01, the largest price reduction in history
After clearly returning to focus on the public cloud market, on February 29, Alibaba Cloud ushered in another "largest price reduction in history". It has just been a year since
last cut its price in such a big way. Alibaba Cloud said that unlike previous price cuts, this big move is to lower the threshold for small and medium-sized enterprises to migrate to the cloud and accelerate their migration to the cloud.
Faced with the irresistible wave of AI, Alibaba Cloud wants to seize the cloud market and become the "water, electricity and coal" in the AI era.
According to Liu Weiguang, senior vice president of Alibaba Cloud Intelligence Group and president of the Public Cloud Division, Alibaba Cloud has lowered the official website prices of cloud products across the board, with an average price reduction of more than 20% and a maximum reduction of 55%.
This is the largest price reduction in Alibaba Cloud's history, involving more than 100 products and more than 500 product specifications, covering all core products such as computing, storage, and databases.
According to Liu Weiguang, the discount has dropped from 8.5% off the official website to 6.5% off. In the past, the product was purchased at a 15% discount for one year. This time it has been reduced to 6.5% off for the year, a decrease of nearly 24%. For the core rds database product, the five-year cycle purchase The decline rate is as high as 40%, and the average decrease of all products sold online this time is as high as 20%.
Liu Weiguang said: "China's cloud computing has developed for more than ten years, and the penetration rate of public cloud is still significantly lower than that of mature markets in Europe and the United States. As the largest cloud computing company in China, Alibaba Cloud hopes to allow more enterprises to use this large-scale price reduction. provide advanced public cloud services and accelerate the popularization and development of cloud computing in all walks of life in China." Before
officially released its price reduction strategy, Liu Weiguang spent nearly an hour sharing and "laying the groundwork" for the logic of Alibaba Cloud's price reduction. .
First, the vast majority of Chinese companies are still in the initial stage of cloud computing and have not embraced the cloud or deeply used the cloud. There is still a vast market; second, the outbreak of AI is certain, and it will definitely accelerate China and even the whole world. The development process of cloud computing in the world. "We firmly believe that the cloud is an important source for the birth and development of new technologies." Liu Weiguang said.
02, to seize the market to boost performance
In April last year, Alibaba Cloud launched a round of price cuts, announcing that the prices of core products would be reduced by 15% to 50% across the board, involving computing, storage, network and security products.
According to Liu Weiguang, the biggest differences between this Alibaba Cloud price reduction and history are: the most comprehensive coverage of participating products; the broadest beneficiary group; and for the first time in history, new and old customers share the entire new price system.
He emphasized many times that this is the first time Alibaba Cloud has given profits to existing customers for the unfulfilled portion of their existing orders. Specifically, from now (February 29) to May 31, customers who renew within three months and have existing orders to be fulfilled will enjoy the new price system.
Alibaba Cloud’s intention to seize the market is very obvious: in the past, cloud manufacturers, during the price reduction process, the unfulfilled portion of existing orders could not enjoy the l l price after the price reduction. In order to seize the existing market and increase the renewal rate, they would rather reduce prices significantly to make profits. Another significant change in
is that Alibaba Cloud has emphasized in the past that customers should "pay as you go, pay as you need", allowing customers with stability and planning to enjoy better value for money from a cost perspective. Starting this year, Alibaba Cloud will provide the product capability of "the more you buy, the cheaper it will be", and one-time bulk purchases will bring about cost reductions.
Alibaba Cloud’s big price cut this time is to lower the threshold for mid- and long-tail enterprises to migrate to the cloud and accelerate their cloud migration. In the past, most of the beneficiaries of price reductions were industry leaders. However, this price reduction is intended to allow small and medium-sized enterprises to use the cloud at low cost, and they do not need to have a huge procurement scale to enjoy the price reduction. Compared with traditional self-built IDCs, public clouds can greatly improve the utilization rate of computing resources and reduce the computing costs of small and medium-sized enterprises.
"The release of Alibaba Cloud's entire technological dividend is not about competing with itself. We lead Chinese companies, especially long-tail Chinese small and medium-sized enterprises, to use the cloud-to-cloud threshold to accelerate their rapid embrace of cloud computing." Liu Weiguang said.
Cloud intelligence business is Alibaba’s second largest business segment after Taotian Group.The latest financial report released on February 7 showed that in the fourth quarter of 2023, Alibaba Cloud's revenue increased by 3% to 28.066 billion yuan, accounting for 11% of Alibaba Group's total revenue. Compared with 9% in the first quarter of 2023, the proportion of cloud business in the group's business is increasing. At the conference call after the release of
's financial report, Alibaba Group CEO Wu Yongming said: "In 2024, Alibaba will actively invest in core businesses. The group's highest priority is to rekindle growth momentum in its two core businesses of e-commerce and cloud computing. ."
Alibaba Cloud mentioned in its financial report that if the 3% revenue growth rate is not included in the revenue contributed by Alibaba Group, cloud business revenue will decline year-on-year, and explained: Part of the reason for the decline in revenue is that Alibaba Cloud has reduced Project-based revenue with lower profit margins will continue to improve the quality of revenue.
In fact, Alibaba Cloud’s revenue growth rate has been declining year by year: in the four years from fiscal year 2019 to fiscal year 2022, Alibaba Cloud’s revenue growth rates were 84%, 62%, 50%, and 29%, respectively. . In 2023, it will basically be single-digit growth or negative growth.
This is due to the year-by-year decline in Alibaba Cloud’s domestic public market share: In the second half of 2022, Alibaba Cloud’s domestic public cloud market share has declined. IDC's latest report shows that in the first half of 2023, Alibaba Cloud's market share in the public cloud laas market was 29.9%, which was lower than in 2022.
In the public cloud market, the three major operators' Tianyi Cloud, China Unicom Cloud and China Mobile Cloud all have a year-on-year growth rate of more than 100% in fiscal year 2022.
Not only Alibaba Cloud, but also the entire Chinese public cloud market is facing a slowdown in growth. The IDC report shows that in the first half of 2023, China's public cloud iaas + paas market grew by 15.9% year-on-year, which was the lowest year-on-year growth rate in the past three years. The growth rate of mainland China's public cloud market continues to slow down.
However, price reduction has always been the most common strategy in cloud market competition. Amazon AWS previously stated in 2016 that price reduction is the core strategy. Since its launch in 2006, AWS has reduced prices 52 times in 10 years. Later, Microsoft Cloud and Google Cloud also conducted Several price reduction measures were implemented.
Within the international market, major cloud computing manufacturers have long been "rolled" into a pot of porridge in order to compete for share. Every price reduction may trigger a chain reaction and drive market prices to fall rapidly.
After Alibaba Cloud first cut prices in 2013, it cut prices six times in 2014. From October 2015 to October 2016, Alibaba Cloud cut prices 17 times in a row, with core cloud product price cuts once exceeding 50%. If you include the five-year price war from 2015 to 2020, the number of Alibaba Cloud price cuts is even more difficult to calculate.
However, Liu Weiguang said at the meeting that Alibaba Cloud’s price reduction is not a short-term market competition behavior, but a long-term strategic choice, which is determined by the business model of the public cloud. “Cloud computing is a business model with network effects and scale effects. "
Under the wave of AI, the public cloud market, which resonates with large models, is about to start a new year of competition for the right to speak.
author | Zhao Zikun
editor | Dong Yuqing
operator | Liu Shan
-
-
-
-
-
-
-
-
-
-