Alibaba’s cloud computing unit cuts prices on 100 core products in China to capture more users involved in AI development projects

Alibaba Cloud on Thursday slashed prices by up to 55 per cent on more than 100 core products in its largest discount offering to date
The initiative seeks to ‘lower the threshold of cloud services for more enterprises and developers’ in China, where AI projects are driving demand

Alibaba

Kelly Le

Published: 7:00pm, 29 Feb 2024

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Alibaba Group Holding’s cloud computing unit has cut prices by up to 55 per cent on more than 100 core products – the largest discount offering in the company’s history – to attract more enterprises and software developers as users in mainland China, as the adoption of artificial intelligence (AI) picks up steam across various industries.

This new campaign, which offers an average 20 per cent reduction in prices, took effect on Thursday and includes the unit’s elastic compute service (ECS), object storage service (OSS) and database product categories, Alibaba Cloud said in a statement. Hangzhou-based parent Alibaba owns the South China Morning Post.

The initiative seeks to “lower the threshold of cloud services for more enterprises and developers”, according to Liu Weiguang, the president of public cloud business at Alibaba Cloud Intelligence.

“With the rapidly increasing amount of data in China, businesses will need robust, high-performance and cost-effective computing power to help handle and analyse the data before turning them into actionable intelligence,” Liu said. “This is where we can help, as we aim to become the most open cloud [platform] and help our customers to turn AI into productivity.”

A roomful of high-performance servers are seen stacked inside a data centre run by Alibaba Cloud in mainland China. Photo: Handout

Cloud computing technology enables companies to distribute, manage or process over the internet a range of software and other digital resources as an on-demand service, just like electricity from a power grid. These resources are stored inside data centres.

Prices of Alibaba Cloud’s ECS, which provides users with virtual cloud servers, has been cut up to 36 per cent, while those for OSS – a service to store and access any amount of data from anywhere – was slashed up to 55 per cent. For database product categories, prices were reduced up to 40 per cent. Both existing and new customers can avail of the discounted prices, according to Alibaba Cloud.

Founded in 2009, Alibaba Cloud currently serves 80 per cent of technology companies on the mainland, including half of firms involved in AI large language model (LLM) development, Alibaba co-founder and chairman Joe Tsai said last October at the annual Apsara Conference. LLM is the technology used to train generative AI services like ChatGPT.

Alibaba Cloud’s latest initiative reflects the market opportunity to address growing demand for high-performance computing resources on the mainland, where AI development efforts have rapidly expanded amid Washington’s sanctions on the export of advanced semiconductors to the country.

Alibaba’s cloud unit now serves 80% of Chinese tech companies

Lowering prices, however, could also trigger a price war among China’s major cloud services providers, as competition intensifies among vendors to support the development and deployment of innovative AI services in the country.

Alibaba Cloud, which continues to have the biggest share of cloud infrastructure services spending on the mainland, initially slashed prices on a number of its core products and services on May 7 last year after announcing the initiative in April.

A number of Chinese cloud firms have already made their self-developed LLMs and online platforms available to third-party developers, so they can build AI applications for a range of traditional industries.

Cloud infrastructure services spending in mainland China grew 18 per cent year on year to US$9.2 billion in the third quarter last year, with Alibaba Cloud recording a 39 per cent market share, according to a report in December by research firm Canalys. The cloud units of Huawei Technologies and Tencent Holdings had shares of 19 per cent and 15 per cent, respectively, in the same period.

Alibaba seeks growth from AI co-development programme, cloud price cuts

Earlier this month, Alibaba reported that revenue from its Cloud Intelligence Group in the December quarter rose 3 per cent year on year to 28.06 billion yuan (US$3.95 billion) on the back of efforts to cut sales from low-margin, project-based contracts.

Alibaba chief executive Eddie Wu Yongming said in a statement at that time that the company’s top priority is to “reignite the growth of our core businesses, e-commerce and cloud computing”.

At present, Alibaba Cloud operates 89 availability zones – where it operates data centres – in 30 regions globally, supporting more than 4 million customers worldwide.