his latest endeavor: to help restore China’s environment by becoming the Chairman of the Board for The Nature Conservancy’s China Program.
The preparation for the IPO certainly includes international expansion plans as well. U.S. is already the place where one can see that:
Alibaba Group unveils U.S.-based investment organization [press release, Oct 22, 2013]
Strategy to back entrepreneurs with a focus on Internet commerce and emerging technologies
SAN FRANCISCO – Oct. 22, 2013 – Alibaba Group announced that it has established a U.S.-based investment organization that will look to back entrepreneurial teams working on innovative platforms, products and ideas with a focus on Internet commerce and emerging technologies.
Michael Zeisser, who joined Alibaba after leading Liberty Media Corp.’s strategies in digital media and Internet commerce for nearly a decade, heads the team. Zeisser created and oversaw Liberty Media’s eCommerce Group, a roll-up of specialty online retail companies where he worked closely with entrepreneurs and senior executives in growing the group’s annual revenues to $1.5 billion. Prior to Liberty Media, Zeisser was a partner in the Media and Private Equity practices of McKinsey & Co. Zeisser will assume the role of Chairman of US Investments for Alibaba Group.
“Alibaba is run by entrepreneurs, and we believe in supporting entrepreneurs with great vision and a strong sense of mission for their companies,” said Joe Tsai, Executive Vice Chairman of Alibaba and head of Alibaba’s strategic investments. “We are extremely excited to have someone of Michael’s caliber and experience to lead our investment efforts in the U.S. The team has been active over the past several months and we have already completed a few investments in the U.S. by partnering with terrific entrepreneurial teams.”
Three U.S. companies have recently announced that they received growth capital funding from Alibaba. They are Fanatics, the leading online retailer of officially licensed sports merchandise; ShopRunner, a platform for top retailers providing free 2-day shipping to online shoppers; and Quixey, a leading developer of search technology that enables users to search for content within mobile apps.
Other members of Alibaba’s U.S. investment team include Peter Stern, a senior banker from the technology, media and telecoms M&A team at Credit Suisse in New York who advised Alibaba on the landmark $7.6 billion stock repurchase from Yahoo in 2012; and Danielle Wong, a Stanford undergraduate who recently received her MBA from the Yale School of Management. The team will be based in the San Francisco Bay Area.
About Alibaba Group:
Alibaba Group’s mission is to make it easy to do business anywhere. Since it was founded in 1999, the China-based Alibaba Group has developed leading businesses in consumer e-commerce, online payment, business-to-business marketplaces and cloud computing. Alibaba Group operates Taobao Marketplace (www.taobao.com), China’s most popular online shopping destination; Tmall.com (www.tmall.com), China’s leading online platform for merchants offering quality, brand-name goods to consumers; Juhuasuan (www.juhuasuan.com), a group shopping platform; eTao (www.etao.com), a comprehensive shopping search engine; Alibaba.com (www.alibaba.com) and 1688.com (www.1688.com), leading business-to-business marketplaces for small businesses engaged in international trade and domestic China trade, respectively; and Alibaba Cloud Computing (www.aliyun.com), a developer of platforms for cloud computing and data management. Alipay (www.alipay.com), the most widely-used online payment service by consumers and merchants in China, is an affiliate of Alibaba Group.
Regarding Fanatics and ShopRunner here is: Self-Made Billionaire Michael Rubin: E-Commerce Is Rapidly Changing [Entrepreneur YouTube channel, Nov 27, 2013]
Score! Web Sports Retailer Fanatics Inc.Tops $3 Billion Valuation [The Wall Street Journal, June 6, 2013]
One online retailer has quietly grown into one of America’s largest Web merchants by carving out a lucrative niche: sports apparel.
The company, Fanatics Inc., this week raised $170 million in a new funding round. That more than doubles the retailer’s valuation to $3.1 billion from just a year ago, according to a person familiar with the deal’s terms.
In an interview, Michael Rubin, chief executive of Fanatics’ parent company Kynetic LLC, said the retailer expects to pull in $1 billion in revenue this year, up from $800 million last year, through a focus on sales—primarily online—of officially licensed jerseys, mugs, jackets and other such merchandise. He said the company is profitable, without providing specifics, and he has no plans to take it public.
The new funding comes from Singapore state-owned investment company Temasek Holdings Pte. Ltd., and Alibaba Group Holding Ltd., said Mr. Rubin. Temasek gains a seat on the Jacksonville, Fla., company’s board, he said.
A spokesman for Temasek confirmed the investment, but declined to discuss specifics. An Alibaba representative declined comment.
Mr. Rubin said the money would, among other things, help Fanatics increase its $500 million inventory, fund an overseas expansion and bolster its distribution, including a planned new warehouse in the Western U.S. “We think there’s huge potential in sports apparel and for Fanatics to grow,” said Mr. Rubin. “We’ll be looking at Western Europe and Asia as places to move into.”
Fanatics adds 800 seasonal jobs for upcoming holiday season [USA01 YouTube channel, Oct 21, 2013]
Sports E-Commerce Leader Fanatics Launches Mobile App for iPhone and Android [press release, Nov 13, 2013]
November 13, 2013 – JACKSONVILLE, FL – Fanatics, Inc. announces the launch of its first-ever mobile app for iPhone and Android devices. The leading online retailer of officially licensed sports merchandise is continuing to ensure sports fans receive the best possible shopping experience, including easier access to the largest assortment of team gear on smartphones.
The new Fanatics app provides sports fans worldwide with mobile access to more than 250,000 products from over 700 teams. Users have the ability to browse through merchandise, save their favorite teams and find the best quality gear from all major leagues, including the NFL, NCAA, MLB, NBA, NHL, NASCAR, PGA and UFC. App users also have access to the free Fanatics REWARDS program, which offers free 3-day shipping on everything plus 5% Fan Cash™ on orders over $50 and 10% Fan Cash™ on orders over $100.
“Launching the Fanatics mobile app is an exciting time for our company as we continue to expand our reach to sports fans,” said David Katz, SVP and GM of Mobile for Fanatics. “With Fanatics growing so quickly and sports over-indexing on mobile, it was crucial that we get a great, user-friendly commerce app for fan gear out to our users. And this is just the start since location information and real-time data will allow us to build on this start and create even better experiences for passionate fans.”
Fanatics is a leading online retailer of officially licensed sports merchandise and provides the ultimate shopping experience to sports fans. As a Top 50 Internet Retailer Company, Fanatics comprises the broadest online assortment offering hundreds of thousands of officially licensed items via its Fanatics (www.fanatics.com) and FansEdge (www.fansedge.com) brands. In addition, the company powers the e-commerce sites of all major professional sports leagues (NFL, MLB, NBA, NHL, NASCAR, PGA), major media brands (NBC Sports, CBS Sports, FOX Sports) and e-stores for over 200 collegiate and professional team properties.
ShopRunner Helping Retailers Boost Sales, CEO Says [ShopRunner YouTube channel, May 14, 2012]
Alibaba Leads $206 Million Investment in ShopRunner [The Wall Street Journal, Oct 10, 2013]
Alibaba Group Holding Ltd. has led a $206 million investment in a rival to Amazon.com Inc., AMZN +1.38% one of its biggest U.S. moves as the Chinese e-commerce giant considers an initial public offering here.
Alibaba invested in ShopRunner Inc., which offers unlimited two-day shipping from retailers including Toys “R” Us Inc. and RadioShack Corp. RSH -2.62% for a $79 annual fee. American Express Co. AXP +1.27% has also taken a small stake in ShopRunner.
The deal values ShopRunner at about $600 million, said a person familiar with the matter, and completes a funding round in which Alibaba previously chipped in about $70 million. It isn’t clear exactly how much Alibaba invested, but it did put in most of the funding, this person said. As part of the deal, eBay Inc. EBAY +1.58% sold its prior 30% holding in ShopRunner for a profit, the person said.
Alibaba has had designs on the U.S. for years. It operates two U.S.-facing websites, traditional online marketplace Aliexpress.com and Alibaba.com, a business-to-business sales site. In 2010, it struck a deal to sell goods through eBay’s marketplace. In June, Alibaba took a minority stake in Fanatics Inc., also controlled by ShopRunner-parent Kynetic LLC, as part of $170 million funding round.
“The U.S. market in the long run is very interesting to us,” said Joe Tsai, Alibaba’s executive vice chairman and co-founder in an interview. “Coming into this market is about learning about American consumers and how the market operates.” Mr. Tsai said he expects ShopRunner to be competitive with Amazon over time. One analyst says that won’t be easy.
ShopRunner is headed by Scott Thompson, the former PayPal president who resigned as Yahoo’s chief executive last year after a flap over a flawed biography in a company regulatory filing.
Mr. Thompson, who joined ShopRunner in July, said the cash injection will help the company grow more quickly, including adding new retailers. “We’re staking out a place in mobile, hiring more engineers that will allow us to evolve our business,” Mr. Thompson said. He said the company is also hiring additional salespeople.
Luxury retailer Neiman Marcus Group Ltd. plans to join as soon as this month, said John Koryl, a division president. “Our customer wants to know she’ll get her item in two days,” he said. “This is a good experiment to see how it goes.”
The ShopRunner funding round marks another milestone for Kynetic CEO Michael Rubin, who sold e-commerce consultancy GSI Commerce to eBay in March 2011 for $2.4 billion; the unit is now called eBay Enterprise. The June round in which Alibaba participated valued Kynetic at $3 billion.
ShopRunner takes a 2% to 5% cut of goods purchased from merchants’ websites by members of the loyalty program, Mr. Thompson said. And it is one of few alternatives for merchants hoping to branch out into e-commerce while not relying too heavily on Amazon. The company doesn’t disclose revenue or profitability.
Earlier this year, the company announced a partnership with American Express giving many U.S. cardholders free memberships, a potential pool of tens of millions.
From Fnno.com, this is the Financial News Network. While a lot of attention has been paid to Marissa Mayer being named the new CEO of Yahoo, it seems her predecessor has a new job as well. Scott Thompson, the previous CEO of Yahoo has been named the new CEO of ShopRunner.
ShopRunner is a subscription service that partners with over 60 online retailers. Customers pay a monthly fee, and are then able to reap the benefits of exclusive deals with certain retailers, and receive free shipping. Thompson was previously a board member for the company, as early as when he was the president of PayPal.
Thompson’s previous position at Yahoo lasted only four months after which he was forced to depart amid allegations he lied about his qualifications. ShopRunner’s current CEO, Mike Golden, will remain with the company as president. For more coverage and analysis of the business world follow us on Twitter @FNNOnline or check out our website at fnno.com
Quixey – Introducing the New Android App [quixey YouTube channel, Oct 22, 2013]
Announcing Quixey on Android, a Better Way to Find Apps! [Quixey News, Oct 23, 2013]
Today we’re super excited to announce the launch of our first direct to consumer product, now available for free on Android — download it from Google Play right here and read about it on the product page!
Until now, most app search has been based on titles and keywords, which requires users to know the name of an app before they can search for it. With Quixey, all you have to do is describe what you want to do in natural language. For example, “tune my guitar” or “identify wines.”
Beyond that, we’ve included a bunch of fun and engaging new features. Whether you know what kind of app you want, or just have a minute to find something new, there’s something for everyone. Here’s what Quixey on Android offers:
Search – App search that works. You don’t need to know an app’s name to get great results. Search for apps by describing what you want to do and we’ll find apps to help.
Trending – Check out the latest and greatest apps. No matter who you are – parent, student, teacher, traveler, athlete, gamer, musician – we have the top trending apps picked for you.
Browse – Browse through categories and subcategories. Take our browse wheel for a spin to find the perfect app for you (not available on Gingerbread OS).
Sample – Curious what types of apps are out there? Check out our sample queries to see what other people are searching for.
Quixey is in beta and we’re committed to building an amazing product that you love. Submit your feedback from within the app (in the information section) or send an email to firstname.lastname@example.org. Thanks and have fun finding great new apps!
[Tech Talk Video] The Functional Web: The Future of Apps and the Web [quixey YouTube channel, March 4, 2013]
The Functional Web is also explained by him in this Quixey blog post of March 7, 2013.
Today we’re thrilled to announce we’ve officially closed our latest round of funding! Series C is led by Alibaba Group, with new investor GGV Capital, and participation from existing investors Atlantic Bridge, Innovation Endeavors, Translink Capital, US Venture Partners, and WI Harper.
“Next year, 95% of the world’s population will have mobile access, and by 2016 people will use 1.5 billion smart mobile devices. Quixey is at the epicenter of this brave new world, and this investment will ensure that we continue to expand globally,” said Tomer Kagan, Quixey CEO and Co-Founder. “Apps have moved from novelty to a major factor in purchasing decisions for consumers and we’ve only just started to scratch the surface of what they can do.”
We’re very excited to be working with a company on the level of Alibaba, whose mission is to make it easy to do business anywhere. Since its inception, it has developed leading businesses in consumer e-commerce, online payment, business-to-business marketplaces and cloud computing, reaching Internet users in more than 240 countries and regions.
Joe Tsai, Executive Vice Chairman at Alibaba, is equally as excited to be working with us. As he says, “Innovation is at the heart of Alibaba’s culture, so backing entrepreneurs who are developing forward-thinking technology is what we love to do. Quixey has a great vision for the future and a fantastic team to see it through.”
The additional $50 million, which brings our funding total to $74.2 million, will be used to further develop our market leading Functional Search™ technology, which currently allows users to find apps by describing what they want to do. With the flexibility to bolster our already strong roster of talented employees, we’ll now be able to focus on going deeper and deeper into apps, bringing users the information and functionality they want quicker than ever before.
“Building user-centric products is what Quixey is about. We should be the starting point for every mobile device,” said Guru Gowrappan, EVP, Product and Marketing at Quixey. “We give users a more natural way to search for the things that makes their lives easier. That’s the core of our Functional Search™ technology and the core of the company.”
Ever since launching in 2011, we’ve been working hard to bring the build the best possible product for our users. This is a huge benchmark for us as it allows us to make our vision for the future of apps and the web a reality much faster than originally possible. If you have any questions about the funding round, please send us a note at email@example.com. Look out for more big announcements in the coming months!
Alipay service gains rising popularity [CCTVcomInternational, July 17, 2013]
China’s answer to PayPal expands into the U.S. [Internet Retailer, Sept 27, 2013]
Three hundred million Chinese consumers shop online, and most of them have accounts with Alipay, the PayPal-like online payment service owned by Alibaba Group Ltd., operator of China’s top online marketplaces. In a move that could make it easier for Chinese shoppers to buy on U.S. e-commerce sites, Alipay is now promoting itself as a payment option for U.S. e-retailers.
Among the U.S. online retailers that’s begun accepting Alipay this year is iHerb Inc., No. 204 in the Internet Retailer. In the first six months of accepting the Chinese payment method, iHerb’s sales on the cn.iHerb.com subdomain of its web site aimed at Chinese consumers increased 244.52% compared with the prior six-month period and 684.15% compared with the same period a year earlier, says John McCarthy, director of marketing at iHerb.
Leading Alipay’s international expansion is Jingming Li, whose title is chief architect and acting president of the newly formed Alibaba International Financial Service Unit. Based at Alibaba’s U.S. headquarters in Santa Clara, CA, Li sees a big opportunity in enabling Chinese shoppers to pay with a method that they use widely in China, not only to shop online but also to pay utility and other bills offline in China.
Li notes that China’s increasingly affluent middle- and upper-class consumers made 83 million trips abroad last year [in 2012] and spent $100 billion while traveling. In addition, he says, they spent 20 billion yuan ($3.3 billion) buying directly from e-commerce sites outside of China. They’re especially interested in buying baby products, apparel and luxury goods.
They would buy more, Alibaba reasons, if they could pay with the Alipay accounts they use in China. “That’s where our international focus will be, helping our members continue to use their Alipay accounts outside of China,” he says.
Without disclosing the total number of U.S. sites accepting Alipay, Li says there are about 10 web sites in the U.S. that already are generating more than 100 Alipay transactions per day. They include the e-commerce sites of retailers Gap Inc. Direct, No. 19 in the 2013 Top 500, and Forever 21, No. 353; travel site Travelzoo; web domain registrar GoDaddy and peerTransfer, which handles tuition payments for international students.
International web sites can boost sales by accepting Alipay because many Chinese consumers don’t have credit cards from Western brands like Visa and MasterCard, Li says. Plus, he says, “They are in the habit of using Alipay. If a merchant is willing to use Alipay as a form of payment it gives a lot more trust and confidence to the consumer who may be purchasing an airline ticket from a foreign carrier for the first time.”
Li would not disclose Alipay’s fees, but says they are lower than the fees charged by major credit card brands like MasterCard and Visa. Chinese consumers typically fund their Alipay accounts from their bank accounts, which eliminates much of the risk that credit card issuers take on when they extend credit to cardholders. McCarthy of iHerb says the fees he pays are comparable to what he pays for other payment methods, and that he views the fees as “attractive.”
Alibaba restructures Alipay’s parent, Jack Ma’s share reduced [Reuters, Nov 1, 2013]
The online payment affiliate of China’s biggest e-commerce company Alibaba Group Ltd will be restructured to attract new strategic investors, in a move that will reduce the shareholding of Alibaba’s founder Jack Ma in the affiliate.
Zhejiang Alibaba E-Commerce Co Ltd will be restructured as a new company in which 60 percent of its shares will be offered to new strategic investors, Lucy Peng, head of the restructured entity, said in a letter published on its official Weibo microblog account on Friday.
Ma will see his shareholding reduced from 80 percent to about 7 percent in the new company, or no greater than his shareholding in Alibaba Group, according to the letter.
The restructured company, to be known as Alibaba Small and Micro Financial Services Group, will hold Zhejiang Alibaba’s 100 percent stake in unit Alipay, as well as its shareholding in Alibaba’s micro-finance unit, Zhongan Insurance, and Tianhong Asset Management Co.
Alipay is China’s biggest third-party payment platform, providing payment solutions to 460,000 merchants, and with 800 million registered accounts.
The remaining 40 percent in the new company will be offered to nearly 24,000 employees at Alibaba Group and Zhejiang Alibaba, said Peng, former chief executive of Alipay. That includes the share held by Ma.
The announcement on Friday will have no impact on existing agreements with Alibaba and the group’s shareholders SoftBank Corp and Yahoo! Inc, Alibaba spokesman John Spelich said.
In 2011, Ma sparked a public dispute with Alibaba Group’s biggest outside investors when he separated Alipay from Alibaba. Ma said at the time that new Chinese government regulations on third-party payment services required the changes.
The companies later settled, in a deal that guaranteed Alibaba 49.9 percent of Alipay’s earnings prior to an initial public offering, and as much as $6 billion if Alipay sells shares to the public.
“Today’s announcement underscores that employees of both Alibaba Group Holdings and Alibaba Small and Micro Financial Services Group are being incentivized to work hard to achieve success for the company,” Spelich said.
Alibaba Group, through Alipay, is introducing a variety of financial services to complement its e-commerce businesses. Besides Alipay, which provides users with an online payment system, the Hangzhou-based company has also started fund and insurance sales, as well as small loan finance.
In June, Alipay launched Yu E Bao, a fund management platform, allowing Alibaba customers to directly invest cash from their Alipay account into a money market fund managed by Tianhong Asset Management Co.
The Zenglibao fund is the most successful fundraising by any mutual fund in China this year, with managed assets reaching 55.7 billion yuan ($9.14 billion) at the end of September.
Alibaba also received approval this week from China’s securities regulators to act as a third party for the online sale of fund products on its Amazon-like Taobao.
UATP and Alipay Unite to Help the U.S. Travel Industry Tap into the World’s Top-Spending Travel Market [press release, Nov 5, 2013]
Airline and Travel Payment Summit, Chicago, – November 5, 2013 – UATP announced today that it has entered into a strategic partnership with Alipay, China’s leading third-party online payment solution, to enable the U.S. travel industry to offer Chinese consumers a convenient and trusted way to book and pay for overseas travel.
With minimal change to their existing backend systems, airlines, hotels and other travel enterprises can now easily connect to the more than 800 million Chinese account holders on the Alipay platform via the UATP Network. These consumers are extremely comfortable with online purchasing and enthusiastic about high-quality international products and overseas travel.
China’s increasingly affluent middle- and upper-class consumers made 83 million outbound trips in 2012. China has been the world’s fastest-growing tourism source market for the past decade and it is now also the world’s top tourism spender. Chinese travelers spent a record US$102 billion in 2012 to surpass the U.S. and Germany, both with spending close to $84 billion.
“After years as the most widely used online payment platform in China, Alipay is thrilled to join forces with UATP in this milestone collaboration. We are excited to help U.S. businesses satisfy eager Chinese consumers,” said Jingming Li, vice president and chief architect of Alipay International. “Alipay is dedicated to meeting the needs of China’s vast and growing pool of keen overseas travelers by making it easier for them to pay for air tickets, book hotels, rent cars and make other travel-related purchases online from the world’s leading airlines and accredited travel agencies.”
“We look forward to partnering with Alipay and working with them in this mutually beneficial opportunity,” said Ralph Kaiser, president and CEO, UATP. “We see further growth in outbound travel as inevitable for China. Matching the strength of the UATP Network with Alipay’s proven success, we are confident that we can bring the best that both companies have to offer to this booming market.”
Launched in 2004, Alipay is a cross-border payment solution that provides an easy and secure platform to make and receive payment over the Internet. Alipay partners with more than 180 financial institutions and supports transactions in 15 foreign currencies. It had more than 800 million registered accounts as of December 2012.
UATP is a comprehensive payment solution that airlines offer to reduce the high cost of credit card use and provide vital data for accurate travel management. UATP’s corporate program and data tools, DataStream and DataMine, supply Level III Data for all air and rail travel, and folio-level data for hotel stays.
For more information, visit http://uatp.com and http://global.alipay.com
No wonder that the British Prime Minister, David Cameron and the Mayor of London, Boris Johnson are now courting Jack Ma as evidenced by the recent Alibaba Gets a British Touch [BizAsiaAmerica YouTube channel, Dec 26, 2013] video report: