Alibaba Cloud is betting on emerging markets with massive price cuts

Enterprises’ expenditure on generative AI, which includes software, related infrastructure hardware, and IT services, is expected to reach $143 billion in 2027, globally, from $16 billion in 2023, a forecast from research and advisory firm IDC showed.

The growth in generative AI, approximately a CAGR of 73.3% over the forecast period, is more than twice the rate of growth in overall AI spending and almost 13 times greater than the CAGR for global IT spending over the same period, according to the forecast released last year in October.

Eyeing customers in emerging markets  

Alibaba’s price reduction strategy could be to target new customers in emerging markets, according to analysts.

“Alibaba could be targeting emerging markets where there is less competition from other hyperscalers and where cost is a significant factor for cloud adoption. By offering lower prices, they can capture market share in these regions,” Dickens said.

Last week, Alibaba Cloud announced that it is looking to invest to ramp up its international data center business by opening a new region in Mexico, followed by additional data centers in Malaysia, the Philippines, Thailand, and South Korea in the next three years.  

The focus on international markets comes after the cloud unit dropped plans for an initial public offering (IPO) and underwent a management overhaul to focus on selling public cloud and infrastructure services last year.