On February 29, Alibaba Cloud held its 2024 annual strategy conference, announcing that the price of all cloud products will be reduced, with an average price reduction of more than 20% and a maximum reduction of 55%, which will be implemented from now on.
Liu Weiguang, senior vice president of Alibaba Cloud and president of the public cloud business department, said that this is the largest price reduction in the history of Alibaba Cloud. Alibaba Cloud has decided to increase investment in public cloud technology to lower the threshold for small and medium-sized enterprises to use the cloud and accelerate the penetration rate of public cloud in the Chinese market.
Involving a wide range of products.
According to Alibaba Cloud, this price reduction involves more than 100 products and more than 500 product specifications, covering all core products such as computing, storage, and databases.
Liu Weiguang said that this time Alibaba Cloud has reduced the price, with a wide range of participating products and a large beneficiary group. Among them, ECS is reduced by up to 36%, Object Storage Service (OSS) is reduced by up to 55%, and RDS is reduced by up to 40%. The price reduction of Alibaba Cloud is a concrete implementation of the "AI-driven, public cloud first" strategy. Alibaba Cloud intends to promote the transfer of users from traditional IT to cloud computing through Internet play, which will further increase the penetration rate of public cloud in the Chinese market.
Alibaba Cloud hopes that through this large-scale price reduction, more enterprises will use advanced public cloud services and accelerate the popularization and development of cloud computing in all walks of life in China. Liu Weiguang said.
Increase market penetration.
Liu Weiguang said that the current penetration rate of domestic public cloud is significantly lower than that of mature markets in Europe and the United States. "Most traditional enterprises and small and medium-sized enterprises have not fully or deeply embraced the cloud, and most industries are still in their infancy. ”
Liu Weiguang believes that many domestic enterprises have not enjoyed the value brought by the public cloud, and many users only use the cloud as a server resource, and the data capabilities and AI capabilities on the cloud have not become the technology to help enterprises transform and upgrade. In the future, technological innovation will be born on the cloud, and the public cloud will provide developers and enterprises with the most cost-effective choice.
Taking the AI model as an example, Liu Weiguang said that the public cloud is the best partner for AI. Cloud computing not only provides computing power support for large models, but also includes iterative upgrades of network storage and supporting technical architectures. "Many enterprises need the capabilities of large models, but they don't need to do their own inference training, and they can easily obtain AI capabilities by using resources on the public cloud. ”
From the perspective of the development history and business logic of global cloud computing giants, cloud computing has a scale effect. The expansion of the scale of users will force the continuous progress of the entire ** chain technology. Liu Weiguang said that Alibaba Cloud will not do things that go against business logic, and in the process of achieving scale effect, the ability of self-developed technology system has been continuously improved. "The technology dividends continue to be released, and we hope to give back to the market and customers. ”
It is understood that cloud computing is similar to the "Moore's Law" of the IT industry - every 3 years, the computing power per unit of cloud computing** will decline by 50%. At present, the average resource utilization rate of a large number of self-built IDCs in China is less than 5%, while the resource utilization rate of data centers based on self-developed cloud computing operating systems such as Amazon and Google can reach 30% to 40%. With the expansion of scale and the improvement of R&D efficiency, public cloud vendors usually continue to reduce prices. Over the past decade, Alibaba Cloud has reduced computing costs by 80% and storage costs by nearly 90%.
Scale up even further.
This large-scale price reduction may have a short-term impact on Alibaba Cloud's operating profit. Appropriately reducing profits and increasing scale is the long-term strategy of the cloud computing business model. The "public cloud first" strategy means that Alibaba Cloud will further increase its investment in public cloud technology and accelerate the penetration rate of public cloud in the Chinese market.
On the evening of February 7, Alibaba Group announced its results for the third quarter of fiscal year 2024 (Q4 2023). Alibaba Cloud's revenue increased 3% to 280 in the quarter$6.6 billion, with adjusted EBITA profit surging 86% to 23.6 billion6.4 billion yuan. After the earnings conference, Wu Yongming, CEO of Alibaba Group, said that the group's top priority is to rekindle the growth momentum of its two core businesses, e-commerce and cloud computing. In terms of cloud computing, the next year will focus on resources and develop public cloud products.
Cloud computing networks have been built, and the more people who use them, the higher the resource utilization, and the lower the idle cost. We want to make it even bigger. Zhang Qi, Vice President and General Manager of the Public Communication Department of Alibaba Cloud, said, "Alibaba Cloud has the confidence to do this, which is strongly related to our scale and continuous technology accumulation. "At present, Alibaba Cloud is the largest in the Asia-Pacific region.
1. The world's third-largest cloud vendor.
Liu Weiguang said that he believes that by reducing prices and giving profits to customers, the scale of small and medium-sized enterprises on the cloud can be expanded, so as to make up for the loss of revenue caused by price reductions. "In the past few quarters, Alibaba Cloud's revenue growth has slowed down, and we have implemented a differentiation strategy to get out of this situation. ”