Alibaba Cloud, the cloud computing unit of Alibaba Group, has announced that it will cut the price of its core products by 15% to 50%. The price cuts aimed to improve its shares in the cloud computing market, where it currently holds the largest market share in China and across Asia.
Reuters reported that the move is also regarded as a way to beat users from rivals such as Tencent and to fight for a bigger slice of China's cloud market amid rising competition. The price cuts will affect core products and storage products, with elastic computing services using Arm and Intel-based chips seeing a 15% to 20% drop in prices, while services using Nvidia's V100 and T4 graphics processing units will drop between 41% to 47%. The price cuts will begin on May 7, 2022.
According to Bloomberg Intelligence analysts, the price cuts raise the risk that the unit's adjusted Ebita in 2024 ending March will fail common expectations. The cuts raise the likelihood that Alibaba will give up its 2024 cloud profit to avoid increased competition from Tencent and Baidu this year.
Alibaba's cloud division is one of the company's fastest-growing and is considered very hopeful for a future IPO. The company has also claimed that more than 200,000 enterprises have requested beta testing for Tongyi Qianwen, the company's large language model. The model is still being tested now.