Written by Wu Jingjing.
Edited by Su Jianxun.
On the evening of February 7, Alibaba Group released its results for the fourth quarter of 2023 (Q3 FY2024) ended December 31.
Cloud intelligence business is Alibaba's second largest business segment after Taotian Group. According to the financial report, in the fourth quarter of 2023, Alibaba Cloud's revenue increased by 3% to 2806.6 billion yuan, accounting for 11% of Alibaba Group's total revenue. Compared to 9% in the first quarter of 2023, the proportion of cloud business in the Group's business is increasing.
At the first meeting after the earnings release, Alibaba Group CEO Wu Yongming said: "In 2024, Alibaba will actively invest in its core business. The Group's top priority is to rekindle the growth momentum of its two core businesses, e-commerce and cloud computing. ”
Screenshot from Alibaba's financial report.
It is worth noting that Ali's financial report mentions,The 3% revenue growth rate does not include the revenue contributed by Alibaba Group, and the cloud business revenue decreased year-on-year.
Alibaba Cloud explained in its earnings report that part of the reason for the decline in revenue is that Alibaba Cloud continues to improve the quality of revenue by reducing project-based revenue with lower profit margins.
In recent years,Alibaba Cloud's revenue growth rate is declining year by year, and it will basically be a single-digit growth or negative growth in 2023In the four years from fiscal year 2019 to fiscal year 2022, Alibaba Cloud's revenue growth rate was %, all the way down.
The slowdown in revenue growth corresponds to the declining share of Alibaba Cloud's domestic public market year by year. In the second half of 2022, Alibaba Cloud's domestic public cloud market share has declined。According to the latest IDC report, in the first half of 2023, Alibaba Cloud's share of the public cloud LAAS market will be 299%, down from 2022.
Data from IDC China.
This is not just the pressure on Alibaba Cloud, at present, the entire Chinese public cloud market is facing a slowdown in growth. According to the IDC report, in the first half of 2023, China's public cloud IaaS + PaaS market will grow by 15% year-on-year9%, a new year-on-year growth rate in the past three years, and the growth rate of the public cloud market in Chinese mainland continues to slow down.
According to IDC's analysis, the main reasons are: on the one hand,Enterprise IT budgets are not growing as expectedEnterprises are more cautious about the formulation, expenditure and use of budgets; On the other hand, Internet cloud vendors are graduallyShift from "revenue generation" to "profitability"., take the initiative to abandon non-benign projects, increase the proportion of their own integration, and the year-on-year growth rate of market revenue declined.
This kindFrom "income generation" to "profitability" The development tone has shifted downwardAlibaba Cloud's performance in terms of profits is also highlighted.
Alibaba Cloud's adjusted EBITA, a non-GAAP financial measure, reported a profit of 23 percent for the fourth quarter of 20236.4 billion yuan, an increase of 86%, a new high in the fiscal year.
Screenshot from Alibaba's financial report.
On the one hand, the growth of profits is due to throttling, for exampleLayoffsand other means; On the one hand, it is also the best in Alibaba CloudDe-integrationand setting the tone for a new strategy of "AI-driven, public cloud-first".
In addition, it is also mentioned in the financial reportDingTalk's business is not included in the intelligent cloud sectorCombined with the fact that DingTalk has not yet come out of the loss, this has further improved Alibaba Cloud's profit performance.
At present, the main tone of Alibaba Cloud has completely changed and is being vigorously promotedThe implementation of the public cloud-first strategy
On November 23, 2023, Alibaba Cloud carried out a comprehensive organizational structure adjustment, and established three business divisions: the Public Cloud Business Division, the Hybrid Cloud Business Division, and the Infrastructure Business Division, to comprehensively focus on public clouds with a higher degree of standardization, encourage government and enterprise customers to give priority to the use of public clouds, and reduce the sales of project-based software and hardware orders.
For Alibaba Cloud today, the focus of development is no longer blindly pursuing revenue, but pursuing profits.
Wu Mingyong, CEO of Alibaba Cloud Group, said at the first meeting after the release of the financial report: "These structural adjustments are showing results, and the overall profitability of Alibaba Cloud continues to improve. We have also upgraded Alibaba Cloud's sales business, established different sales and service systems, and served customers of different types and sizes, and by improving our customer coverage and service capabilities, we will increase our growth rate. ”
Nowadays, the competition among cloud vendors is becoming increasingly fierce, and Alibaba Cloud has not only adjusted its strategyOn the one hand, it has also adopted the method of product price reduction to compete for the stock market, and on the other hand, it is also further developing the incremental market by increasing the investment in the model.
In terms of product pricing, in the first half of 2023, Alibaba Cloud announced a 15% to 50% offline increase in core products** across the board, involving computing, storage, networking, and security products.
Price reduction is one of the most common strategies in the cloud market competition, and AWS said in 2016 that price reduction is the core strategy, and since its launch in 2006, AWS has cut prices 52 times in 10 years, and then Microsoft Cloud and Google Cloud have also carried out several price reduction measures.
The popular large model is also providing new products to various cloud vendors"**At present, in the development route of the large model, Alibaba Cloud has taken the lead in choosing the open source route on the one hand, and has open-sourced a variety of Tongyi Qianwen version models to attract more users; On the other hand, we will continue to build an open large-scale model platform, shouting the slogan of "the most open cloud in the AI era", and seek further growth space. However, at present, the help of large models to performance has not yet been reflected in the financial report.
There's a lot of potential to leverage AI to dramatically improve search conversions and increase profitability, but this is still in early beta and we see a lot of potential. Wu Yongming said at the meeting.