On December 14, App Annie released its November top 30 list of monthly non-game manufacturers and non-game app overseas revenue. The author noted that in the list of 2 times, there are 3 manufacturers with "soft and hard interconnection" business, Xiao ant Technology, Wondershare Technology and Lollipop Technology. The difference between the three is that the revenue of a variety of apps under Lollipop Technology has jointly pushed manufacturers on the list; Wondershare's software is mainly tool apps, "FamiSafe" is the app of its intelligent monitoring equipment, with a double-ended revenue of 130,000 US dollars last month; and Xiao Ant Technology relies on the "Xiao Ant Camera" App to increase the overall revenue of manufacturers.
As App Annie begins to disclose the revenue rankings of some non-gaming apps, we may see some consumer goods/DTC brands, when the target size of the audience for their hardware products is not small, and on the software side, it will also reflect a good ability to generate revenue.
According to App Annie data, Xiaoant Technology has a total of 3 publisher accounts. According to Sensor Tower data, in November, the revenue of Xiao ant Technology's overseas app was about 500,000 US dollars, of which the iOS version of "Xiao Ant Camera" (overseas App named "Yi Home") contributed 400,000 US dollars.
A piece of hardware only sells for $30, but it can bring in $400,000 per month
The popularity of smart hardware is getting higher and higher, and it is not uncommon for people to wear smart watches and ride smart bicycles at home, but the reason why these products are called smart is because they not only meet the needs of daily use, but also connect with them, and manufacturers usually provide solutions on the software side that usually have the main goal of "improving the situation/ improving the level".
For such manufacturers, it is not only hardware consumer goods that make money, but also the software side will generate revenue by providing some value-added services. Moreover, because unlike general Internet products, software and hardware are bound to use, when consumers buy hardware, in order to obtain all services, they will basically download and use software. Therefore, there is basically no need for drainage, marketing expenses are greatly reduced, and gross profit margins have also risen sharply. The most typical case here is "Peloton".
"Peloton" released its 2022 Q1 financial report (calendar year 2021.09-2021.11) on November 4, with total revenue of $805 million in the quarter, of which connected fitness product (hardware) revenue was $501 million (including data from the newly acquired fitness equipment brand Precor), accounting for 62%, and software subscription revenue was $304 million, accounting for 38%, up 8% from Q4 in 2021. While hardware revenue still accounted for the majority, hardware gross margin was only 12% in the quarter, and the gross margin on the subscription segment was 66.7%, up slightly from 58.5% in the same period last year. It can be seen that the gross profit of hardware with a high proportion of revenue is not high, but the software has increased the gross profit of the entire business.
According to the author's inquiry of past information and Amazon sales, Xiaoant Technology's explosive product overseas is a home smart camera priced at $29.99 (the author saw it drop to $22.49 before the author's publication), if you want to operate the camera, you need to use the "YI Home" App, through the App, users can also bind Amazon's smart speaker Alexa with the camera. The same is true of other smart cameras owned by the Ant brand.
The domestic and overseas versions of "YI Home" are the same as when most apps go to sea, the domestic version is more complex, and the overseas version is more simple. Users can use 2 modes on "YI Home", home and out mode, and users can customize the functions of different modes.
Specifically, the entire app has a total of 3 menus, and the homepage section has 2 modes to switch, which is an instructional video that guides users to connect to the device and some cross-promotion ads. The second menu is the video playback area, which shows the devices the user is connected to, the video content, and the filtered time period; the third part is some basic functions such as mode settings, message management, connecting alex, and the service center. The point that needs to be mentioned here is that the service center hides submenus such as blog, ant mall, feedback center, etc., and the content discovery and mall in the domestic version are the parts that can be seen by opening the app.
"YI Home" cloud service subscription price
The only billing point in "YI Home" is the cloud service for video content storage and playback. After purchasing the product, users can view the screen directly through the app in real time, but if they need to review the content later, they need to purchase a memory card or cloud storage plan. Most smart camera brands' cloud storage packages include monthly and annual packages for reviewing 30-day recordings, and upload recordings only when the picture changes dynamically. "YI Home" offers a more flexible package with 7, 15, 30 days to watch back, and the option to upload only live images or full-time screens. In addition, cloud services are gradually adding new functions, such as face recognition, animal vehicle recognition, hardware warranty, 7 * 24 hours emergency call, etc. Brands that can provide such app configurations, the unit price of hardware is basically more than 50 US dollars.
From this point of view, "YI Home" can achieve good revenue on the software side, one of the reasons is that the subscription scheme is more flexible and more suitable for the actual psychological state of consumers. The new features that are being added may also derive more payment points in the future.
Compared with the software and hardware revenue, this camera is priced at $29.99 overseas, excluding shipping (the author has become $24.99 before the deadline), the domestic similar price is 159 yuan (about 23 US dollars), once it encounters a big promotion, this product will basically not have a higher profit margin than the domestic one overseas, but at the same time it needs to bear high logistics costs. However, on the software side, there is a big difference between domestic and overseas, and the article begins by mentioning that "YI Home" earned about $400,000 at the end of October, while the domestic version of the App", "Little Ant Smart Camera", only had $30,000 in October. Domestic consumers and users in mature overseas markets still have very different payment habits in service subscriptions.
The cost of the "YI Home" software part mainly comes from cloud storage. According to the official website of Xiao ant Technology, its cloud storage cooperation enterprise is Alibaba Cloud, that is to say, the equipment procurement cost, site rental fee, electricity cost, personnel cost and bandwidth rental cost required to provide cloud services do not need to be considered by Xiao Ant Technology, Xiao Ant Technology only needs to choose Alibaba Cloud's billing method, and then distribute the purchased cloud storage space to App subscribers, which is equivalent to a dealer. The author is not sure which cloud service Xiaoant uses in Alibaba Cloud, but it can be determined that the "wholesale-re-retail" model must have a certain profit margin.
Alibaba Cloud Storage Space is partially charged
The small ant, which does not have much profit margin in hardware, runs with this smart camera to infiltrate overseas brands, but software revenue generation makes this behavior a not loss-making transaction.
Now the small ants may have entered a new stage of going to sea
At this point in time, seeing the income of "YI Home", we went to observe the small ants and found that the brand has already reached another stage of going to sea.
The cost-effective product of 29.9 US dollars mentioned earlier is a stage for small ants to expand the consumer group and understand users on a broad basis. Before 2018, Xiaoant also launched products with different usage scenarios such as wall-mounted cameras, with a higher price than $29.99 and improved performance, but it is still a cost-effective route. The change came in 2018, when Xiaoant Technology established a sub-brand Kami.
Note: The above table only lists the YI products sold in the Amazon channel, and also provides more performance-segmented products on the brand independent site.
Kami, like YI, is a smart camera brand, but the price point is significantly higher. According to the author's observation, Kami takes the "ultimate single product" route, and provides users with more services in the software section, and the use scenarios of the product are more targeted.
Unlike the development path of YI for a variety of home smart cameras, Kami currently has only 6 products, namely home cameras, outdoor cameras, outdoor wireless cameras, mini cameras, children's smart monitors and smart doorbell cameras, with a unit price of up to $100, which is significantly layered in price compared to YI. After obtaining a certain brand recognition through low-cost products, appropriately increase the profit margin of the hardware. At this point, brand tone and software performance are important elements for consumers to accept this part of the premium.
Kami products are further subdivided according to the use scenarios and applicable populations, and the software part takes the KamiBaby smart children's camera as an example, and the products add functions such as baby crying awareness, sleep quality monitoring, temperature and humidity measurement. Now the Kami Home App has also begun to contribute revenue, of course, judging from the user reviews, there are still many problems to be solved.
On Kami's official website, the brand also provides security system services and user forums, the former is mainly to collect the user's family data, accurate location and medical history, in the camera detects an emergency to respond faster, the latter is the user on the after-sales service and use of the space to communicate. If the image of YI to the user is a smart camera brand, then Kami's image is closer to the brand that provides smart home solutions.
In addition, Xiaoant Technology has been developing AI-based IoT toB business with Kami as the origin.
The overseas intelligent monitoring market is developing rapidly, but there are also many competitions
Xiaoant Technology is a brand that we know through the list of smart cameras, and the author found through the query of Amazon's best-seller list that there are many brands in this field, including other brands that have gone overseas.
The brands at the top of Amazon's best-selling list generally do not change much, the author queried the Security Monitors & Displays best-selling list where the Amazon US Station Xiaoant Technology explosive camera is located, as well as the Video Surveillance Equipment, Camera & Photo list with similar home camera products. The brands that overlap with Xiaoant Technology products are listed in the following table (Note: Some products may be temporarily out of stock during the overseas promotion period, and some brands may be missed and not included).
These brands are not only making cameras with security functions used indoors, but also door-mounted surveillance cameras, doorbell video two-in-one cameras, and care-oriented cameras for a group of people such as pets and children. From the degree of product segmentation, the number of brands and other phenomena, it can be judged that the market for smart cameras may not be small.
The report shows that the global smart home security camera market size of 3.71 billion US dollars in 2019 is expected to grow at a compound annual growth rate of 15.7% from 2020 to 2027, not only cameras, lights, door locks and other smart home devices are rising demand.
The environment in which European and American families live is still very different from that in China. In Chinese cities, most people live in "residential areas", several buildings are surrounded by walls, residents will have a concept of "community gate", and there will be "gatehouses" at the gate, which plays a role in screening people entering and leaving and maintaining law and order.
Europe and the United States do not have the concept of "community", if in the area with a small population density, people will have the concept of "block", these families are usually a family, the house is equipped with a courtyard, garage, multiple rooms, workers drive commuting; if it is in a densely populated city, although there are high-rise apartments, but the apartment door is generally on the street side.
Grand View Research report shows that as of April 21, 2020, there will be a burglary every 26 seconds in the United States, of which 51% occur during the day, and in addition, there are more and more 1 or 2-person households in North America, which are the reasons why the demand for indoor smart cameras in European and American households is increasing.
Looking at it extensively, the brands with good sales of home cameras in the above table are expanding to other categories of smart homes. Specifically, although Wyze is an American brand, a large part of the brand team composition is Chinese, and Wyze's categories are not only in the security smart home, but also expanded to the categories of vacuum cleaners and sweeping robots on the home cleaning track, which are larger and have a higher hardware technology threshold. The development path of Wyze allows me to see another Anker, which continues to cultivate in the life home track, the difference is that the products that Wyze is currently making are still under the brand name of Wyze, and no new brands have been created.
Ring and Blink have been acquired by Amazon, 2 brands are deeply engaged in the category of home intelligent security, and constantly iterate the performance of various security products, from the product pricing point of view, Ring and Blink are respectively targeted at people with high spending power and general population.
HelloBaby and Nooie are 2 overseas brands, of which HelloBaby from the needs of infants and young children, in the child monitor this sub-category of research, iterated out a number of versions, but also launched for the baby fetal heart, hair clipper and other categories. Nooie is based on camera technology to develop a variety of products using cameras, its company Ape Man Technology and Apeman and Teckin 2 brands, the company through Teckin touched the smart home field. The products and development paths that Ape Man Technology is doing are the most similar to Xiao Ant Technology in the author's opinion.
epilogue:
Xiao Ant Technology, founded in 2014, was founded at the beginning of the brand under the Xiaomi ecological chain, and it is a routine operation to take the route of hardware cost performance to enter the market. But overseas, smart camera products obviously face a greater demand gap because of the difference in living environment, and also because overseas users spend on software subscriptions, they have obtained higher income.
On this basis to do Kami, Beluga Sea is currently unable to judge its market acceptance and achievements, but when the market is still in the incremental stage, to expand the direction of more segmentation, establish brand recognition, and be more "restrained" in website and App design and pay attention to user feedback, are some points worth learning.
Make an irresponsible prediction, maybe in the future, we will see more hardware-related apps in the top 30 list of non-game overseas revenue.