Canalys: China's mainland cloud service spending reached $9.4 billion in Q2, an 8% year-on-year increase.

Canalys reports that in the second quarter of 2024, spending on cloud infrastructure services in mainland China reached $9.4 billion, an 8% year-on-year increase. Alibaba Cloud, Huawei Cloud, and Tencent Cloud continue to dominate the market, collectively holding a 71% market share. Cloud service customers, especially those focusing on digitalization, have increased their spending due to the push for AI. Leading cloud providers are now focusing on deep integration of AI with cloud computing to explore new growth opportunities. The impact of AI on cloud consumption is becoming increasingly significant and gradually becoming a key driver for business expansion. The customer base for AI platforms provided by top cloud providers is expanding, and is expected to continue driving cloud consumption growth in the second half of 2024. To maintain a competitive advantage in the AI innovation field, top cloud providers in China are increasing their investments in AI. They are continuously upgrading AI large models and developing customized solutions for specific industries. For example, Huawei Cloud has successfully applied its Pangolin large model in 30 industries and 400 business scenarios, while Baidu Intelligent Cloud has launched 20 new AI applications. These AI-related investments are gradually yielding returns as the customer base expands, but also intensifying competition. In addition to integrating AI technology, cloud providers are collaborating with third-party AI model developers to expand the AI ecosystem. For example, in July 2024, Alibaba Cloud announced a partnership with Moon's Dark Side to enhance the reading and reasoning capabilities of the Kimi intelligent assistant. Canalys analyst Zhang Yi said, "After a period of fierce competition, top cloud providers have realized that simply reducing prices cannot sustainably drive customer spending growth. They are now shifting their focus towards innovation and collaboration within partner ecosystems as a differentiation strategy to attract and retain customers. Cloud providers are actively collaborating with channel partners to develop customized AI solutions for specific industry needs. In the second quarter of 2024, revenue generated through channel partners accounted for 26% of total cloud computing revenue in China, and this proportion is expected to increase further. Collaborating with professional partners helps cloud providers enhance the value of their AI large models and address customer concerns about the complexity of AI deployment." Alibaba Cloud maintains its leading position in the mainland China market, holding a 36% market share. Its overall growth is primarily driven by its public cloud business, which achieved double-digit growth in the second quarter of 2024. The success of AI products has also contributed significantly to Alibaba Cloud's growth recovery, with a record number of paying users and a quarterly growth rate of 200%, while revenue continues to grow at a triple-digit pace. This momentum has prompted Alibaba Cloud to further increase its investment in AI. In July 2024, Alibaba Cloud launched the AI assistant "Xiaoying," providing knowledge base and decision support, enabling automatic learning and execution of tasks. Huawei Cloud is solidifying its position as the second-largest cloud provider, with a market share of 19% and a stable growth rate of 13%. Huawei Cloud is making steady progress in the field of AI. In June 2024, Huawei Cloud launched the latest version of its AI large model, Panggu 5.0, offering various parameter configurations to meet the diverse training needs of customers. In terms of channel partner ecosystems, Huawei Cloud announced a partnership capability program in collaboration with TCL, Ernst & Young, and iSoftStone Information Technology to enhance partners' capabilities in product and scenario technologies. Currently, around 4,500 partners have joined the program and collaborated with Huawei Cloud to develop over 500 solutions. Tencent Cloud ranks third, with a market share of 16%. In June 2024, Tencent Cloud announced that it would provide 100 million Tokens of Mixuan large models for free to newly migrated enterprise users, in order to attract more customers. Tencent Cloud also introduced multiple versions of Mixuan large models, including Pro, Standard, and Lite, and provided free exclusive migration tools and services to meet the diverse needs of users. At the Tencent Global Digital Ecosystem Conference in September 2024, the company announced a 150% increase in the number of partners with annual revenue exceeding 1 million RMB (approximately $142,000). Recognizing the importance of partner service capabilities in enhancing the channel ecosystem, Tencent Cloud launched a new partner program in September 2024 to develop channel partners with product sales and service experience, while also piloting the MSP service provider certification system.