AI public cloud has become the second battlefield of domestic cloud giants: Kunlun Wanwei, an A-share large-scale model company, and iFLYTEK "stand in line" with Alibaba Cloud and Tencent Cloud, and the performance of small and medium-sized cloud manufacturers has been losing money year after year under the price war
Finance Associated Press, December 10 (edited by Rising Sun) As the "100 model war" has entered the deep water area, cloud vendors such as Alibaba Cloud, Huawei Cloud, Tencent Cloud, Baidu Intelligent Cloud, Volcano Engine, and e Cloud have shown their killer features. At the 2023 Apsara Conference, Tsai Chongxin, the new chairman of the board of directors of Alibaba Group, said that at present, 80% of the country's technology companies and more than half of the AI large model companies are running on Alibaba Cloud. Previously, at the 2023 Baidu Cloud Intelligence Conference, the Baidu Intelligent Cloud Qianfan Large Model Platform announced for the first time that the number of monthly active enterprises has reached nearly 10,000, covering more than 400 business scenarios in finance, manufacturing, energy, government affairs, transportation and other industries.
Among the A-share listed companies, large model companies such as Kunlun Wanwei and iFLYTEK are also inseparable from the support of cloud giants such as Alibaba Cloud and Huawei Cloud. In addition, listed companies including LongShine Technology, Giant Network, Hang Seng Electronics, Runda Medical, GF Securities and other listed companies have also become their respective end customers of Alibaba Cloud, Huawei Cloud, Tencent Cloud, Baidu Intelligent Cloud and Volcano Engine.
Industry insiders said that the major cloud giants already have large-scale model companies standing in line, and anyone may be able to come up with their own "domestic OpenAI". At the same time, few players are strongly bound to a cloud giant manufacturer, but they are still in an "ambiguous period" in terms of GPU computing power supply, development tool chain, community ecology and other aspects.
▌Kunlun Wanwei, iFLYTEK and other large model companies have "stood in line" Alibaba Cloud, Tencent Cloud, and even Internet cloud manufacturers spent $5 billion to buy NVIDIA chips to "attract customers"
The rapid growth of massive parameters and databases in the training process of AI large models and the number of user calls has brought about a surge in computing power demand. Considering the resource advantages and economics, cloud vendors are becoming the main bearers of AI computing power demand. According to IDC, the size of the mainland AI public cloud market will reach 7.97 billion yuan in 2022, a year-on-year increase of 80.6%. Among them, Baidu Intelligent Cloud, Alibaba Cloud, Huawei Cloud, and Tencent Cloud have a leading share, and the industry CR4 reaches 93.7%. In 2022, Baidu/Alibaba/Tencent AI public cloud revenue will be 23.0/21.8/1.49 billion yuan respectively, a year-on-year increase of 69.7%/71.2%/124.6%, corresponding to an overall revenue contribution of 13%/2.8%/4.7%.
The customers of large public cloud manufacturers can be simply divided into two categories: one is large model enterprises, and the other is large model terminal application customers in specific industries. At present, Alibaba Cloud, Tencent Cloud, Huawei Cloud, Baidu Intelligent Cloud, and Volcano Engine have won many major customers in the industry.
Among them, Alibaba Cloud and Tencent Cloud have layouts in two types of customers: large-scale model enterprises and industry terminal application enterprises. Alibaba Cloud's Zhipu AI, Baichuan Intelligence, Kunlun Wanwei and other enterprises compete for the first echelon of domestic large models, and the industry end users include LongShine Technology, Giant Network, AsiaInfo Technology and other listed companies. Tencent Cloud's large-scale model customers include Baichuan Intelligence, Zhipu Technology, and MiniMax.
Source: WeChat public account Zhidong article on November 28 "The five promoters behind China's AI large model are inseparable!" (the same below)
Baidu Intelligent Cloud and HUAWEI CLOUD focus on implementing their large models into industry terminal applications, covering various fields such as healthcare, education, finance, entertainment, energy, and meteorology. Among them, HUAWEI CLOUD customers gather listed companies such as iFLYTEK, Kunlun Wanwei, Hang Seng Electronics, Runda Medical, and GF Securities.
Baidu Intelligent Cloud's end customers include Kingsoft Office, Good Future, Runjian Co., Ltd., Haitong Securities, BlueFocus, Kelan Software, iSoftStone, Changan Automobile, China Hi-Tech and other enterprises. ByteDance's Volcano Engine mainly focuses on large-scale model companies, and its customers involve Kunlun Wanwei, Guosen Securities, MiniMax, Zhipu Al and other companies.
However, it is worth mentioning that at present, few enterprises are strongly bound to a cloud giant vendor, and public cloud vendors have also begun to spend huge sums of money to snap up NVIDIA GPU cards to enhance their competitiveness. Analysts pointed out that in the competition for large model customers, the focus of competition among cloud manufacturers is GPU computing power clusters. Every major public cloud manufacturer is trying to promote its 1000 calorie and 1000 calorie cluster capabilities, and in the final analysis, this is the core competitiveness to attract large model customers.
China's internet giants are scrambling to buy Nvidia's high-performance chips, with Baidu, ByteDance, Tencent and Alibaba ordering $1 billion worth of A800 processors, the Financial Times reported on August 10. In addition, the companies have purchased $4 billion of Nvidia's graphics processing units (GPUs), which will be delivered in 2024.
▌The business of the public cloud market has slowed down, Alibaba Cloud and Tencent Cloud have started a price war, and the small and medium-sized cloud manufacturer Qingyun Technology has lost money for five consecutive years, and the stock price of UCD has fallen by more than 9% in three years
The first half of cloud computing is a blue ocean, and cloud vendors have enjoyed the dividends brought by the market explosion during this period. However, in the second half, the overall growth rate of the public cloud market began to decline. According to IDC's latest "China Public Cloud Service Market (First Half of 2023) Tracking" report, the overall market size of China's public cloud services in the first half of 2023 will be 19.01 billion US dollars. Among them, the IaaS market size was US$11.29 billion, with a year-on-year growth rate of 13.2%; The PaaS market size was US$3.29 billion, with a year-on-year growth rate of 26.3%. From the perspective of the IaaS + PaaS market, the first half of 2023 will increase by 15.9% year-on-year, the lowest year-on-year growth rate in the past three years, and the growth rate of the public cloud market in Chinese mainland will continue to slow down.
Some analysts said that on the one hand, after the epidemic, enterprises are more cautious about the formulation, expenditure and use of budgets, and the demand for cost reduction and efficiency improvement has further increased, and the growth of enterprise IT budgets has not been as expected. On the other hand, Internet cloud vendors have gradually shifted from "revenue generation" to "profitability", actively abandoning non-benign projects and increasing the proportion of their own integration, which has also led to a year-on-year decline in market revenue.
For this reason, the domestic cloud market is facing a fierce competition situation, and price reduction has become a good strategy. At Alibaba Cloud's 2023 Partner Conference, Alibaba CEO Daniel Zhang announced a 15% to 50% drop in the price of its core products across the board. This was followed by a drop of up to 40% for some Tencent Cloud product lines and a 60% drop for all mobile cloud products.
Under the price involution, the survival pressure of small and medium-sized cloud manufacturers has increased sharply, and the performance of independent cloud manufacturers such as Qingyun Technology and UCD has continued to lose. According to the data of Qingyun Technology's third quarterly report, the company's Q3 net profit loss was 123 million yuan. Looking at the previous annual report, the data shows that the company has been in a state of loss since 2018, and has been losing money for five consecutive years so far.
Another independent cloud vendor, UCD, has also lost money for many years, with net profit losses of 343 million yuan, 633 million yuan, and 413 million yuan in 2020, 2021, and 2022, respectively. In the first three quarters of 2023, the company's net profit loss was 284 million yuan. In the secondary market, the stock price of UCD has fallen by 52% year-to-date, and in the long run, the largest decline since the all-time high in February 2020 has reached 91%.
Some industry insiders said that as the Matthew effect in the cloud computing market continues to intensify, the domestic market is dominated by Alibaba Cloud, Huawei Cloud, Tencent Cloud, etc., and its leading edge will leave many challengers behind, and it will be difficult for small and medium-sized enterprises to run on the public cloud track.
(Finance Associated Press, Rising Sun)