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Alibaba price cuts heat up cloud space

chinadaily.com.cn| Updated: March 4, 2024 L M S

The competition in China's cloud computing sector is heating up as major Chinese players have announced cuts to prices of multiple core products.

Experts said this will mean lower cost of access to cloud services for enterprises, which in turn will boost market development.

Alibaba Cloud, the cloud computing unit of Alibaba Group Holding Ltd, announced on Thursday a price reduction of up to 55 percent on more than 100 core products, marking the biggest price cut in the company's history.

This move aims to make public cloud services more inclusive and accessible in the era of artificial intelligence, and speed up the popularization of cloud computing in all walks of life, the company said.

The new prices, with 20 percent reduction on average, cover over 100 cloud products, such as computing, storage and database.

"As the biggest cloud service provider in China and the Asia-Pacific region, we see tremendous growth prospects in China's digital market. That's why we decided to launch the price reduction campaign. This will lower the threshold of cloud services for more enterprises and developers who can now reap the technological dividends and accelerate the adoption of advanced public cloud services across various industries in China," said Liu Weiguang, president of public cloud business at Alibaba Cloud Intelligence.

With the amount of data in China increasing rapidly, businesses will need robust, high-performance and cost-effective computing power, Liu said.

The decision to reduce product prices comes at a time when interest and investments in AI continue to rise globally, given that the process of training AI-powered large language models requires massive computing power.

Experts said Alibaba Cloud's price cuts underscore its commitment to fueling the adoption of AI technologies and supporting the quickly evolving landscape.

JD Cloud, an arm of Chinese technology company JD, said on Thursday it will provide core products covering computing, storage and networking at the lowest prices compared to rivals.

This round of significant price cuts by Alibaba Cloud is a proactive response to the changing market demands and competitive dynamics in the Chinese market, where cost effectiveness, localization and AI-led innovation are the three key themes this year, said Charlie Dai, vice-president and principal analyst at research firm Forrester.

"It will not only encourage more small and medium-sized enterprises to adopt cloud services, but also drive next-generation AI adoption with foundation models at the core, triggering a new round of price wars among other cloud service providers that hope to sustain growth momentum and gain more market share," Dai said.

Expenditure on cloud infrastructure services on the Chinese mainland grew 18 percent year-on-year to $9.2 billion in the third quarter of 2023, accounting for 12 percent of global cloud spend, according to market consultancy Canalys. Alibaba Cloud led the cloud infrastructure services market, taking up 39 percent of total spending.

Canalys said cloud vendors remain relentlessly focused on AI innovation and investments, consistently unveiling new AI products and solutions.

Liu Lihui, assistant research director at market research firm International Data Corp, said the significant price reduction has indicated Alibaba Cloud's determination to compete in the public cloud market as the company is sharpening its focus on implementing the AI-driven strategy and developing public cloud products and services.

The move will make cloud computing services more accessible and affordable for small and medium-sized enterprises, and attract a new breed of users while maintaining existing clients, Liu said.

Cloud computing is playing an increasingly important role in Alibaba's overall business landscape. Revenue of Alibaba's cloud computing business was 28.07 billion yuan in the October-December period, up 3 percent year-on-year.