Over the past year, the price wars among mainstream cloud vendors have escalated, and the competitive landscape has deteriorated, rendering China's cloud market even more "intense".

Alibaba Cloud was the pioneer in announcing a comprehensive price reduction on its cloud products, with an average discount of over 20% and a maximum reduction of 55%. JD Cloud followed suit on its WeChat official account, boldly stating, "Feel free to reduce prices; let's compete to the end! We'll continue to benchmark prices across the entire network, breaking through low prices with another 10% discount!" Tencent Cloud also engaged in the price war, discounting AI products such as AI painting, face fusion, and audio file recognition.

Concurrently, operator clouds like Tianyi Cloud, Unicom Cloud, and Mobile Cloud, leveraging their extensive network coverage and massive customer resources, continue to ramp up investments and deployments in the cloud computing sector, steadily eroding market share. Amidst this increasingly competitive cloud market, Tencent Cloud has achieved phased success by focusing on self-development and promoting integration reforms over the years.

However, standing at the dawn of AI, Tencent Cloud still has a long journey ahead.

Achieved Phased Victory

In the fiercely competitive cloud service market, Tencent Cloud has distinguished itself and achieved phased success, marked by significant revenue growth.

Reports indicate that in 2024, Tencent Cloud's valued partners saw their public cloud revenue soar by double digits year-on-year, surpassing the average market growth rate. With the growth of self-developed products and the proportion of subscription revenue, Tencent Cloud's consolidated revenue increased by 60% year-on-year. This achievement stands out amidst many cloud vendors still mired in price wars and sluggish revenue growth.

Furthermore, in 2024, Tencent Cloud expanded its network by adding 1,000 new partners, bringing the total number of global partners to 11,000. It has forged in-depth collaborations with 70% of industry leaders and assisted partners in expanding their customer base by over 60,000 last year. This vast and high-quality partner network enables Tencent Cloud's services to swiftly extend into various industries and fields.

Tencent Cloud's phased success is inseparable from its two core competitive advantages: robust technical prowess and a rich ecosystem.

On one hand, leveraging Tencent's deep technical expertise in social and gaming fields, Tencent Cloud excels in audio and video processing, game development cloud services, and more. For instance, in real-time audio and video communication scenarios, Tencent Cloud utilizes its self-developed low-latency transmission technology to provide users with a seamless and stable interactive experience, attracting numerous industry clients in online education, live e-commerce, and other sectors.

On the other hand, Tencent Cloud has constructed a comprehensive ecosystem encompassing everything from basic cloud services to industry solutions. Customers of varying sizes and from different industries can find suitable solutions within the Tencent Cloud ecosystem, significantly enhancing customer loyalty and stickiness.

From fintech to smart manufacturing, from smart retail to healthcare, the solutions launched by Tencent Cloud in collaboration with its partners are profoundly empowering enterprises in their digital transformation, continuously exploring new business growth points, and markedly boosting Tencent Cloud's discourse power and influence in the cloud service market.

Despite Tencent Cloud's phased success, the cloud service market is in a state of constant flux. Alibaba Cloud and Huawei Cloud are fiercely competing for market share, while operator clouds like Tianyi Cloud, Unicom Cloud, and Mobile Cloud are keeping a close eye on the market. There is no room for complacency.

Alibaba Cloud and Huawei Cloud Overhead, Breaking the Deadlock is Difficult

In the ever-evolving cloud computing market, Alibaba Cloud and Huawei Cloud occupy leading positions due to their profound foundations and first-mover advantages, casting a formidable shadow over Tencent Cloud's path forward.

From a market share perspective, in the fourth quarter of 2024, Alibaba Cloud firmly held the top spot with a 36% market share, followed by Huawei Cloud with 20%, while Tencent Cloud accounted for only 15%, a 1-percentage-point decline from the same period last year. In terms of revenue, Alibaba Cloud's fourth-quarter revenue reached $3.996 billion, Huawei Cloud's was $2.22 billion, and Tencent Cloud's was only $1.665 billion. In terms of growth rate, Huawei Cloud achieved a year-on-year growth of 20.4%, Alibaba Cloud maintained a stable growth of 5.63%, and Tencent Cloud, despite a 7.3% increase, had no advantage over the former two.

If this trend persists, and Tencent Cloud fails to alter its market competition strategy and expand its market territory, the gap with leading vendors will widen, potentially leaving it behind in the torrent of market competition.

Compared to Alibaba Cloud, Tencent Cloud's market share in e-commerce industry solutions lags significantly. As a crucial field of cloud computing applications, Alibaba Cloud has amassed a vast customer base through its rich industry experience and mature solutions. While Tencent Cloud excels in audio and video, gaming, and other fields, it still needs to catch up with Alibaba Cloud in terms of service stability and security.

Compared with Huawei Cloud, Huawei Cloud has established a high-performance cloud service system grounded in its robust hardware research and development capabilities and underlying technologies. While Tencent Cloud exhibits competitiveness in software services and ecosystems, there is a gap with Huawei Cloud in the depth of technological research and development. As customers' demands for cloud service performance, stability, and security become increasingly stringent, if Tencent Cloud cannot address these shortcomings, it will always be at a disadvantage when competing for large enterprise customers and key industry orders.

In the crucial AI race in the cloud computing sector, Alibaba Cloud and Huawei Cloud have long been heavily invested and have achieved remarkable results.

Alibaba Cloud has witnessed triple-digit growth in AI-related revenue for six consecutive quarters, with over 290,000 users accessing Qwen API through the Tongyi Bailian platform. Huawei Cloud, with its multi-mode product portfolio, has implemented AI across various industries such as coal and railways, and its overseas AI business revenue has surged by more than 50%.

Under the dual pressure from Alibaba Cloud and Huawei Cloud, Tencent Cloud's path to breaking the deadlock is fraught with challenges. Tencent Cloud must leverage its strengths in audio and video, gaming, and ecosystems while increasing investments in the AI field, enhancing service stability and security, and delving deeper into industry solutions. Only then can it uncover opportunities for breakthroughs in the fiercely competitive market and achieve a turnaround.

AI-Driven, New Growth Momentum

Trailing behind Alibaba Cloud and Huawei Cloud, AI is undoubtedly a crucial breakthrough for Tencent Cloud to break the deadlock and carve out new growth curves. Currently, the technological revolution sparked by large AI models is reshaping the cloud service market landscape, presenting Tencent Cloud with an opportunity to overtake on curves.

Canalys predicts that the growth rate of the cloud infrastructure service market in mainland China will reach 15% by 2025, with AI demand being the primary driver of this growth. The emergence of large AI models has not only opened up a vast market space but also spurred enterprises' massive demand for AI computing power, model development, and deployment.

In terms of product layout, Tencent Cloud has created a comprehensive AI product matrix. Products such as the Tencent Cloud TI platform, high-performance service HAI, CloudStudio, and the large model knowledge engine all support "multi-mode invocation" of the DeepSeek and Tencent Hunyuan large models, providing developers and enterprise customers with diverse AI application deployment solutions.

Taking the large model knowledge engine as an example, enterprises can build enterprise applications within minutes based on the Hunyuan large model and DeepSeek, combined with their private knowledge bases, through simple drag-and-drop operations. Optimized by Tencent Cloud, when using the DeepSeek model, the engine's speech rate increases by 84%, and costs are reduced by 46%, significantly improving the efficiency and economy of enterprise application development.

Additionally, the "Tencent Cloud AI Code Assistant" has been implemented within Tencent for over a year, with 80% of Tencent programmers using it daily. 33% of the code is generated by AI, boosting coding efficiency by 42%, demonstrating the immense potential of AI technology in enhancing R&D efficiency.

In terms of application scenarios, Tencent Cloud continues to explore the integration of AI with various industries. Besides achieving notable results in the field of code development, it is also promoting the implementation of AI applications in finance, healthcare, manufacturing, and other fields, expanding its business boundaries.

In the financial sector, Tencent Cloud leverages AI technology to assist banks in intelligent risk control, significantly reducing fraud risks. In the medical industry, through AI image diagnosis technology, it aids doctors in enhancing diagnosis efficiency and accuracy. In the manufacturing industry, it optimizes production processes with AI to improve production efficiency and product quality.

It is evident that by constructing an AI product matrix, solving industrial challenges, and exploring diverse scenarios, Tencent Cloud has carved out a new growth path for itself. Although the revenue generated by large AI models for Tencent Cloud is not yet substantial, in the long run, it will undoubtedly become a significant growth engine.