A number of cloud service vendors have reduced prices and some companies have directly discounted 1

The price war reflects the anxiety of cloud giants

Reporter Yuan Lu

The cloud services market is undergoing new changes. Following the "largest price reduction in the history of Alibaba Cloud" at the end of April, several cloud service giants recently announced price reductions for core products. Some Tencent Cloud product lines have dropped by up to 4%, mobile cloud products have dropped by up to 40%, and Tianyi Cloud has published a header advertisement on the homepage saying that some products are as low as 60% off.

In less than a month, three mainstream cloud service providers actively followed up, not only with large price reductions, but also with a wide range of coverage. "The main purpose of the price war is to 'exchange price for volume' and expand the user base and scale." Industry insiders analyzed that price wars are often a last resort, reflecting the deep anxiety of cloud giants, and the market is imminent.

Four cloud service providers have significantly reduced the price of their products

On the evening of May 5, Tencent Cloud announced that it will reduce the price of a number of core cloud products, with some product lines reducing by up to 16%, and the price reduction policy will officially take effect on June 40.

In terms of databases, some Tencent Cloud database resource packages have decreased by 25% compared with annual and monthly subscription products of the same specification. In terms of cloud security, Tencent Cloud Host Security Basic Edition will be available to small and medium-sized enterprises on the entire network free of charge.

Less than 50 minutes after Tencent Cloud's announcement, Mobile Cloud also quickly followed suit, announcing that the price of mobile cloud general-purpose entry-level cloud hosts and general-purpose network optimized cloud hosts was reduced by 60%, and the price of Cloud Security Center and EVS Disk backup was reduced by 50%. On the evening of the same day, the reporter saw the head picture advertisement of "90% profit of core products as low as 1% discount" on the homepage of the official website of Tianyi Cloud, saying that the new S7 cloud host was 2.5 folded and the database was 1.5 folded.

This round of price war in the cloud service industry has long been foreshadowed. On April 4, Alibaba Cloud announced the launch of the "largest price reduction in history", in which the price of core products was reduced by 26% to 15% across the board, and the price of storage products was reduced by up to 50%. On May 50, Alibaba Cloud announced that the number of free trial products has increased to more than 5, adding multiple categories such as cloud native, AI, and security.

"The prices of various cloud vendors have 'rolled up'." Mr. Hu is an operation and maintenance engineer at a technology company in Beijing and is currently considering placing the company's network entrance on the public cloud. According to Alibaba Cloud's previous quotation, the company spends about 2,15 yuan a month, and can save 3000,<> yuan after reducing the price by <>%. "Now that everyone is on sale, we still want to wait and see, maybe the offer can be cheaper and save money on a cloud host."

"Price for volume" to compete for market share

Why did major cloud service providers suddenly cut prices sharply? Alibaba Cloud said it hopes to further expand the user base and scale of public cloud and increase the market penetration rate of cloud computing. Qiu Yuepeng, president of Tencent Cloud, said that he hopes to take this opportunity to focus more on products and release technology dividends to users by adjusting the prices of core products.

"Cloud service providers have reduced prices, and the fundamental purpose is to 'exchange price for volume' and expand the user base and scale." Industry insiders analyzed that the Internet giants took the initiative to reduce prices and make profits, which is very attractive to many enterprises, especially small and medium-sized enterprises with tight funds.

Zhou Shenzhen, director of operation and maintenance of a technology company in Shenzhen, told reporters that this round of cloud service providers are competing to reduce prices, and the main target is actually the first-time contracted enterprises, which is not very attractive to mature users. "Whether it's a free trial period or a price reduction for core cloud products, it's mainly aimed at enterprises that sign up for the first time." Zhou Shenzhen told reporters that the company's team has used Alibaba Cloud since 2015, "I just renewed my contract with Alibaba Cloud Server Load Balancer (SLB) products a few days ago, and the price has not dropped a penny. ”

"You have to attract the fry into the pond first." Zhou Shenzhen said that the characteristics of cloud services are strong binding with service providers and are difficult to migrate. Once you decide which company to choose, it is almost impossible to replace the migration in the middle, and the time cost and refactoring cost are too high. "No matter how expensive the later renewal is, you have to recognize it."

AI large models may become new ideas for problem solving

The growth of the domestic cloud service market is not optimistic. According to the latest data from IDC, the two major businesses in China's public cloud market grew by 2022% year-on-year in the second half of 19, a significant decline compared with the 2021.42% growth rate in the same period of 9.

Market growth is slowing down, and competition among cloud service vendors is intensifying. "Behind the low-price competition of cloud service providers is that the threshold of cloud computing technology is not high, but there is a scale threshold, and efforts must be made to improve the reuse rate of infrastructure." Pan Helin, a member of the Information and Communication Economy Expert Committee of the Ministry of Industry and Information Technology, said that cloud service providers without technical barriers, the anxiety and pressure of the "involution" of the price war will continue.

Foreign cloud service providers may be able to provide a new idea for solving problems. In the third quarter of fiscal 2023, Microsoft's intelligent cloud division generated revenue of $221.16 billion, up 1% year-over-year, far exceeding market expectations. Google Cloud also made a profit for the first time, with EBIT of $91 million. Microsoft Cloud and Google Cloud are closely related to AI big models.

The reporter noticed that major cloud service providers have also begun to focus on the AI big model. Recently, Alibaba Cloud announced that it will comprehensively move towards "model as a service" and jointly promote the application of large models in different industries through the generative artificial intelligence robot "Tongyi Qianqian". Tencent Cloud claims to support customers to fine-tune training based on Taiji Angel's large model capabilities.

"The AI big model can provide a way for cloud computing vendors to create barriers through technology and increase industrial added value." Pan and Lin believe that providing users with full-process solutions for developing generative AI applications based on AI models will become one of the development directions of cloud service providers in the future, and will also constitute a new differentiated advantage for cloud computing vendors. (Source: Beijing Daily)