Alibaba Cloud Offers Significant Price Cut to Add More Customers

Alibaba Cloud, the cloud computing arm of Chinese e-commerce giant Alibaba Group Holding, declared its most aggressive price reduction to date on Thursday.
Alibaba Cloud businessThe decision to cut the price of Alibaba Cloud underscores the intensifying competition among industry players to attract heavyweight users, particularly developers specializing in artificial intelligence (AI) software. Alibaba Cloud aims to capture a larger share of the rapidly expanding cloud computing market in China.

This marks the second instance in less than a year that Alibaba Cloud has implemented price cuts, following reductions of up to 50 percent in April. The latest initiative will see prices slashed by as much as 55 percent on select products, with over 100 items receiving an average reduction of 20 percent, Reuters news report said.

Alibaba Cloud’s strategic decision to lower prices is aimed at incentivizing developers to leverage its cloud services for building data-intensive AI models and applications. This move comes amidst similar actions from competitors such as Tencent Holdings and Huawei Technologies.

Tencent and Huawei reduced cloud prices last year in response to Alibaba’s lead. These rivals have been actively promoting various incentives to entice tech firms to develop AI solutions within their respective ecosystems.

Speaking at a conference in Beijing on Thursday, Alibaba Cloud executive Liu Weiguang emphasized the company’s commitment to democratizing access to cloud services.

“We decided to launch the price reduction campaign to lower the threshold of cloud services for more enterprises and developers,” Liu Weiguang stated, articulating Alibaba’s ambition to establish the most inclusive and accessible cloud platform in the market.

Alibaba Cloud, as one of the pioneering players in China’s cloud computing sector, currently commands approximately one-third of the local market share. With the demand for cloud services continuing to surge, fueled by the rapid digitization of businesses and the growing adoption of AI technologies, Alibaba’s aggressive pricing strategy underscores its determination to fortify its position as a dominant force in the industry.

Alibaba Cloud earlier revealed that its revenue rose 2 percent to $3.789 billion for the quarter ended September 30, 2023.

Alibaba Cloud aims to improve revenue quality by reducing the revenue from project-based contracts that are of low margins. On the other hand, revenues from public cloud products and services increased during this quarter which drove improved profitability, Alibaba Cloud said.

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