Trends
Alibaba galvanized the cloud price war by slashing its fees
OUR TAKE:Alibaba’s aggressive price cuts for its cloud services reflect a strategic shift to compete in the market. Forgoing short-term profits to drive revenue growth and expand its user base, Alibaba is focusing on public cloud services and addressing geopolitical risks. JD.com’s swift response wi…
Headline
OUR TAKE:Alibaba’s aggressive price cuts for its cloud services reflect a strategic shift to compete in the market. Forgoing short-term profits to drive revenue growth and expand its user base, Alibaba is focusing on public cloud services and addressing geopolitical risks.…
Context
OUR TAKE: Alibaba’s aggressive price cuts for its cloud services reflect a strategic shift to compete in the market. Forgoing short-term profits to drive revenue growth and expand its user base, Alibaba is focusing on public cloud services and addressing geopolitical risks. JD.com’s swift response with its own price cuts sets the stage for a fierce competition that could reshape the cloud services landscape in China. This underscores the increasing importance of cloud services and highlights the evolving strategies of key players in the market. — Iris Deng, BTW reporter Alibaba slashed its price for cloud services aiming to win back its customers, which was a more aggressive bid to defend against competition from other tech industrial companies .
Evidence
Pending intelligence enrichment.
Analysis
Previously, Alibaba halted its plan to spin off its cloud business into an independent, publicly traded unit, which stunned investors. In order to win back customers, Alibaba began slashing prices by as much as 55% on more than 100 services on Thursday. It has been the biggest price cut in the company’s history. As a result of this initiative, Alibaba’s stock fell as much as 1.9%. The price of its storage products will be slashed by up to 50 percent, as part of its broader push to expand user base and improve its proportion in the cloud computing market. Facing the fierce and turbulent Internet competition, Alibaba has taken public cloud services, which are the domestic services arm aimed at enterprise customers as its new key development direction. Alibaba Cloud led the cloud infrastructure services market, taking up 36 percent of total spending, followed by Huawei Cloud, Tencent Cloud, and Baidu AI Cloud. Due to geopolitical risk factors, Alibaba has made great efforts to cope with the shortage of advanced chips caused by U.S. sanctions against China. Also read: Alibaba’s Surprise Reversal Slashes $20 Billion from Market Value
Key Points
- Alibaba began slashing prices for cloud services in order to win back customers amid fierce competition, while its stock fell instead of rising.
- Alibaba is now focusing on growing the public cloud, addressing the sanctions curtailing the supply of advanced chips from the US.
- The rival competitor company in e-commerce and cloud services of Alibaba, JD.com , declared the cloud price war on Alibaba.
Actions
Pending intelligence enrichment.
