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Wen/Qing Yue
Source/Tanglang Finance (ID: TanglangFin)
"$18.58, $71.51, $51.71", "$10.23, $39.97, $18.54".
These two groups of data are the "three giants" of online education, New Oriental, TAL and Altway. The stock price information on December 31, 2020 and as of May 30, 2021, by contrast, the stock price of the "three big mountains" has halved in less than half a year.
On May 28, it was also reported that Chen Xiangdong, the chairman of Gaotu, held an internal staff meeting and announced that Gaotu Classroom would reduce its staff by 30%. As early as 10 days ago, it was reported that VIPKID would make business and personnel adjustments, and the proportion of layoffs was as high as 50%. On the social media platform, the news that online educational institutions, including Homework.com, have stopped recruiting has also spread widely.
However, different from the overall decline of the online education market, on May 18, NetEase Youdao handed over the best financial performance report ever, of which the learning products composed of intelligent hardware are the main driving force. So, what is the situation of the education hardware market that has become increasingly popular this year? How long can Youdao's good performance last as the big factories enter the market in turn?
The general environment is full of twists and turns, and educational hardware seems to be an industry self rescue export
If 2020 is the year of online education, then 2021 is the year of tackling difficulties.
In March, the Central Commission for Discipline Inspection first criticized several online education institutions, which led to the issue of industry regulation becoming a hot topic of public opinion. Then Bill Hwang, a private equity tycoon, suffered from chain bad luck due to his use of high leverage, and many of his shares plummeted, triggering a position explosion.
The stock prices of many education Chinese stocks led by New Oriental and TAL collapsed. By May, this momentum had not stopped. In response to the chaos of out of school education and training institutions strongly reflected by the masses, the homework gang and ape tutoring were first fined 2.5 million yuan; On May 17, New Oriental and XRS were again named by the Beijing Municipal Education Commission for "one-time fees exceeding the deadline and teaching times exceeding the curriculum standards".
With stricter regulation, the online education industry has entered a "painful period". Under the stimulus of such an environment, most enterprises have begun to think about the possibility of diversified income generation, and education hardware has become an important "outlet".
From the step by step high point reader to the Little Genius phone watch, from the homework help wrong question printer to Netease Youdao dictionary pen, from the iPad to the byte beating intelligent homework lamp, "education hardware" itself does not have a strict definition and scope.
(Image source: 2021 China Education Intelligent Hardware Trend Insight Report, data source: iResearch) But it is certain that the potential of this track cannot be underestimated. According to iResearch data, from 2018 to 2020, in China's education intelligent hardware market, both traditional categories and emerging categories will show a steady upward trend, and it is expected that the overall market size will reach the level of 100 billion three years later.
At the 79th China Education Equipment Exhibition held in April 2021, more than 1300 enterprises from home and abroad participated in the exhibition, and more than 9000 booths occupied the entire venue, making it the largest exhibition area since the establishment of the exhibition center. According to the observation of Tencent Research Institute, the popularity of this educational equipment exhibition is comparable to the automobile exhibition and communication exhibition in the peak period.
Admittedly, the popularity of the industry is not necessarily equal to "making money", and "making money at a loss" has always been seen.
However, Youdao's quarterly performance report gave a preliminary conclusion to this query. During the reporting period, the net income of Netease Youdao's learning products was 201.9 million yuan, an increase of 279.8% over the same period in 2020; The gross profit rate was 44.1%, the highest since the listing.
Of course, not only NetEase, but also Bubugao Group and Byte Beat are among the most important players in education hardware.
Take Little Genius under Bubugao as an example. In 2019, its shipment volume was 6.045 million units. So far, it is the first in the global market of children's smart watches, with a market share of more than 30%, and its sales volume exceeds the sum of the second to fifth places.
Byte skipping is the biggest one. In October 2020, the "Vigorously Intelligent Work Light" released by Byte Beating integrates shooting and correcting homework, reading, voice calling, and parent monitoring. In addition, we are also developing almost all the verified or popular educational hardware products in the market, including educational tablet, pocket learning printer, early education machine, dictionary pen, etc.
In fact, before the educational hardware made a great contribution to NetEase Youdao's performance in the first quarter, the debate about whether the educational hardware is the next "outlet" or "IQ tax" has never stopped, so does this market have the potential to become a new generation of "wealth password"?
The theory of "IQ tax" has not ended, and educational hardware is not equal to "wealth password"
Where there is heat, there is controversy, and the track of educational hardware is no exception.
At present, there are two kinds of education hardware products on the market. One is used as a tool to assist learning, and it is good enough to use at a certain point to try to penetrate the pain points; The other is to earn money from built-in content and services without relying on hardware. The typical cases are the learning machine with high steps, the powerful intelligent light with byte beating, and the dictionary pen with Tao.
"Tanglang Finance" has counted some comments on "xxx is an IQ tax", and found that consumers' criticism of products generally stems from the following two aspects.
One is the query of product function.
For example, in the market of "eye protection lamp", according to the National Visual Health Report issued by the National Development Research Institute of Peking University, in 2012, about 450 million people in China suffered from myopia of varying degrees. In 2018, the research report released by the World Health Organization showed that the number of myopia in China has reached 600 million in 18 years.
If there is demand, there will be dividends. "Mantis Finance" searched for the keyword "eye protection lamp" on Taobao, and the top products sold tens of thousands of dollars.
(Image source: blackboard insight Data source: Dongxing Securities) Of course, "Da Lian" is not absent. As mentioned in the Weekly Quality Inspection Report of CCTV in October 2020, 61 of the 73 samples taken from the market, including Philips, Osram, Yashiguan, Haoshiguan, Midea, Haier and other well-known brands, fail to meet the standards.
In terms of performance, a large number of reading and writing desk lamps do not reflect the required performance in many indicators designed to protect vision (such as illumination, color rendering, stroboscopic, etc.), which is easy to cause vision damage. Instead, the "eye protection" lamp is "eye injury".
Second, it is related to the scenario of product construction.
The learning machine was originally used to "shoot, search, fight and learn" and "dictionary pen" were used to analyze difficult words and sentences, but in the real application scene, it began to have a "smell".
As the most direct user - students, they must benefit from dictionary pens and learning machines. But in the eyes of teachers, this is not the case. Taking dictionary pens as an example, the most taboo of former English teachers is that students use dictionaries to look up obscure words. His original words are "only by combining the context to guess the meaning of the word, can the memory point be most profound. If you still do not understand, you can use dictionaries to look up to prevent dependency".
The same is true of learning machines. Wenquxing and Bubugao used to have all kinds of game works with small capacity and large play methods, such as Hero Altar, Magic Tower, China, etc. The world of Hero Altar is quite open, with hidden tasks, hidden locations, and even copies and weapon casting systems, How many students have indulged in it, which often makes learning machines, mobile phones and computers listed as contraband by parents.
Driven by controversy and doubt, the education hardware market began to "spiral" forward. Since the end of the 20th century, educational hardware has experienced a total transformation from the era of 1.0 to the era of 2.0 and 3.0. In the 1.0 era, Wenquxing, Xiaooverlord, and Bubu advanced enterprises were represented. They had no Internet thinking, and their product functions were relatively simple. Most of them focused on word search.
In the era of 2.0, Xiaooverlord and Wenquxing gradually declined, and electronic dictionaries and repeaters were banned by more full-featured and diversified point readers, learning machines and other products, but the industry survival rate was still low, maintaining between 1% and 3%.
2020 is the first year of intelligent hardware products and the third stage of the development of intelligent hardware manufacturers. At this stage, more Internet companies are involved. They focus on a number of products that are both scientific and practical, such as scanning dictionary pens, intelligent work lights, and intelligent robots. In the 3.0 era with many entrants, who can tear out the "exit" in the "storm"?
When the fog is everywhere, who can see the sun through the clouds in the crowd?
Today, "cross-border" has become the norm. Once an industry becomes "popular", major manufacturers are like hyenas coming from the smell, and the track of education hardware is no exception.
According to the observation of Mantis Finance, at this stage, there are three types of participants.
First, it is an education company led by Netease Youdao. Among them, Youdao has always had hardware business. In 2017, it launched a translation egg for business and tourism professionals. From the market reaction, Youdao's first mover advantage has been successfully transformed into business achievements and reflected in financial reports.
In addition to NetEase Youdao, other education companies are unwilling to lag behind. After the launch of the wrong question printer Meow machine, the news came out that at present, the company has started the tablet project; In terms of ape coaching, a hardware team has also been set up in Shenzhen, and an order for smart tablet has been signed with the OEM; TAL has set up a separate department for the hardware business. It is said that it is currently planning an intelligent desk lamp project; New Oriental also plans to launch similar products.
Secondly, there are byte, Tencent, Ali and other Internet giants. In October 2020, Byte Beat launched its first intelligent hardware product, "Vigorously Intelligent Operation Light"; In March 2021, Tencent Education also officially announced the new product "AILA Smart Work Light"; Baidu and Alibaba launched smart speakers in 2020.
Finally, there are enterprises represented by traditional education hardware such as Bubugao and Shuelang. At the end of April, Duluang Education submitted a prospectus to Hong Kong stocks. From the data fed back by the prospectus, we can see that the entire tablet business shipped 399600, 456900 and 484600 units in 2018-2020, with corresponding revenue of 468 million yuan, 542 million yuan and 665 million yuan, accounting for 90% of the total revenue.
As for which kind of "player" can be the first to reach the top, the industry still in the "fog" cannot give an accurate answer.
Educational enterprises have a foundation. These players have the user trust that other competitors lack, which is due to their past accumulation of content. Whether in the K12 field, or in the adult or children's fields, they can better perceive the pain points of users' demand for intelligent hardware, so as to carry out targeted product iterations.
Take Netease Youdao as an example. Youdao Dictionary Pen has been developed for three generations. It is based on Youdao Dictionary's ability to search words with a long history and its deep understanding of learning scenes. Once launched, it has gained good reputation and has long held the first place in the sales of electronic dictionary categories in the 618 and Double Eleven e-commerce shopping festivals.
At the same time, Youdao has never stopped the pace of product iteration. In the first quarter of this year, the company strengthened the software and hardware synergy between "Youdao Dictionary" and "Youdao Dictionary Pen". For example, dictionary pen users can find their personal learning records in the "Youdao Dictionary" and enjoy "word cloud synchronization", which can enable them to learn new knowledge anytime and anywhere. The collaboration of software and hardware may bring more user growth space for both.
Internet giants have money. Capital is crucial to this track. According to front-line business reports, Li Tong, NetEase Youdao's head of hardware, has repeatedly stressed that "out of stock will not kill you, but inventory will kill you."
What can support this inventory logic is money. Chen Jing, the vice president of Blue Elephant Capital Investment, once calculated that "10000 devices mean 10000 registered users, which is not much in quantity. But if the cost of a device is 1000 yuan, 10 million yuan will be added, and this project may last for half a year to one year." Compared with education giants and traditional education hardware companies, being rich, having traffic, technical advantages and being good at resource integration are the "bottom line" of Internet giants.
In addition, the traffic advantages of Internet giants cannot be underestimated. Just like the former Internet giants have entered online education, the Penguin Tutoring and Qingbei Online School, which are backed by Tencent, can use their own social traffic advantages to select targeted users, introduce traffic into their new business areas, and reduce the risk of cross industry entrepreneurship. This logic can also be extended to the field of education hardware.
Traditional education hardware company has experience. This type of player has entered the market early, and has accumulated considerable advantages in supply chain, quality control, sales channels and other fields. At the same time, they can quickly gain insight into customer needs.
Taking Bubugao as an example, since the launch of the repeater series in 1998, it has won the favor of consumers. So far, we have launched different series of tutoring machines, which not only have a more simple and beautiful appearance, but also have more complete and diversified functions. In addition to fingertip positioning function, there are intelligent voice dictation, English point reading, intelligent question answering, discipline synchronous guidance, learning diagnosis and other functions.
In addition, these companies are also constantly breaking through the content shackles. It is reported that some hardware manufacturers have tried to cooperate with online education enterprises such as Programming Cat, VIPKID, ABCmouse, etc.
In a word, no matter what era, education is an important investment in family consumption, and children are the top priority of the whole family's consumption investment. In addition, education hardware can form cross diversion and functional synergy with other products on the platform, and this important traffic portal is bound to become a battleground for soldiers. However, although the current education hardware track is "crowded", "fog rises all around". We cannot know who can stand in it when the "fog" disappears, but we can be sure that the "three armies contend for hegemony" is only temporary. With the expansion of the education scene, more unexpected players will enter this field in the future.
(Statement: This article only represents the author's view, not Sina.com's position.)
