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

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.

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