If it is said that the price cuts of cloud vendors in the past started a marketing battle from the C-side to the B-side, then behind this round of price cuts, it corresponds to the signal that cloud vendors are marching from large KA customers to small and medium-sized enterprises, strong integration, strong Get customers.
Another round of price cuts has hit cloud vendors.
On May 16, China Mobile Cloud announced that some product lines will drop by as much as 60%, and the price reduction policy will come into effect on May 17. Tencent Cloud also launched a price reduction notice together with Mobile Cloud. Some product lines have dropped by up to 40%. The price reduction policy will officially take effect on June 1. In addition, last month, Aliyun also launched the "largest price cut in history". Following the price cut in April, the price of core products was once again lowered to 50%.
In fact, this is not the first time that cloud vendors have ushered in a wave of price cuts. The price cuts are not the largest, and the product coverage is not the most complete, but this kind of action is still worth pondering. With the economic recovery improving and corporate IT budgets gradually recovering, what is the signal behind the price cuts by cloud vendors?
Today, the number of large enterprises in the domestic cloud market is small, and it is generally difficult to obtain customers. At the same time, with the rise of the operator cloud in the past two years, the competition among cloud vendors has become increasingly fierce and almost red sea at the level of large customers such as finance and government affairs.
But in terms of business, the growth story still needs a new pivot. If it is said that the price cuts of cloud vendors in the past started the battle from the C side to the B side, then behind this round of price cuts, it corresponds to the signal that cloud vendors are marching from large KA customers to small and medium-sized enterprises, heading to TOB depth.
But at the same time, this also indicates that cloud computing is entering a new reshuffle period.
1. A new round of price cuts is coming
From the Internet cloud to the carrier cloud, gunshots were fired one by one.
In this wave of price cuts, unlike the previous wave of price cuts caused by Internet cloud vendors, the presence of mobile cloud in this wave of price cuts has attracted widespread attention from industry insiders.
Specifically, the mobile cloud’s price reduction products involve cloud hosts, cloud security centers, and cloud hard disks. Among them, general-purpose entry-level cloud hosts and general-purpose network-optimized cloud hosts are all reduced in price by 60%, down to 240 yuan and 806.4 yuan per year respectively; cloud security center prices are reduced by 50% to 360 yuan per year; cloud hard disk backup prices are reduced by 50% to annual packages 7.2 yuan.
The products involved in Tencent Cloud are in terms of cloud network, database, and cloud security. Among them, Tencent Cloud reduced the price of LCU fees for load balancing CLB by 18%, and reduced the price of standard NAT gateways by 15%. Help users reduce costs by up to 80%; Tencent Cloud Host Security Basic Edition will be open to small and medium-sized enterprises on the entire network for free.
Among Alibaba Cloud’s previously reduced prices, the 7th generation of elastic computing instances and Yitian instances have been reduced by up to 20%, the storage OSS deep cold archive is 50% lower than the previous lowest price, the network load balancing SLB and NAT gateway are reduced by 15%, and the database RDS The Yitian version has a price reduction of up to 40%, video cloud and CDN prices have been reduced by up to 20%, and secure web application firewall prices have been reduced by up to 30%.
Generally speaking, the products involved in the mobile cloud are mostly underlying hardware. Generally speaking, it means the reduction of rental prices of storage and servers in the computer room. The price reduction products of Internet cloud vendors mainly involve the basic capabilities of public clouds such as databases.
It is worth noting that the range of products involved this time is more concentrated on the PaaS layer, and compared with the previous price reduction of cloud vendors' products, this time the range is greater.
Taking Alibaba Cloud as an example, its first round of price cuts dates back to 2014. The price reduction products are mainly cloud servers and cloud database products, and the price reduction has reached 20%. Then there is the price reduction of all cloud products in 2016, and the price reduction of core products including elastic computing, storage, and performance testing PTS in 2018.
In addition to Alibaba Cloud, Tencent Cloud, Huawei Cloud, JD Cloud, etc. have all adopted corresponding adjustments in product prices in recent years. It has also caused a small wave of cloud computing price cuts. But overall, the leaders and participants are Internet cloud vendors and foreign cloud giants.
And in the past, in the wave of price cuts led by foreign cloud giants, domestic participants were mainly Internet cloud vendors and professional cloud vendors, and the underlying logic was more of a defensive action against foreign cloud giants seizing the domestic market; price cuts led by domestic Internet cloud vendors In this trend, the main participants are cloud vendors themselves, and most of the underlying logic is action signals and marketing methods from the C-end to the B-end.
But this time, due to the participation of the operator cloud, it also means that this round of price cuts corresponds to the "bayonet fight" at the level of real enterprise customers.
2. From KA customers to small and medium-sized enterprises, the first shot was fired
The collective slowdown of cloud vendors is already a proposition that the entire cloud computing field needs to face together.
A set of data shows that Alibaba Cloud achieved full-year profitability for the first time in fiscal year 2022, becoming the only cloud service provider in China to achieve a break-even balance, but it is difficult to conceal the slowdown in revenue growth. Not only in the four quarters of fiscal year 2022, Alibaba Cloud’s growth rates were 30%, 33%, 20%, and 12% respectively. By Q3 of fiscal year 2023, this figure has dropped to 3%.
This is the epitome of the entire Internet cloud vendor. In contrast, the "national team" operator cloud has significantly accelerated its attack rhythm in the past two years.
Public data shows that in 2022, China Telecom's Tianyi Cloud revenue will be 57.9 billion yuan, a year-on-year increase of 108%. In 2022, China Mobile's cloud revenue will reach RMB 50.3 billion, with a growth rate of 108.1%.
Although the growth rates are different, their future goals are relatively consistent for both. That is, as the accounts of financial and government customers are "divided", for operator clouds, they need to find the next growth point; for Internet cloud vendors, they also need to win these based on the advantages of the Internet side in the past. A new position is needed to really fight the bayonet.
Taking the financial field as an example, large banks have become a stock market. With the gradual penetration of digitalization in the future, after the customer resources of these large government enterprises are "exhausted", where should the operator cloud find new growth? The answer is City Commercial Bank.
"Basically, in the past two years, the core systems of all major banks have been replaced by domestic products. Next, we need to standardize these functions and win more city commercial bank customers." A person in charge of the database of a cloud vendor told us.
The same phenomenon occurs in more fields. That is to say, in addition to a handful of large companies, cloud vendors are casting their eyes on many other livelihood industries including industry, energy, and construction.
This is also the voice that each company wants to convey to the outside world and to channel vendors and integrators in this price reduction wave.
That is to say, whether it is the operator cloud or the Internet cloud, if they want to reach the edge business of large enterprises and small and medium-sized enterprises, they need to use their strengths. The lower price can reduce the cost of channel providers and make it easier to be integrated.
Just as Alibaba Cloud’s PaaS layer application price cuts will significantly increase the profit margins of some ISVs and channel providers. On the one hand, partners can have more space to operate and choose to integrate with Alibaba Cloud. On the other hand, it can also provide lower prices for small and medium-sized enterprises. After the continuous penetration of small and medium-sized enterprises, it will also increase the cloud usage of Alibaba Cloud and increase the revenue of Alibaba Cloud. Realizing the closed-loop revenue growth of the entire chain will help build a growth flywheel.
3. The new reshuffle period for cloud vendors
In China, enterprises have a low degree of standardization and require high levels of customization when deploying digital software. In order to meet the individual needs of enterprises, software manufacturers often make large and comprehensive products, so as to meet the various "abnormal" needs of enterprises as much as possible.
For example, most enterprises adopt hybrid cloud and multi-cloud deployment, which requires enhanced penetration capabilities of data, services, and businesses between clouds, and can uniformly provide elements required for deployment, including servers, networks, storage, databases, and operating systems etc., coordinate between different systems and clouds, and a more integrated large and comprehensive platform is easier to adopt.
This makes cloud vendors should focus on the competition of the underlying capabilities, instead of the competition of specific software applications. Some manufacturers have shifted from focusing on specific application competition to competition on underlying capabilities.
However, behind this "big and comprehensive" Chinese characteristics, many innovative cloud vendors in the middle waist began to abandon their core business research and development, and more companies became "sell server" companies. Price wars and involution.
But this wave of price cuts is a new opportunity.
With the price reduction of the related businesses of leading cloud vendors, the living space of the corresponding part of the business of mid-tier cloud vendors will be reduced. For example, Mobile Cloud cuts prices for hosts and cloud storage hardware, and Alibaba Cloud and Tencent Cloud cut prices for databases and other fields. Correspondingly, other middle-tier cloud vendors may choose to cut prices or give up underlying businesses. It forces enterprises to turn to more specialized and refined fields, such as PaaS layer services such as database, storage, computing, and middleware.
"Although privatization deployment will still be dominant in China at present and in the next few years, in the end, only a few major cloud vendors must provide underlying computing power resources." An investor told us, "The rest of the space is in PaaS and SaaS , or MaaS, which will be the main form of the IT industry in the future."
It can be clearly predicted that with this wave of price cuts in the field of cloud computing, the leading effect of domestic cloud manufacturers will become more and more obvious, and changes and new rules in the cloud market will also slowly take shape. "The follow-up impact of this wave of price cuts will be It will run through 2023."