Aliyun, Alibaba’s Cloud Computing Unit, Takes Its First Steps Into The Middle East

Aliyun, the cloud computing arm of Alibaba, announced today that it has signed a joint-venture agreement with Dubai-based holding company Meraas to bring it services to companies and government organizations in the Middle East and North Africa.

The deal marks Aliyun’s first move into the MENA region, according to an Alibaba representative. The joint venture will be based in Dubai and create new applications, cloud computing architecture, and big data tools for local clients.

In a statement, Meraas chairman Abdulla Al Habbai said that the services will contribute to “transport, communications, infrastructure, electricity, economic services, and urban planning” as Dubai attempts to transform itself into a “smart city,” with 1,000 government services connected to an online platform over the next two years.

In addition to the joint venture, Meraas also plans to build a technology hub that will include a data center, as well as residential and commercial spaces.

The deal with Meraas lets Aliyun tap into a potentially lucrative new market. According to IDC, spending on ICT products and services in the Middle East and Africa will exceed $270 billion in 2015. Its IT market is projected to grow 9 percent year-over-year in 2015, making it the second-fastest growing in the world. The SaaS segment is expected to surge 29 percent, making cloud computing services especially important.

Other companies seeking opportunities in the region include Virtustream, which is partnered with Mobily, a telecom based in Saudi Arabia, as well as Cisco, Hewlett Packard, EMC, and Huawei, which was one of the first Chinese companies to offer cloud computing services in the Middle East.

Aliyun, which claims 1.4 million customers, has also built data centers in Silicon Valley as part of its global expansion strategy, but it is taking a different approach to business there. In MENA, Aliyun will sell its services to local companies, but in the U.S., it is targeting Chinese companies that have operations there instead of competing directly with Amazon Web Services for the patronage of American businesses.