Core Viewpoint - The article discusses Alibaba's organizational transformation from a decentralized "federal" structure to a more centralized model, emphasizing the need for unified infrastructure to compete effectively in the market. This shift is evidenced by significant changes in financial performance and strategic focus, particularly in the realm of instant retail and AI infrastructure. Group 1: Organizational Structure and Strategy - The nature of an organization's structure directly influences its product system, with a decentralized structure leading to modular and incompatible products [1] - Alibaba's "1+6+N" organizational reform aimed to create a federal system, but this approach has effectively ended, leading to a return to a centralized model [1][2] - The shift to a centralized structure is seen as necessary for addressing the challenges of building integrated physical and digital infrastructures [1][4] Group 2: Financial Performance - Taotian Group's adjusted EBITA dropped from 44.3 billion to 10.5 billion yuan, a decline of 76% year-over-year [2] - The significant profit drop is interpreted as a strategic decision to reallocate resources rather than a mere consequence of increased competition [3][4] - The centralized decision-making process allows for the redistribution of profits from profitable units to support critical areas like instant retail [4][7] Group 3: Instant Retail and AI Infrastructure - Instant retail is framed as a foundational infrastructure rather than just a business, focusing on long-term strategic investments rather than immediate profitability [6][8] - The integration of various business units is crucial for operational efficiency, enabling seamless collaboration across logistics, supply chain, and sales [8] - Alibaba's cloud intelligence group reported a 34% revenue growth, with AI-related products experiencing triple-digit growth for five consecutive quarters [8][9] Group 4: Capital Expenditure and Strategic Focus - High capital expenditure (CapEx) of 31.4 billion yuan indicates a strategic commitment to AI infrastructure, which is seen as a long-term investment [9][10] - The centralized approach to AI infrastructure is necessary to avoid data fragmentation and inefficiencies across different business units [10][11] - The transition from an "application factory" to a "smart power plant" reflects a strategic pivot towards building a unified AI capability [12] Group 5: Implications of Centralization - The centralization process results in the marginalization of non-core businesses, with a 25% revenue decline in "other" business segments [13][14] - The focus on core areas like e-commerce and cloud services signals a shift away from diversified operations towards a more streamlined infrastructure model [14][16] - The article highlights the challenges of executing this transformation, including potential internal confusion and inefficiencies during the transition [16][17]