The cloud market is in a state of morbidity, and the price cuts will drive the cloud manufacturers to the "Ghost Gate".

The cloud market is nearing its end in 2017, and the cloud market is also facing a big crisis. With the Alibaba Cloud price reduction model, more and more cloud vendors are going bankrupt, and the cloud market price war has been a lot of the most critical time or it is already positive. Into the "morbid competition."

This is because the domestic cloud makers, whose price wars have fallen into a quagmire, are once again experiencing a bigger crisis. Recently, at the Yunqi Conference and Guangdong Branch in 2017, Alibaba Cloud once again presented the sixth round of price cuts this year, announcing another price cut for ECS enterprise-level instances, RDS instances, CDN and security services, including CDN price cuts. 25%, hit the lowest price sign on the whole network. Ignoring the complicated preferential routines and price algorithms, no matter whether the price reduction action really dragged the price to the lowest in the country, the public opinion has completely pushed the small and medium cloud manufacturers to the edge of life and death.

Under the continuous price cuts, more and more cloud vendors are going to go bankrupt in the CDN industry, which only depends on the scale to win: 甩 single big traffic customers, strip CDN business, architecture adjustment CEO change coach...

For the 2C market for ordinary consumers, price war or subsidy policy has always been a weapon for harvesting the market. The psychologically cheaper decision determines where the price is cheap, there is a chance to lick wool, and where the user is flocking, this is almost an ironclad.

In the past, Didi, fast, and Uber snoring, through a large amount of subsidies, did not hesitate to lower the price in a loss-making manner, dragged the competitors, and then raised the price again, and turned into a profit harvester. In the field of shared bicycles, the small blue bicycle that wins with quality is also helplessly exiting in the big spread of Moby and ofo.

The price reduction action has become a powerful means of harvesting the market, and it has been tried and tested in the 2C market. In the past two years, Alibaba Cloud has frequently provoked price wars in the field of cloud services, and introduced the price subsidy of the 2C market to the cloud computing and CDN markets of 2B. In recent years, Alibaba Cloud has launched at least six significant price cuts.

At the Yunqi Conference held in Shenzhen in March this year, Alibaba has accused Ma Huateng of being irresponsible for the cloud computing market. Alibaba Cloud President Hu Xiaoming yelled at Tencent. "Today, when everyone wants to promote the development of the company to achieve an industry, Ma Huateng and his team used the one-pound bid to destroy the industry."

In a twinkling of an eye, with the intensification of competition in the cloud service market, Alibaba Cloud has become the object of its own accusation, “cleansing” the market through continuous price cuts; and matching a set of “beautiful” rhetoric, saying that it is lower. Price to support the development of companies and entrepreneurs.

However, this argument has encountered the vote of the cloud manufacturers. Many CDN and cloud computing startups believe that the giants also need to make a profit, and it is impossible to continue to lose money in the CDN business. Now the loss is sold only to "burn out the competitors."

In fact, after several rounds of price cuts, a month ago, Ali Zhaoyun, general manager of Ali Video Cloud, was interviewed by the media and asked if he would continue to cut prices, acknowledging that the price war is coming to an end. He said, “The price cuts in these two years are very good. Basically, it has already reached the psychological expectations of customers. Now customers are more concerned not only with the price, but also whether his problems can be solved."

One month after the interview, on November 22, Alibaba Cloud again lowered the price and successfully shifted the public's attention from the latter issue to the price. This kind of strategy can not help but remind the author of the truth in the catering industry. The restaurant with too much weight just wants to make up for the lack of quality. Therefore, in the catering industry, a restaurant that is determined to pursue quality will not focus on every The amount of dish.

In fact, Alibaba's price cut this time is close to the end of 2017. This period is an important period for cloud manufacturers to sign and renew their contracts. Therefore, Alibaba Cloud quickly overturned its previous judgment in just one month. Is it reminiscent of whether this move is the pressure of Alibaba Cloud’s signing at the end of the year?

However, the continuous price cut has indeed caught a large number of cloud manufacturers to catch up with the "ghost door."

For Alibaba Cloud's price reduction action, the companies in the industry have been extremely angry. The price of cloud computing and CDN has already dropped to freezing point. If the price is lowered, it will basically not give other domestic cloud manufacturers a "living way". Especially at the capital level, the family is not "thick". If you follow Alibaba's price cuts, the loss of the hole will become bigger and bigger. If you don't follow it, the market will be eaten by the vicious price war in the morning and evening, and you will be caught in a dilemma.

Chen Lei, CEO of Thunder, admitted in an interview with the media that the monopoly of large companies in the Internet field resulted in the fact that everyone did not count the cost when expanding the scale. In particular, the field of 2C actually produced morbid competition. Now this pathological Competition has reached the field of 2B. He said, "All these unreasonable industries are essentially monopolies. When you monopolize, you can enjoy very big benefits. This is what users have no choice. So what is the biggest threat to innovation? It is suicide. Follow."

The CDN industry is a typical heavy-duty, heavy-duty business. To build a high-standard CDN platform that meets the requirements of enterprise-level customers, it is necessary to lay out hundreds of CDN nodes, a number of T-bandwidth reserves, thousands of R&D personnel, and hundreds of millions of R&D investment each year.

Liu Liang, CEO of Cloud, also revealed in an interview with AI Finance and other media. "The whole industry is generally in a state of loss. I know that many companies have gross margins that are upside down."

Two years ago, Yun Entropy hoped to reduce the cost of CDN through decentralization technology and enter the 2B market. But now Yun Entropy CEO Xiao Zhiming publicly expressed his helplessness in the media, acknowledging that CDN is a 2B business, and the giants headed by Alibaba Cloud have fought a price war, which makes this business impossible. He said, "Even if we have such a good cost structure, we will not necessarily win. If the 2B business is really difficult to do, it will not be possible to digest the collected traffic and switch to 2C business."

Sun Jia, director of Vision Cloud Resource Purchasing Center, said in an interview with the media, "There is expectation of price war, but I did not expect it to be crazy to below cost. This is unimaginable. Because CDN is a play-level thing, on T Bandwidth, the bandwidth cost of a few hundred dollars a year means that you have to burn a lot of money every month."

Ucloud CEO Ji Yuhua once said in an interview with the media: "Ucloud does not want to fight price wars, but hopes to compete for services, especially for small and medium-sized customers."

The last straw that crushed the camel, the cloud computing CDN field ushered in a massive collapse?

Nowadays, a large number of cloud vendors that use CDN to short-term revenue are facing bankruptcy, and this has become an open secret of the industry.

In the cloud computing market, domestic Jinshan Cloud, Qingyun, Ucloud, Century Internet, Dr. Peng, Huayun, Jingdong Cloud, and Netease Cloud have more than 20 cloud vendors, and the technology gap between different enterprises is not large. As the cloud computing technology becomes more and more homogeneous, it is nothing more than the performance and indicators of flexibility, heterogeneous management, high reliability, high availability, and the space for differentiation is getting smaller and smaller.

However, Alibaba Cloud has support for key business scenarios such as Taobao and Tmall, and it can be fearless. For a single cloud vendor, homogenization forced them to follow the price cuts.

In fact, a large number of cloud manufacturers have turned to the CDN field this year, and they have been forced to go to Liangshan. Previously, some media reported that cloud services, cloud storage and databases, network equipment and other procurement frequencies are relatively low, and competition is fierce. In contrast, the CDN market is still in rapid growth. According to data from research firm MicroMarketMonitor, the global CDN market is expected to reach $12.1 billion in 2019, with more than 50% of Internet traffic being accelerated by CDN. 4K, video, live broadcast, VR and other high-concurrency traffic, bandwidth-consuming applications appear, so that CDN service demand has increased. Therefore, cloud manufacturers collectively run into the CDN field, relying on selling cheap CDN resources to make large income, in exchange for the next round of financing in place, so that they can continue to play with the Alibaba Cloud against the final listing of the game.

However, most of the cloud manufacturers are destined to wait for the day of listing. As this time, Alibaba Cloud continues to cut prices, and the last straw that crushed the camel appeared, and the cloud manufacturers collectively fell.

Let's calculate the account, based on the bandwidth of a CDN startup 2T, according to the current bandwidth cost of 10 yuan / M / month, 2T bandwidth CDN vendors monthly bandwidth expenditure of about 2-3 million, annual bandwidth The cost is about 3-4 billion. In addition to related research and development expenses and sales expenses, it is expected that a CDN enterprise with a size of at least 400-500 million yuan will be invested in one year.

CDN leading companies have invested more. From the perspective of R&D investment, according to Akamai's financial report, its research and development costs in 2014, 2015 and 2016 were US$125.3 million, US$148.6 million and US$167.6 million, respectively, equivalent to an annual R&D investment of around RMB1 billion. The domestic CDN leading enterprise NetScience's financial report also shows that its 2016 R&D investment has reached 441 million yuan.

A CEO of a startup company that has received a CDN license from the Ministry of Industry and Information Technology publicly acknowledged in an interview with the media. "Many CDN companies can't support the price war today, and they don't want to pick up new orders. The orders are lost. They now want to buy the already purchased traffic. All go out, 1T bandwidth will lose millions in a month, who wants to do?", he admitted that after the CDN industry is not so sexy, investors' money will not enter the market. When the money burns out, does it fail?

On the one hand, it is a huge amount of investment in research and development, on the other hand, it is the loss of orders brought by the price war. It is no wonder that some media broke the news that a cloud publicly sold a large 500G customer in the market. Ucloud CEO Ji Yuhua also publicly stated that "the current price war in the CDN field has become a red sea field." It said that the proportion of CDN before strict control is very wise. Even Yunfan Acceleration, which was once a prosperous wind, has recently announced that its CEO, Yong Yongyue, will resign as CEO on December 10 this year due to his personal development pursuit.

For a single cloud vendor, it must balance the gap between rapid revenue growth and small-scale losses. However, the "burning money" fight is real money, and Aliyun continues to cut prices, which is equivalent to pushing the balance point temporarily formed by cloud manufacturers to the death line. Some cloud vendors even pointed out that Ali Yun is now selling at a loss to "burn out competitors."

Cloud makers who are not guilty and unable to find dryness can only watch Aliyun's low-cost customers, and they have no ambition to cut prices to protect their own territory, so they are forced to retreat to a dead end.

Most of the entrepreneurial cloud vendors that are still alive are in a state of maintaining or contracting their businesses, and are working hard to open up other profitable businesses for the winter. The CEO of a cloud vendor admitted in an interview with the media that "the CDN industry is quite special. Once this business is started, it is difficult to stop and stop because the upstream and downstream of the industry chain have resource relationships. So it can only be said to be maintained. Not expanding the scale, and reopening new value-added services to survive."

This is a typical vicious circle. The market share has been stolen. The story of the next round of financing will not be discussed. Without the continuity and assistance of capital, the logic of cloud manufacturers telling stories will not be established.

Chen Lei, CEO of Thunder, stated in July this year that "Alibaba Cloud has frequently cut prices on CDN services, resulting in a messy market today. Vicious competition, most companies are doing a loss. It was originally a dividend market, and the results were all lost. No matter what the business model is." Originally, Thunderbolt used the P2P sharing mode to exploit a user's distributed idle resources and ran out of a business model. However, the development of today is too bad, and it has deviated from the original intention of the business.

Coincidentally, Ucloud founder and CEO Ji Yuhua also believes that the excessive expansion of the CDN business has triggered a bubble. If you follow the play, no one will have a good ending.

Perhaps as many people have said, BAT companies have been highly appreciated by the outside world for their business models and industrial empowerment. However, in recent years, they have been “reversing the road” on the road of innovation, and they have tried every means to make their walls more and more high. Let other companies have nowhere to go.

Also on November 22nd, Alibaba Cloud was excited to announce a price cut at the Yunqi Conference. The former "Little Blue Car", a former franchise in the bicycle field, failed to live its own birthday. Just a few days ago, the financing obtained by the small blue car failed to burn to the New Year, and the problem of the hardship of the deposit was immediately triggered, and the employees were forced to dismiss. On November 16th, the shared bicycle platform "Little Blue Car" under the Beast Cycling issued a statement officially proclaiming the end of the small blue bicycle.

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