Text丨Liu Qian
出品丨牛刀财经(niudaocaijing)
The latest keyword for 2024 is freshly released: price war. It is not only the vigorous price reduction of the new energy vehicle industry, but also the field of cloud computing.
On April 8, Alibaba Cloud announced price reductions across the board in overseas markets, covering core cloud products and more than 500 product specifications deployed in 13 regional nodes around the world, with an average reduction of 23% and a maximum reduction of 59%.
This is the fourth price cut by industry giant Alibaba Cloud in the past year.
The last price reduction was on February 29 this year, and at the 2024 Alibaba Cloud Strategy Conference, Alibaba Cloud announced that it would raise the price of the official website of cloud products in China offline, with an average price reduction of more than 20% and a maximum price reduction of 55%, which is known as "the largest price reduction in history".
The interval between the two price cuts is only one month, which is nothing, and what's more interesting is that Alibaba Cloud also hung itself up in the small yellow car in Luo Yonghao's live broadcast room.
It seems that Alibaba Cloud has made up its mind to become a price "killer" in the field of cloud computing, but in fact, the cloud market is currently fiercely competitive, and the crazy price reduction has also brought great challenges to the development of Alibaba Cloud.
Behind Alibaba Cloud's price cut, there are 3 mines that I have buried for myself.
1. Alibaba Cloud lowered prices to "disrupt the situation", and the most injured agents were the agents
Alibaba Cloud has slashed prices, whether it is for other cloud vendors and agents in the industry, not only the pace of other cloud vendors has been disrupted, but the agents are also very hurt.
In April last year, Alibaba Cloud launched an unprecedented price reduction campaign involving core products and storage products, with prices reduced by 15% to 50% across the board, with a maximum reduction of 50%.
After Alibaba Cloud announced the price cut, Mobile Cloud also announced a maximum reduction of 60% for some product lines, and Tencent Cloud announced a maximum reduction of 40% for some product lines.
Consumers who don't know the truth are overjoyed, thinking that Alibaba Cloud is BYD in the field of cloud computing, and finally wants to "beat" the price of cloud computing.
The actual effect is difficult to estimate, because the real large customers can usually enjoy a greater contract discount in addition to the price reduction.
Although Alibaba Cloud said that if the contract discount of large customers is not as large as the discount on the official website, which preferential model has a lower price, it will use which model to cooperate, but the official website price is often lower than the contract preferential price enjoyed by large customers, and long-tail customers with less usage and elasticity can save money, which is also considered to be the customer group that Alibaba Cloud is targeting this time.
The timing of Aliyun's approach is very delicate, and it can be described as a precise sniper for its friends.
Alibaba's price reduction is mainly aimed at the "three major parts" of elastic computing, storage, and database, accounting for more than 30% of Alibaba Cloud's revenue, and these three sets are also an important source of revenue for Tencent Cloud.
Tencent Cloud's goal in 2024 is to break even, and in 2025, it hopes to make a slight profit.
HUAWEI CLOUD is also at a critical juncture. At present, Huawei's internal management is rotated every three years, and how to deal with this price war is a great test for the new management.
The biggest impact of changes in the price system is the agents.
The first fatal blow is that the commission is reduced and the profit is reduced. Agents themselves have been affected by the previous changes in prices and settlement systems. More critically, it is reported that some agents are worried, "As long as Alibaba Cloud products are less than 3.8% off, there will be no rebates." ”
In addition to the reduction of rebates, the loss of customers is a fatal blow to agents.
Last year, after Alibaba Cloud implemented the customer tiering policy of ABCDEF, some agents who focus on small and medium-sized customers are in an extremely difficult situation. Now the price of all products on the official website of Alibaba Cloud has been greatly reduced, which is equivalent to grabbing the cake directly from the mouth of the agent.
The price advantage of agents is no longer there, and more and more small and medium-sized customers may abandon agents and place orders directly through the official website of Alibaba Cloud, after all, it is the agents who are the most hurt.
2. From the cancellation of double computing to a substantial price reduction, Alibaba Cloud's sales contradiction has escalated
The conflict of interests between cloud giants and agents has been around for a long time, so there is a "double calculation" system in the industry.
To put it simply, when cloud giants are developing customers, it is easy to "collide with big customers" with agency partners.
In order to grab customers, many agent partners began to frantically lower prices and give discounts, and cloud giant direct sales can only suffer dumb losses, but sales contradictions have escalated again and again.
It is not uncommon for agents and direct sales to tear each other apart, and after-sales service will also be affected, which is certainly not a good thing for the company.
So there was a double calculation system. Once the customer signs a successful contract, it is counted as both direct sales performance and agent performance.
It is a good thing that internal conflicts have been reduced and performance has grown, but after having common interests, direct sales and agents have begun to turn hostility into friendship and join forces to get bugs.
Agents and direct salesmen work together to make orders and earn double commissions from the platform. Last year, Alibaba Cloud was the first to abolish the dual-computing system.
Alibaba Cloud launched the partner commission policy for fiscal year 2024, announcing a review of existing customers, clarifying the attribution of each customer, and canceling double counting. Alibaba Cloud has incorporated most of the head and shoulder customers and small customers into the direct sales team, and only the waist customers have agents to follow up.
Repeated price cuts are also a manifestation of Alibaba Cloud's attempt to exchange low prices for growth. The price reduction again will indeed attract many small and medium-sized customers to flock to the official website and telemarketing channels to buy cloud services, and Alibaba Cloud's official website sales and telemarketing teams will directly benefit from the performance.
This change in the price system may have an impact on the structure of agents and direct sales.
3. It is useless for Alibaba Cloud to blindly reduce prices, and it is necessary to promote technological innovation
The price involution puts Alibaba Cloud in a dilemma.
On February 29, the price reduction was announced at the 2024 Alibaba Cloud Strategy Conference, and on the evening of February 29, JD Cloud released a message saying, "Drop it casually, compare it to the end! We will continue to compare prices across the network! Break down the low price! Lower by 10%!" and promised to "buy expensive, you will lose".
Judging from the official website, JD Cloud has made two "killer moves" in the activity, one is to give a 10% discount to the lowest transaction price of the benchmark product after price comparison on the whole network, and the other is that if the user buys expensive, JD Cloud will directly issue a voucher with a validity period of up to one year.
On the second day after Luo Yonghao sold the cloud for Alibaba Cloud live broadcast, JD Cloud immediately followed up and officially released the "Spring Breeze Plan" and set up a "1 billion price comparison fund".
JD Cloud also sold cloud products in the live broadcast room, and the background of "1 billion price comparison, make a real friend" is very eye-catching, and the two sides are facing each other, and friends obviously do not want Alibaba Cloud to have a better time.
Price reduction does not solve the problem, in fact, the reason for this situation is very simple, because the current cloud service market has a high degree of homogeneity of cloud products, and everyone can only roll up the price.
It seems that price reduction alone cannot be rolled up to the end, and if you want to win other large manufacturers, you need to ensure the continuous decline of technology costs, maintain value advantages, and solve the problems of safety and stability.
Compared with the price, Alibaba Cloud's several downtime accidents have hit the market's confidence.
According to public reports, in December 2022, Alibaba Cloud's data center in Hong Kong went down due to a cooling failure, which was the longest large-scale failure in more than a decade of operation, and many large customers were affected.
On the night of the 2023 Tmall Double 11 promotion, Taobao had a brief downtime, and on the evening of November 12, many Ali apps, including Taobao, Xianyu, DingTalk, Ele.me, and Cainiao, were inaccessible or had abnormal services.
At that time, Alibaba Cloud officially explained to the customer that "the cloud product console access and API call are abnormal".
In the eyes of the outside world, both incidents have dealt a heavy blow to Alibaba Cloud's customer image.
However, the perspective is elongated, the cloud computing market is unpredictable, the pressure on Alibaba Cloud is increasing, and the door to artificial intelligence has just opened, and the second half of Alibaba Cloud's competition may lie in the "cloud + AI" aspect.
As a large model company with bottomless computing power, they all rely on powerful cloud vendors behind them, and in turn, the development of large models has also brought new growth points to cloud vendors.
Taking Microsoft as an example, Microsoft's intelligent cloud Azure and other cloud businesses saw a 30% year-on-year increase in revenue in the fourth quarter, which was higher than the previous three fiscal quarters and market expectations.
According to Robin Li, chairman and CEO of Baidu, Baidu's total revenue in the fourth quarter was 8.4 billion yuan, of which the large model brought about 660 million yuan of incremental revenue to the cloud business.
Alibaba Cloud's price reduction strategy may be effective in attracting price-sensitive customers in the short term, especially small and medium-sized enterprises.
In the face of fierce competition and serious product homogeneity, as well as customers' high requirements for stability and safety, a simple price war is not enough to maintain a long-term competitive advantage.
Alibaba Cloud needs to further strengthen the quality and stability of its products and services, while seeking differentiated competition and new growth points in emerging fields such as AI to consolidate its leading position in the cloud computing market.