The past year has witnessed an escalation in the price war among mainstream cloud providers, making the Chinese cloud market increasingly "fiercely competitive."

Alibaba Cloud pioneered a comprehensive price reduction for its cloud products, with an average drop of over 20% and a maximum decrease of 55%. JD Cloud boldly declared on its WeChat official account: "Feel free to reduce prices; we'll compete to the end! We'll continuously compare prices across the entire network to beat the lowest prices, with an additional 10% off!" Tencent Cloud has also entered the fray, discounting AI products such as AI painting, face fusion, and audio file recognition.

Meanwhile, operator clouds like Tianyi Cloud, Unicom Cloud, and Mobile Cloud, leveraging their vast network coverage and substantial customer resources, continue to invest heavily in cloud computing, steadily eroding market share. Amidst this intensifying competition, Tencent Cloud has achieved notable milestones by focusing on independent research and development and fostering integration reforms in recent years.

However, standing at a new juncture in AI, Tencent Cloud still faces a long journey ahead.

Achieving Milestones

In the fiercely competitive cloud services market, Tencent Cloud has distinguished itself with substantial revenue growth, marking significant victories.

In 2024, Tencent Cloud's valued partner public clouds witnessed double-digit year-on-year revenue growth, surpassing the average market growth rate. With the increase in self-developed products and the proportion of subscription revenue, Tencent Cloud's overall revenue surged by 60% year-on-year. This achievement stands out amidst the ongoing price wars and sluggish revenue growth experienced by many cloud providers.

Furthermore, Tencent Cloud expanded its partner network by 1,000 new partners in 2024, bringing the total global partner count 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 extensive and high-quality partner network has swiftly extended Tencent Cloud's service reach across various industries and fields.

Tencent Cloud's milestones are inseparable from its two core competitive advantages: robust technical strength and a vibrant ecosystem.

Leveraging Tencent's deep technical expertise in social media and gaming, 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 offers users a seamless and stable interactive experience due to its proprietary low-latency transmission technology, attracting numerous customers from industries like online education and live streaming e-commerce.

Moreover, Tencent Cloud has cultivated a comprehensive ecosystem that spans from basic cloud services to industry-specific solutions. Customers of varying sizes and from diverse industries can find tailored solutions within the Tencent Cloud ecosystem, significantly enhancing customer loyalty and retention.

From financial technology to smart manufacturing, and from smart retail to healthcare, the solutions jointly launched by Tencent Cloud and its partners are profoundly empowering enterprises in their digital transformation, continuously exploring new business growth avenues, and significantly boosting Tencent Cloud's voice and influence in the cloud services market.

Despite Tencent Cloud's milestones, the cloud services market is rapidly evolving. Alibaba Cloud and Huawei Cloud fiercely compete for market share, while operator clouds like Tianyi Cloud, Unicom Cloud, and Mobile Cloud closely monitor the market dynamics. There is no room for complacency.

Alibaba Cloud and Huawei Cloud Pose Stiff Competition

In the ever-evolving cloud computing market, Alibaba Cloud and Huawei Cloud dominate the industry due to their profound foundations and early mover advantages, casting a significant shadow over Tencent Cloud's path forward.

Market share data from the fourth quarter of 2024 reveals that Alibaba Cloud firmly held the top spot with a 36% share, closely followed by Huawei Cloud with 20%. Tencent Cloud accounted for only 15%, a decline of 1 percentage point from the previous year. In terms of revenue, Alibaba Cloud reported $3.996 billion, Huawei Cloud $2.22 billion, and Tencent Cloud $1.665 billion. Regarding growth rates, Huawei Cloud achieved a 20.4% year-on-year increase, Alibaba Cloud maintained a stable 5.63% growth, and Tencent Cloud, despite a 7.3% growth rate, lagged behind the former two.

If this trend continues, and Tencent Cloud fails to revamp its market competition strategy and expand its market footprint, the gap with leading vendors will widen, potentially leaving it behind in the market competition.

Compared to Alibaba Cloud, Tencent Cloud lags significantly in market share for e-commerce industry solutions. As a pivotal field of cloud computing applications, Alibaba Cloud has amassed a substantial customer base based on its rich industry experience and mature solutions. While Tencent Cloud excels in areas like audio and video and gaming, it still needs to catch up with Alibaba Cloud in terms of service stability and security.

In contrast to Huawei Cloud, which has established a high-performance cloud service system leveraging its robust hardware R&D capabilities and underlying technologies, Tencent Cloud, while competitive in software services and ecosystems, lags in the depth of technological research and development. As customers' demands for cloud service performance, stability, and security become increasingly stringent, Tencent Cloud risks being at a disadvantage when competing for large enterprise customers and key industry orders if it fails to address these shortcomings.

In the crucial AI race within the cloud computing field, Alibaba Cloud and Huawei Cloud have long deployed significant resources and 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 diverse product portfolio, has implemented AI across multiple 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 faces significant challenges in breaking the deadlock. To do so, Tencent Cloud must fully leverage its strengths in audio and video, gaming, and ecosystems while increasing investments in AI, enhancing service stability and security, and deepening industry solutions to find breakthrough opportunities in the fiercely competitive market and achieve a comeback.

AI-Driven Growth Momentum

Trailing behind Alibaba Cloud and Huawei Cloud, AI represents a crucial breakthrough for Tencent Cloud to break the deadlock and forge new growth trajectories. Currently, the technological revolution sparked by AI large models is reshaping the cloud services market landscape, offering Tencent Cloud an opportunity to overtake in the race.

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

In terms of product layout, Tencent Cloud has established 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 using 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 enhancing the efficiency and economy of enterprise application development.

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

In terms of application scenarios, Tencent Cloud continuously explores the integration of AI across various industries. Besides achieving remarkable results in code development, it has also propelled the implementation of AI applications in fields such as finance, healthcare, and manufacturing, expanding its business horizons.

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

By building an AI product matrix, solving industrial challenges, and exploring diverse scenarios, Tencent Cloud has carved out a new growth path for itself. Although the current revenue generated by AI large models for Tencent Cloud is not substantial, it will undoubtedly emerge as a significant growth engine in the long run.