text|Wenxin
source|Bowang Finance
Since entering the large-scale model, Alibaba Cloud has become a weathervane in the eyes of investors.
On July 14, 2023, Alibaba Cloud announced that it has reached a "game + AI" cooperation with Giant Network. Alibaba Cloud Tongyi Qianwen large model and AIGC product capabilities will fully empower Giant Network to build a "game + AI" intelligent computing platform and create a benchmark for AI in game scenarios.
Affected by this good news, on July 14, the stock price of Giant Network rose by 4.57%, closing at 16.46 yuan per share.
Undoubtedly, Alibaba Cloud, which continues to increase its large-scale model business, has become Ali's "new story". Zhang Yong's full-time role as chairman and CEO of Alibaba Cloud Intelligent Group and the action of spin-off and listing also means that Alibaba Cloud has a more lofty imagination.
However, it is worth noting that Alibaba Cloud's market influence and revenue growth rate are currently declining, and it has been in a weak position in the key government and enterprise market. All of these actually indicate that Alibaba Cloud will face huge challenges in the future.
1has lost 10% of its share in three years. Alibaba Cloud is very anxious.
The fiscal year 2022 financial report shows that Alibaba Cloud's EBITA profit was 1.146 billion yuan, compared with a loss of 2.251 billion yuan in the previous year. This is the first time that Alibaba Cloud has achieved annual profitability since its establishment in 2009. At the same time, Alibaba Cloud has become the only cloud service provider in the Chinese market to achieve a break-even balance.
Image source: Canalys
Reflected in the market, Alibaba Cloud also won the "championship". According to the data of China's cloud infrastructure service market disclosed by Canalys, in Q1 of 2023, Alibaba Cloud occupies 34% of the market share, ranking first.
Referring to the experience of the Internet industry, if companies gain a leading position in the vertical market, most of them can evolve into oligarchs by virtue of their unique brand and channel advantages, and then generate income without worry. However, Alibaba Cloud did not show a similar trend. Instead, it fell into a "quit" where market influence and revenue growth were declining.
Canalys data shows that in the first quarter of each year from 2020 to 2023, Alibaba Cloud's share in China's cloud infrastructure service market is 44.5%, 39.8%, 36.7% and 34%. A vertical comparison of shows that in just three years, Alibaba Cloud's share dropped by 10.5 percentage points.
Correspondingly, Alibaba Cloud's revenue growth rate has also dropped sharply. The financial report shows that from fiscal year 2020 to fiscal year 2022, Alibaba Cloud's revenue growth rates are 61.99%, 50.26% and 23.13% respectively. By the fourth quarter of fiscal year 2023 (Q1 of the natural year 2023), Alibaba Cloud's revenue even fell by 2% year-on-year.
It is worth noting that the decline in Alibaba Cloud's market influence is not caused by the disappearance of market dividends. Instead, the cloud computing industry is booming as bandwidth improves and upstream hardware costs fall. The "China Internet Development Report 2022" disclosed by the Internet Society of China shows that in 2021, the scale of China's cloud computing market will be 322.9 billion yuan, with a growth rate of 54.4%.
Against this background, many companies have achieved impressive revenue growth. The financial report shows that in 2022, the revenue growth rates of Tianyi Cloud, Mobile Cloud, and China Unicom Cloud will be 107.5%, 108.1%, and 121%, respectively.
From this point of view, although Alibaba Cloud has ranked first in China's cloud infrastructure service market share for many years, and achieved annual profit for the first time, its growth and market influence continue to weaken. If it does not find its core competitiveness as soon as possible to stabilize the market, then Alibaba Cloud's phased victory is likely to become obsolete tomorrow.
2Zhang Yong sits in Alibaba Cloud, and the large model becomes the top priority.
Just because cloud computing has a very lofty imagination space, under the background of Alibaba Cloud's pressure, Zhang Yong has already served as the president of Alibaba Cloud Intelligence at the end of 2022.As Alibaba launched the "1+6+N" organizational reform, Zhang Yong also stepped down as the chairman and CEO of Alibaba Holding Group, and became the chairman and CEO of Alibaba Cloud Intelligence Group full-time.
Although he is neither the founder of Ali nor the "Eighteen Arhats", Zhang Yong has "rebuilt" Ali several times before with his precise strategic vision.
In 2009, Ali's B2C business was sluggish, and Zhang Yong also served as the general manager of Taobao Mall. Under the leadership of Zhang Yong, Taobao Mall developed rapidly and created the well-known Double 11 Shopping Festival. Today, B-end customers have become the mainstay of Ali's revenue. According to data disclosed by Caijing magazine, in 2022, 70% of Taobao Tmall’s revenue will come from brand merchants.
Coincidentally, in 2015, Zhang Yong, who served as the CEO of Alibaba Group, proposed the "small front desk, big middle desk" middle desk strategy. The technical level has unified development tools and technical standards, which can support the rapid iteration and innovation of each business line; the business level can open up the data and processes between the business lines, and realize information sharing and business collaboration.
"LatePost" once reported that in 2020, at an internal sharing meeting, Zhang Yong revealed that "in the five years since the start of the construction of the middle platform, the cost of various businesses has been reduced several times."
Source: Alibaba Cloud
Because Alibaba Cloud is facing huge challenges, after leading Alibaba Cloud, Zhang Yong keeps moving. In April 2023, the price of Alibaba Cloud's core products will be reduced by 15% to 50%, and the price of storage products will be reduced by 50%.
At the same time, Ali also released its own large-scale model product "Tongyi Qianwen". In this regard, Zhang Yong said that in the future, all Alibaba products will be connected to the large model of "Tongyi Qianwen" for a comprehensive transformation. In the future, Alibaba Cloud will open its AI infrastructure and large-scale model capabilities to all enterprises to jointly promote the development of the AI industry.
More importantly, Zhang Yong also intends to lead Alibaba Cloud to enter the capital market independently. In May 2023, Zhang Yong stated in an internal letter, "We plan to completely split Cloud Smart Group from Alibaba Group and complete the listing in the next 12 months, forming a new company that is completely independent from Alibaba Group in terms of equity and corporate governance." Capital needs, and then seek a broader market.
3Internet companies account for nearly half of their revenue, making it difficult to conquer the government and enterprise market.
In the past few years, the slowdown in Alibaba Cloud's performance growth is largely due to the saturation of Internet customers' demand for cloud access, and Alibaba Cloud's failure to capture the dividends of the government and enterprise market.
Under the influence of factors such as the epidemic and policy incentives, the pace of digital transformation and upgrading of Chinese government and enterprises is accelerating. According to the research report of Qianzhan Industry Research Institute, in 2020, the scale of China's government affairs cloud market will be 65.36 billion yuan, a year-on-year increase of 42.3%, and the compound annual growth rate is expected to reach 30% in the next three years.
may be because it started on the Internet, and Internet companies are still "half of the country" of Alibaba Cloud. The financial report shows that in the fourth quarter of fiscal year 2022, after offsetting the impact of cross-segment transactions, although Alibaba Cloud's revenue from the Internet industry fell by 4% year-on-year, it still accounted for 47% of total revenue.
Source: IDC
This also determines that Alibaba Cloud's influence in the government and enterprise market is negligible. According to IDC data, in the first half of 2022, the top seven platforms in China's government cloud market are Huawei, Inspur, H3C/Ziguang Cloud, China Telecom, China Mobile, and Sugon, while Alibaba Cloud is little-known.
The reason why enterprises represented by Huawei are making rapid progress in the government and enterprise market is mainly because these enterprises can provide targeted services for fragmented government and enterprise objects.Taking Huawei as an example, it has established representative offices in more than 30 provincial-level administrative regions across the country, and the Huawei Cloud Stack system can also help enterprise-level customers achieve unified management of multi-cloud and multi-resource pools.
In fact, through the attitudes of Huawei and Alibaba Cloud towards large models, you can feel that the business orientation of the two companies is completely different.
Source: Huawei
In July 2023, Huawei released the large model Huawei Cloud Pangu Large Model 3.0. In this regard, Zhang Pingan, executive director of Huawei and CEO of Huawei Cloud, said, "The Pangu model does not compose poetry, but only does things. The Pangu model focuses on value scenarios, and is committed to deepening government affairs, finance, manufacturing, coal mines, railways, pharmaceuticals, meteorology and other industries." Of course, Alibaba Cloud has also launched the Tongyi Thousand Questions cooperation plan to fully open the underlying product technical capabilities and business cooperation resources.
However, it is worth noting that, compared with Alibaba Cloud's packaged "model as a service" strategy, Huawei's Pangu model is more personal and serviceable. The official information of
shows that since its release, the Pangu model has continued to evolve along the mature system of the three stages of L0, L1, and L2. L0 refers to the basic large-scale models in five major levels of fields, including NLP large-scale models and CV large-scale models; L1 refers to large-scale industry models, such as meteorology, mining, and electric power; L2 refers to reasoning models for more subdivided scenarios, such as drone inspections in the electric power industry, foreign object detection on conveyor belts, and typhoon path prediction.
From this point of view, regardless of the level of technology, from the perspective of lowering the threshold for customers to use, the affinity of Alibaba Cloud's large models is still far behind that of Huawei Pangu.
Therefore, in addition to continuous improvement in large-scale model technology, Alibaba Cloud needs to do more, perhaps based on the needs of government and enterprise customers, refine its product and service capabilities.
