Source| Disadvantages.
The financial report released by Alibaba on May 26 brought some good news to the market. Among them, Alibaba Cloud's EBITA profit improved from a loss of 2.251 billion yuan in fiscal year 2021 to a profit of 1.146 billion yuan in fiscal year 2022. This is Alibaba Cloud's first annual profit in 13 years since its establishment, and it is also the only domestic cloud service provider to achieve profitability.
Cloud computing, AI, chips and other technologies have always been the main areas of innovation and have gradually become the growth engine of the Internet in the second half. Now, after more than 10 years of persistence, Ali, the leader, has finally proven that this path is feasible. .
Moreover, this achievement comes at the right time. As we all know, domestic Internet dividends are tending to disappear. Amid sluggish user and business growth, capital concerns about the uncertainty of Internet companies have led to a rapid decline in the latter's market value. According to data from the China Academy of Information and Communications Technology, as of the end of March 2022, the total market value of my country's listed Internet companies was 9.9 trillion yuan, a decrease of 20.2% from the end of last year. In the fourth quarter of 2021, the revenue of my country's listed Internet companies was 986.3 billion yuan. The year-on-year growth rate was 12.9, a decrease of 8.3 percentage points from the same period last year.
Twenty years ago, Nasdaq fell from its highest point of 5048 points to 1114 points, a shrinkage of 78%. In two years, the market value evaporated by 5 trillion US dollars. Companies such as Netscape, Yahoo, and Worldcom They all suffered heavy losses, but they also exercised the ability of companies such as Microsoft and Amazon to survive cycles.
Today, domestic Internet companies enjoy the huge traffic dividends brought by the transformation of production relations, but they have also realized earlier the necessity of improving their hard power in science and technology. Through the recent earnings season, it is more meaningful to see which companies have the ability to cross the Internet's "middle-income trap."
Through a rough calculation of recent financial report data released by Internet companies, Tech Planet found that although the current development environment is still full of coldness, the total R&D investment of the top 10 domestic Internet companies in 2021 is still close to 300 billion yuan, and R&D investment is still close to 300 billion yuan. Investment basically maintains a growth rate of more than 30%. Among them, Alibaba has reached a maximum of 120 billion yuan, ranking first in the country.
Can these hundreds of billions of R&D investments become the supporting force for the development of Internet companies after their momentum is transformed?
It is undeniable that the Internet is entering a more normal development rhythm.
According to data from the China Academy of Information and Communications Technology, affected by multiple factors such as the fading of Internet traffic dividends, changes in the macro environment and repeated epidemics, the total revenue of my country's listed Internet companies in Q4 2021 was 986.3 billion yuan, a year-on-year increase of 12.9%, compared with It dropped 8.3 percentage points over the same period last year.
Although revenue growth is declining, everyone is increasing investment in order to achieve a higher jump after "squatting".
Specifically, in fiscal year 2022, Alibaba’s total revenue was RMB 853.062 billion. Not calculated in accordance with U.S. GAAP, net profit was RMB 136.388 billion. In the conference call, Alibaba disclosed that in the past year, Alibaba invested more than 120 billion yuan in technology, and its R&D investment accounted for 14% of its revenue.
Tencent’s Q1 financial report data saw revenue and net profit growth hit a quarterly low in the past decade. However, Tencent’s R&D investment is still growing, reaching 15.383 billion yuan. Baidu's revenue in 2021 will be 124.5 billion yuan, with core R&D expenses of 22.1 billion yuan; NetEase's first quarter financial report of 2022 has R&D investment of 3.4 billion yuan.
The deep intention behind the rapid increase in the proportion of R&D investment by major Internet companies is to change the revenue model based on traffic advertising and truly establish a diversified and healthy revenue system. Judging from Alibaba's "cloud computing and Internet infrastructure" and "cloud computing" revenue, although they only account for 12.1 and 7.68 respectively. But if you look at Amazon, AWS cloud services contribute more than 30% of profits with a revenue share of about 15%. Alibaba Cloud, which has just begun to make profits, will also be responsible for Alibaba's profits in the future.
In line with Alibaba’s transformation ideas, Internet companies’ cash-burning investments of up to 100 billion and as low as 10 billion are concentrated in cloud computing, AI, quantum computing, chips, 5G, autonomous driving, robots and other fields. , all in order to establish a new growth curve in the second half of the Internet.
However, the investment cycle of technology research and development is long, the investment is heavy, and the returns are slow, which requires firm confidence.
Looking back on 2009, Alibaba Cloud was questioned internally because it was too cash-burning and had no prospects. Jack Ma stood up to support Alibaba Cloud, saying that he would invest 1 billion a year for 10 years. , we can’t talk about it until then. When the DAMO Academy was established in 2017, Alibaba also promised to invest 100 billion yuan in three years for long-term construction, and its determination to invest in technology was unprecedented.
Judging from the current data, after years of intensive investment, Alibaba has indeed completed a relatively comprehensive and in-depth technical layout. At present, Alibaba has established seven research centers around the world, covering more than 16 underlying technology fields, and has 3,000 open source technology projects, which is second to none among domestic Internet companies. Alibaba has also obtained more than 10,000 global invention patent authorizations in strategic emerging industries. In the past three years, Alibaba has invested more than 60% in patents, focusing on hard-core fields such as cloud computing, artificial intelligence, and chips.
Looking at the entire industry, the growth achieved by burning money for technology is also very impressive.
Back in 2000, there were only 9 Chinese companies in the Fortune Global 500 list. At that time, the United States and Japan ranked first and second in terms of the number of companies on the list, with 179 and 107 companies respectively. The highest ranking company in China was Sinopec, which was only ranked 58th.
Statistics show that among the Fortune Global 500 in 2021, China has 143 companies on the list, 11 more than the previous year, and continues to be the country with the most companies on the list, the United States ***There are 122 companies shortlisted, and domestic companies on the list are mainly concentrated in the Internet field.
Since 2015, Internet companies have collectively begun to deploy digital productivity such as cloud and AI. R&D investment has increased year by year. According to rough calculation, it has been invested so far at 1 trillion yuan. Now it is time to test the results in stages. .
Alibaba’s R&D investment path is relatively clear. It has identified the path of the digital economy and has built a development model that integrates software and hardware in the fields of cloud, terminal, and bottom layer. Let business go to the cloud, let AI enhance the intelligence of the cloud, and perform calculations in self-developed chips. Realizing these dreams mainly relies on the technology triangle of Alibaba Cloud Intelligence, Damo Academy, and Pingtou Ge Semiconductor Company.
Alibaba’s huge investment has also resulted in significant progress. Industry research organization Gartner released 2021 global cloud computing IaaS market share data. Alibaba Cloud relies on its self-developed Feitian operating system, ranking first in the world in market share Third, it has achieved share growth for six consecutive years; at the same time, Alibaba Cloud ranks first in the Asia-Pacific market, with a market share of 25.53.
Damo Academy has gradually made achievements in fields such as autonomous driving, quantum computing, and AI large models. For example, Xiaomanlu is Alibaba’s self-developed L4 self-driving product for the “last three kilometers”. It has delivered more than 10 million orders so far, setting a new domestic terminal logistics record.
It is reported that DAMO Academy has launched the self-driving truck "Daman Donkey" research and development project to explore self-driving technology on public roads. These technical products will have a major impact on the development of logistics.
Pingtou Ge released the 5nm general-purpose CPU chip Etian 710 last year. Its performance is the top ARM server chip in the world. It means that Pingtou Ge has achieved the leap from dedicated chips to general-purpose chips and has become a first-class chip company. In addition, Pingtou Ge has also released the industry's most powerful RISC-V processor Xuantie 910, a one-stop chip design platform "Wujian", and open sourced Xuantie RISC-V series processors and basic software, which has exceeded 25 Billions of domestic chips use Xuantie processors, becoming the domestic CPU with the largest application scale in China.
Alibaba’s own e-commerce, logistics, and financial businesses are large enough. After applying these technology products internally and then expanding them to the entire industry, it is a very solid strategy for advancement.
Tencent’s research and development focuses on digital cultural creation and digital economy, which is a two-way development strategy.
Digital cultural creation is concentrated in innovative business departments such as Tencent AI Lab, Multimedia Laboratory, and Magic Core. For example, Tencent's self-developed codec technology has more than 100 international codec patents and is promoting the development of future VR live broadcast and other technologies.
Tencent’s digital economy has also begun to take shape. In 2021, Tencent released the distributed cloud operating system Aochi, which supports 100,000 servers in a single cluster; Tencent Cloud distributed database TDSQL helps more than 20 financial institutions Achieve localization of core systems.
Although the synergy effect is not obvious, spanning two major markets can also ensure that Tencent's basic market is large enough.
Baidu is betting that AI will be the next step in the Internet, with plans in areas such as autonomous driving, smart cloud, and AI open platforms. Among them, Baidu Smart Cloud business revenue increased by 45% year-on-year. In the first quarter, Luobo Kuaipao provided 196,000 ride services. At the same time, there are 4.77 million developers in the Flying Paddle developer community, serving 180,000 companies.
In the past, Baidu was deeply troubled by the declining growth rate of search and information flow advertising, and has been waiting for the large-scale commercialization of AI. Judging from the current data, AI has gradually become a second curve trend, and businesses such as autonomous driving are gradually generating commercial revenue.
Others such as JD.com have invested nearly 80 billion in R&D in the past five years, continuing to focus on hot innovation areas and application scenarios in artificial intelligence; NetEase, which has survived the first Internet bubble, is also constantly strengthening R&D. Investment ratio.
In the eyes of mass consumers, large manufacturers often do not do their job properly. Alibaba is engaged in quantum computing, Baidu is building cars, and Tencent is making virtual idols. But in fact, trillions of dollars in technology research and development investment, The core of the digital economy has quietly changed.
The Internet, known for its speed, is now learning to be slow.
Alibaba has been engaged in cloud computing-related research and development since 2009. It was not until fiscal year 2022 that Alibaba Cloud achieved its first full-year profit in 13 years. It took Huawei nearly 30 years from the establishment of a chip design center in the 1990s to a level where it could compete at the same poker table as Qualcomm.
How do Internet companies balance investments in many unknown fields and core technologies that are in urgent need of breakthroughs?
At an internal Alibaba business meeting, Zhang Jianfeng, president of Alibaba Cloud Intelligence and dean of DAMO Academy, discussed strategy with his subordinates, trying to figure out what to do and what not to do. He said, "What is strategy? Strategy is an issue that makes you feel fear, such as quantum computing." One scene that makes him feel fear is, "One day, no matter how many servers and chips Alibaba buys, it won't be enough." A quantum computer.
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Damo Academy has therefore invested in the highly exploratory field of quantum computing. The quantum circuit simulator Taizhang successfully developed in 2018 has become the pioneer in challenging quantum hegemony; the evolved Taizhang 2.0 It can significantly reduce resource consumption. Two months ago, DAMO Academy announced that its new qubit chip achieved a two-bit gate control accuracy of 99.72, reaching the world's best level for this type of bit.
As for the current pain points. , the new products created by Alibaba through technology have solved many practical problems.
For example, in the industrial field where master craftsmen are in great need, Alibaba AI has entered many large steel companies to detect surface defects on steel plates. The output rate has increased from 90 manually to 98; nearly 100 waste incinerators in 30 cities across the country have used Alibaba Cloud AI technology to increase power generation. In the field of meteorology that requires complex calculations, DAMO Academy AI Earth has already been deployed in the Ministry of Water Resources. , the National Meteorological Center, the Ministry of Ecology and Environment and other institutions have been put into use.
Shi Yaoyun, head of the Quantum Laboratory of DAMO Academy, once described this state as "pragmatic idealism", which is actually a vision for the future. Then continue to focus. That is to say, technology often starts from the difficult situation, and the implementation starts from the sinking scene.
This is obviously different from the style of some foreign Internet giants. Google has the famous X experiment. The projects led by this laboratory are very creative and forward-looking, and some of them are called "Moonshot" internally. These fanciful projects include space elevators and Internet heaters.
In contrast, the R&D investment of domestic Internet companies is relatively more focused and the application is more down-to-earth. They start from the IT security of IOE and then invest in the transformation of the digital economy.
Of course. , it should also be noted that there is still a gap between Chinese Internet companies and international giants. Compared with Google and other companies that often spend more than 100 billion on R&D, the R&D investment of domestic major companies is generally in the range of 10 billion, and Chinese Internet companies still need more.