I remember that the first time I used Alibaba Cloud was probably in 2010. I just graduated and took the investment from Innovation Works to start a business. In order to save money, I used Alibaba Cloud. To be honest, the time when I used Alibaba Cloud was a nightmare. If something goes wrong every three days or so, then you can only submit a work order in the background and wait for the other party to call back. . In the most serious case, Alibaba Cloud accidentally deleted our database data for two days, which could not be recovered. . . In the end, we withdrew Alibaba Cloud, bought two servers in Zhongguancun, and several colleagues carried them back to Lanxun’s computer room. Server cost + hosting fee + bandwidth fee are surprisingly expensive together. . . That would kill a lot of small teams with one server.
I used Alibaba Cloud again when I started my business for the second time in 2016. Although I still needed to file a work order in the background if there was a problem, with DingTalk, I can basically contact customer service directly. As for the basic server, database, CDN, bandwidth cost, etc., if compared with the business volume, it can be ignored. The most important thing is that all costs are predictable. How big the business is, how much server cost is required. can be calculated in advance. In addition, there is no need to recruit operation and maintenance separately. A back-end programmer with better skills can handle both operation and maintenance. You don’t even have to worry about traffic attacks/DDOS attacks. Alibaba Cloud’s backend is all process-based Yes, just follow the process to purchase the service and you’re done.
It can be said that after ten years of development, all aspects of domestic cloud computing are becoming more and more perfect, creating huge value for domestic enterprises. However, such an industry with a huge market and huge value has suffered substantial losses in the country for more than ten years, so that many people now look down on domestic cloud computing, thinking that the domestic environment is different from that of the United States. The US cloud computing can make money, but it is difficult for China Profitable.
Why does Amazon AWS make a lot of money and has a high profit margin? I don’t have much research and don’t know much about it. But why domestic cloud computing is still losing money, I know a little bit. It happened that I recently had an exchange with an old friend who worked on SAAS, and I used this exchange to roughly talk about the problems of domestic cloud computing.
Friend: It’s not easy to hold Sinopec’s thigh and make a profit. If you have government resources, introduce the business to me. It’s easy to make money.
Me: OK, please give me an official website and company introduction information, and I will see what kind of business you do.
Friend: What materials do I need? I don’t need it.
I:? How can I introduce you if I have no information?
Friend: You only need to deal with government resources, as long as you can get relationships, I can do anything. It’s also okay to go through bidding, I can find XX Cloud to participate in the bidding, and I will also find you the one who will accompany the bidding, so as to ensure that the superficial work is in place. If I can do specific projects, I will do them myself, and if I can’t, I will assign them to companies that can do them in the market, and a bunch of companies will rush to do them.
At the time of talking here, I probably seemed to understand something.
This is a small microcosm of the [government and enterprise cloud computing] market, one of the main battlefields of domestic cloud computing:
Many companies rely on government-enterprise relations to obtain business, but they do not have the corresponding capabilities themselves, so they find leading cloud computing vendors to bid and take orders, and implement the specific business themselves, or continue to subcontract to other companies to do it.
Or conversely, many top cloud computing companies have high brand awareness, and it is easy to get orders from government and enterprises through bidding. However, due to non-standardized customer needs, they cannot provide landing services. The specific business implementation will be subcontracted to downstream companies.
Therefore, compared with the public cloud market with standardized services and transparent services/prices, the government-enterprise market dominated by customization is relatively too complicated. Of particular complexity are two areas:
1. Diversified needs: The business of the government and enterprise market must first include some standardized public cloud needs, such as servers, databases, and so on. But there are more non-standard requirements, especially the large differences in the needs of different industries, which makes it impossible for leading cloud computing manufacturers to fully meet the needs of customers by relying on their own manpower and resources.
2. Emphasis on customer relationship: the diversification of needs leads to the lack of uniform standards and prices for services, and corruption is easy to breed. Customer relationship is crucial to business development.
Although the government-enterprise cloud computing market is facing the above problems, the growth rate has slowed down because the standardized public cloud market space is close to saturation; and the government-enterprise market has a huge demand for cloud, and the unit price is much higher than that of the public cloud market. Therefore, domestic top cloud computing companies have previously regarded government and enterprise business as the main driving force for future growth, and invested huge manpower and resources to grab government and enterprise business orders.
But over the past few years, various problems have gradually been discovered:
1. Huge demand for manpower: due to the diverse needs of government and enterprises, leading cloud computing manufacturers’ self-developed products can only meet a small part of customer needs. If they want to rely on their own services to meet customer needs, they need to recruit more self-developed personnel to provide customization However, the demand for manpower is huge, the cost increases, and the products developed may not be reusable in other industries, resulting in waste.
2. Low gross profit: If you do not rely on self-research, you can only use the identity of the general contractor to hand over the specific implementation of the business to a third party. In this case, most of the income will be distributed to the third-party company. Head Cloud Although computing companies have huge revenues, their actual profits are very low.
3. Inconvenient pricing: Since many services are implemented by a third party, it is difficult to set a price when bidding, and a reasonable price cannot be given. If the price is too high, the advantage of taking orders will be reduced, and if the price is too low, you will lose yourself.
4. Big losses from bad debts: In the case of bad debts, not only can’t get the money, but also have to pay the downstream third-party implementers. Both sides lose money. It is rumored that Tencent Yunguang’s bad debts reached 3 billion in the first half of this year.
5. Large investment in customer relationship: The importance of customer relationship has led to a substantial increase in various sales expenses. It is said that Tencent Cloud’s annual travel expenses in 20 years have reached 1.3 billion, and it still reached 800 million after 21 years of compression.
Seeing this, do you think this kind of business is still cloud computing? I think it is more appropriate to call it outsourcing. . . Participate in bidding as a general contractor. Customers raise their needs, do what they can do themselves, and subcontract what they can’t do to downstream suppliers for implementation. Then, the needs of customers in different industries are different, even in the same industry. The needs are also very different. . That’s not what outsourcing is.
Therefore, the so-called cloud computing business in China is currently defined very broadly. As long as it is related to the cloud and the network, the list of cats and dogs can be classified into cloud computing. . But in fact, a large part of the business has no technical content, nor is it driven by technology, but is a manpower-intensive business, and the profit margin earned in the end is even lower than that of traditional outsourcing business. After all, the most important thing about outsourcing is to strictly control labor costs and increase per capita output. If you let Ali and Tencent do outsourcing according to their labor cost standards, how can you not lose money.
Since it is such a worthless business, there are several reasons why leading cloud computing companies are still fighting for the top:
1. The coverage rate of standardized public cloud services is relatively high, and the growth rate is slowing down. Major cloud computing vendors need new growth points.
2. The unit price of government and enterprise business is high, and the cost of customer migration is high. After getting a customer, it can be bound for many years in the future.
To put it bluntly, it is to cater to the growth needs of the capital market. However, growth for the sake of growth is actually drinking poison to quench thirst, neither good at nor making money.
However, losing money is not the biggest disadvantage. After all, big companies have plenty of money. The biggest problem is that this type of business requires a lot of manpower and resources. A company’s resources are limited. When a lot of resources are spent on the meaningless total integrator model, each company’s self-developed PAAS and SAAS products Resource investment will inevitably be affected, and this is where giants such as Tencent Cloud, Ali Dingding, and Douyin Feishu are also focusing on investment, and the competition is extremely fierce. This type of service is asset-light, with high profit margins, product-driven, large future space, high user stickiness, and strong agglomeration effect. Once this type of service loses the market, it will not be able to make up for the most government-enterprise customization orders, and may eventually lose the entire Enterprise services market.
Therefore, it is meaningless to grab business orders from government and enterprises indiscriminately just to increase the scale of income, and the disadvantages far outweigh the advantages. And this is one of the core reasons why domestic cloud computing manufacturers suffer long-term losses and cannot make profits.
Aside from government and enterprise businesses with diverse needs, other standardized IAAS, PAAS, and SAAS businesses should actually be close to breakeven. This is a hard demand, and several leading cloud computing companies have been cultivating for ten years and have already achieved economies of scale. Judging from the financial report data of Alibaba Cloud, the overall cloud computing is close to breakeven. If you put aside the unprofitable government-enterprise customization The traditional standardized IAAS, PAAS, and SAAS businesses should have broken even, and this is the break even achieved when each company is still in a price war.
Therefore, the reason why domestic cloud computing is currently not making money is mainly due to the drag on government and enterprise business, and the other is price wars.
Can domestic cloud computing make money in the future? Is it still far from making money?
I think it will definitely make money, and it will not be too far away from making money. Because each manufacturer has realized the problem, began to make strategic changes, began to focus on the technologies and products they are good at, and no longer blindly pursue invalid income.
For example, Tang Daosheng, the head of Tencent Cloud, said in a recent interview: Tencent Cloud will change its identity, from a large-scale integrator to a sub-integrator, retreat to the background to focus on its own products, and output the integration of capabilities to cooperation Party, by them directly facing customers at the front desk.
That is to say, for the follow-up government and enterprise business, Tencent will let its partners bid more as the general contractor, and it will focus on products, and seek a place in the government and enterprise market by improving the competitiveness of its own products. I think this decision is very correct. Focus on the products I am good at, so that users cannot leave me, and everything else will follow.
As for the cloud computing that everyone is worried about, the country is advancing and the people are retreating. In the words of Li Qiang, President of Tencent Cloud’s government and enterprise business line: the identity issue is just a superficiality. Government agencies are more concerned about the security of cloud services and whether the cloud architecture can be self-controlled. When this concern is addressed, clients have far less anxiety about identity.
So the issue of identity is not a problem. Domestic cloud computing business remains optimistic in the future.
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