Cloud computing is a term often heard in technology discussions, but what does it actually mean? To the general layman, it sounds like a completely intangible concept which nonetheless seems to net its owners enormous profits.

In reality, such ‘clouds’ actually consist of giant groups of servers (the common reference is to areas which are the rough size of an American Football field) with a large number of linked systems, known as remote data centres. The need for individuals or companies to buy servers in order to process high volumes of business are receding – they can simply purchase the power they need via servers located elsewhere.

This is a very basic explanation of the essence of cloud computing, but it means that tasks which could, not so long ago, only really be completed if one had some sort of access to a supercomputer, are now easily achievable via ‘the cloud’.

Actually, however, calling it ‘the’ cloud, however, is slightly misleading. There are actually many clouds, and seeing as there is no standard definition for the processes and equipment required for cloud computing, many companies have gone about it in their own way.

Some of the world’s best known companies owe an increasingly large portion of their revenue to their cloud computing operations – chief among them are a power-trio of Amazon, Google and Microsoft. Meanwhile, traditional companies like IBM and Oracle have been left behind in this particular area.

One firm which is somewhat late to the party, however, is e-commerce giant Alibaba. Amazon’s biggest competitor (which floated on the New York Stock Exchange in September 2014, in what became the largest Initial Public Offering of all time) appears to have realised the importance of cloud computing to its rival and has decided to get in on the act – Alibaba has just announced its intention to hire around one thousand developers over the next few years to work on its own cloud-computing platform, which is named AliCloud.

The reason for Alibaba’s burgeoning interest in this sector is twofold – the company clearly has substantial information processing needs and would understandably prefer to be able to meet such a need via one of its own subsidiaries rather than using a competitor. However, Alibaba additionally cannot have failed to note the huge growth in revenue which cloud computing has brought in for Amazon – for example, quarterly cloud revenue figures for the third quarter of 2015, were almost double (just over $2 billion) what they were in Q1 2014 (just over $1 billion), with continuous growth throughout that time period.

With the demand for cloud computing continuing to heat up, it will be interesting to see how effectively Alibaba is able to build up this area of its business, and if so, whether the company will see significant returns on this investment in the coming years.