Alibaba Cloud cuts prices – hard – for multi-year commitments in mainland China

This might solve its twin problems of low growth and short-term customers

Alibaba Cloud has made significant price cuts for those willing to use its datacenters in mainland China and commit to multi-year deals.

The Chinese giant has detailed [in Chinese] price reductions of up to 36 percent for some instance types in its Elastic Compute Service (ECS).

Object storage prices can fall 55 percent under some deals, helped by the extension of Alibaba Cloud's reserved capacity terms – from one year to between two and five years.

Database as a service costs have also been reduced, by up to 40 percent.

A free traffic allowance has been increased from 10 to 20 gigabytes.

The Register understands Alibaba hopes to win more customers in mainland China, and to encourage local businesses to adopt cloud and consider AI.

Alibaba Cloud customers outside mainland China are welcome to use the lower prices. The Register expects a decision to do so will only come after very close consideration of Chinese data protection and security laws, as few orgs are comfortable storing sensitive data offshore – never mind in a famously complex jurisdiction like the People's Republic.

The discounts were announced weeks after Alibaba Cloud revealed that its growth had stalled, other than among Alibaba Group companies. The hyperscaler also sought to slough off low-margin contract-based customers.

Those challenges put into perspective the discounts for long-term commitment to the Alibaba Cloud – customers that sign up for the deals could help the hyperscaler address both of its problems.

Alibaba Cloud is not alone in trying to make long-term commitments attractive. The likes of Azure and AWS have made reserved capacity the cheapest way to consume their services – a tactic that makes sense as it allows them to more predictably cover the costs of their infrastructure. Alibaba would understand that aspect of cloud economics, and almost certainly employs the finance wonks capable of modelling them for its own business.

That it has reached similar conclusions about how best to price its cloud using long deals is therefore no surprise – especially for an organization whose cloudy thinking has so often reached the same conclusions as its Western rivals. ®