Alibaba’s Cloud Computing Price Cuts Heat-Up Competition in China

With competition in the Chinese cloud-computing space heating up, Alibaba Group Holding Ltd. (NYSE: BABA) is the latest major player to announce price cuts for several of its core cloud-computing products. The company’s cloud-computing unit says it is cutting prices by up to 55% for more than 100 of its core products, the largest price cut in the company’s history.

Many experts say the latest round of price cuts will reduce the cost of accessing enterprise cloud services, expanding access to the cloud market and boosting cloud development. According to company management, Alibaba’s price cuts are aimed at increasing inclusivity in the cloud-services market in the artificial intelligence era and integrating cloud computing into “all walks of life.”

Alibaba cut prices by an average of 20% on more than 100 cloud products including database, storage and computing. Alibaba Cloud Intelligence president of public cloud business Liu Weiguang noted that Alibaba is the largest cloud-service provider in the country as well as the Asia-Pacific region.

As such, the company cut prices across the board to expand access to its cloud services among both developers and enterprises. This will in turn allow developers and enterprises to benefit from cloud computing and speed up the adoption of advanced public-cloud services in various Chinese industries, Weiguang said.

Businesses in the country will require robust, cost-effective and high-performance computing power to deal with the rapid build-up of nigh-infinite amounts of data in China. Artificial intelligence (AI) tools will likely have a major role in processing this data and converting it into actionable information, but they typically require massive amounts of computing power. Cloud computing services will most likely be a godsend for startups or established companies that can’t afford to buy, install and run the computing power they need for AI tools.

Alibaba’s price cuts indicate Alibaba Group Holding Ltd’s commitment to encouraging artificial intelligence adoption and providing the support the nascent AI sector needs to evolve even faster. Given the company’s dominance of the Chinese cloud-computing space, its price cuts will have a notable effect on the market, said Charlie Dai, vice president and principal analyst at research company Forrester.

The move will likely encourage the adoption of cloud services among small and medium enterprises, Dai noted, and drive the adoption of next-generation AI tools. This would, in turn, trigger another round of price cuts among cloud-service providers looking to gain more customers and maintain their growth momentum.

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