Retreating Hikvision, Dahua, the underrated "SMB"

Author | Lee Creek

Edit | Yu fast

The early wisdom of the Internet of Things factories, all the way to the top of the song, eager to achieve capillaries. Now when you look closely, there seems to be a difference:

They are drawing the border and quietly retreating.

At the product level, the attributes of lightweight and platformization tend to appear.

Haikang's AI open platform, smart city digital intelligence base, Dahua's "one system, two platforms", Yunrui, Juling AI open platform, they have worked hard and unconsciously established the software platform base capability.

At the strategic level, abandon active integration, retreat behind the scenes, and cultivate ecology.

Dahua once told AI Nuggets that Dahua is very restrained about customized projects and will retreat in the future.

"I am determined not to take the initiative to integrate, and the partners will do it and cultivate the partners."

Hikvision also said that SMBG will do more work around service channel partners and engineering partners, connect online and offline, let practitioners in the ecosystem work more professionally and more standardizedly, and also use the construction and management of the Internet background to help them improve their operational efficiency.

They provide products and solutions in an "integrated" way, benefiting partners who assume the role of total integrator or engineering provider to ensure a balance in the ecological chain.

On the surface, they are still everywhere, but why are they no longer soaring?

Retreat

First of all, we must understand that retreat is not a step backwards, but the inevitable transformation of the wisdom of the Internet of Things, which is to benefit others more in order to achieve long-term win-win results.

From the perspective of external demand, in recent years, the factions of the B-side players entering the game have different, and the paths have their own advantages, but there is a general consensus: the ToB business is complex and extremely fragmented.

In the era of intelligence, ToB services are more fragmented, more differentiated, faster, and more divergent.

For example, in the field of transportation, thousands of algorithms may be born in the future; for example, in the field of underground coal mines, there are many application scenarios, fine demand, and many production lines, and the whole line is very differentiated.

On the internal supply side, no manufacturer can solve the problems of each link in a big package, and the scene cannot be completely covered by any one subject.

A number of experts in the industry told AI Nuggets that all kinds of customization around customer needs, including the customization of hardware, software, data, and algorithms, is a long-term requirement of the industry, and may even be an essential feature.

These enterprises that have entered the B-end in a big way have no more line coverage, products are complete, and the scenes are wide.

To hold the B-end business with large differentiation, fine granularity and large customization means a lot of human, material and financial investment.

There's a core question they need to answer: the contradiction of cost.

Without the underlying platform capabilities and economies of scale, marginal cost inputs will spiral out of control.

Hikvision once mentioned that Hikvision focuses on the ability to perceive and data, from the perspective of competition, whether the final plan is stand-up, or it depends on whether there is enough experience accumulation and whether it can produce economies of scale.

Finding relatively common solutions and relatively scale-effective demand in the fragmented market is the responsibility and obligation of industry giants.

In fact, for themselves, as group-level enterprises, whether it is the scale of employees, product scale, business scale, to compete with marginal costs, the underlying platform support, ecological cooperation is an inevitable choice.

Taking Hikvision as an example, the number of employees has grown from 28 to more than 40,000 today, and the length of the product line is staggering: from front-end cameras, intermediate transmission, back-end video recorders, to central storage, servers, from software to hardware, from screen displays to network cables.

A staggering number, Hikvision has nearly 30,000 products in the SKU.

Nearly 30,000 SKUs, fragmented scenes, thousands of solutions, and the cost of industry fragmentation need to be filled by scale, and a standardized platform is needed to improve the module reuse rate, so as to reduce marginal costs.

At the business level, their "retreat" is more for small and medium-sized enterprises.

The industry's leading enterprises are very representative in terms of degree of customization and business complexity, etc., with sufficient funds and more urgent transformation.

Hikvision once mentioned that on the issue of expanding more customers or deepening head customers, Hikvision tends to believe that the share of most industries will gradually gather to head enterprises, and the information investment of head enterprises will account for a larger proportion of their own revenue, and investment will be more concentrated.

"The proportion of projects that we directly go to Party A to bid for is really not high, and the purpose of our doing some projects is to do pilots, improve solutions, and better explore industry segments." For example, when doing ToB, pick the top 3 of a certain industry and choose one to cooperate with. Dahua Shares Bai Peilin (pseudonym) told AI Nuggets.

In other words, the digital transformation case of the industry leader is the core of Hikvision and Dahua ToB business, and ToSMB is the foundation for expanding the scale.

The experience of large enterprises is precipitated into the industry and platform, and small and medium-sized enterprises are mainly based on standardized needs, and can import industry head experience and solutions, and they can customize and deliver through ecological partners to achieve rapid response.

Partners are divided into two broad directions: first, large integrators, and second, small and medium-sized engineering parties.

Partners use the strength of Hikvision and Dahua to enhance customer satisfaction, and Hikvision and Dahua continue to expand their coverage with the help of partners.

Through the sinking of channels, we extract high-quality solutions for the common needs of end users, and promote solutions more effectively through partners.

Sinking sales personnel, technical personnel and partners are bundled, such as covering enterprises in the region together, and building a co-construction and win-win model in the overall division of labor.

In this way, sales change from passive to active, and sales promotion is more efficient and quality.

"Our own sinking core is by no means to grab business with partners, but on the one hand, to make the market more active, on the other hand, to empower partners through sinking personnel, when the partners are more capable, our coverage will be wider." Yin Jun, president of Dahua Advanced Research Institute, said.

This move is to retreat into advance, turning potential enemies into partners.

Underrated SMB

Why is the SMB service undervalued?

Previously, Hai and Da have been contracting large G city-level centralized projects, and after turning the rudder to ToB, focusing on various industry leaders.

Whenever in public, when the ToB business enjoys the treatment of the crowd, SMB is rarely the focus. However, don't underestimate the potential of the long-term corner of the SMB business.

SMB has an anachronistic effect.

According to relevant data, in 2018, safe city, intelligent transportation, and Xueliang projects accounted for 53% of China's security market, and most of the industry has been focusing on the dazzling 53% and ignoring the huge potential of 47%.

Then the Xueliang project came to an end, technologies such as AI became more and more mature, and the fragmented digital city market was surging undercurrents.

The fading security boundaries allow the remaining 47 percent to ferment at an unprecedented rate.

Communities, parks, businesses, construction sites, buildings, shops, factories, scenic spots...

Countless intelligent needs scattered in all regions and industries across the country, like babbling streams, are flowing and running through a huge mountain and river.

It is fragmented, scattered, small in individual size, small in project size, small in revenue, but has a large number and a wide range, such as a capillary-like market, with a large cumulative effect of scale, and is becoming an important weight for digital cities to take the stage.

Haikang and Dahua SMB are aimed at the lonely and nameless "small" market and long-tail market behind Xueliang and Ping'an.

SMB has an era of inclusive effect.

Looking at the common features of the first three industrial revolutions: machine labor replaced manual labor, and social productivity was greatly improved.

Now that the fourth industrial revolution is about to open the era of intelligence, machines will replace physical strength and machines will replace mental change.

Notice one key word: substitution.

What is substitution? Replace one thing with another. To achieve this, it is inseparable from "widespread and large-scale" applications.

The first three signs of the Industrial Revolution were:

The widespread use of steam engines, the wide application of electric power and internal combustion engines, and the wide application of information technology.

Therefore, to achieve true intelligence, it is the application of the whole society and the whole industry.

If big B is a digital and intelligent motor vehicle force, then small B is a vast army of non-motorized vehicles, which is flexible and ubiquitous.

SMB represents a spontaneous driving force in the market outside of national policies.

Those fragmented markets, those small scenes that have been ignored in thousands of ways, are the core elements that promote the further intelligent era, and the main force for the comprehensive landing of AI.

In addition to the wide scope and scale, there is another important reason.

As a B-end branch, SMB has the gene of platform economy in the industry characteristics.

Hikvision once mentioned that in the toB and ToG business markets, it is difficult for manufacturers to become platform-level companies, and SMMG, which positions the pan-security industry Internet, is possible to derive a small platform to play a leading role.

Li Guangyi, vice president of the ToB business research and development center of Dahua Co., Ltd., and Shi Dong, vice president of the domestic marketing center, also told AI Nuggets that the SMB side is not like the G-end package, not like the B-end technical barriers, nor like the C-end heavy personal experience, the SMB side is biased towards the ecological and business management system.

With the basic business of generalization and scenario,the technical logic of SMB is the simplest.

Once the generalized share dominates, a greenhouse with a scale effect, coupled with ecological benefits, can give birth to a platform-based economy.

The charm of the platform economy lies in the cohesion of resources, and the upstream, middle, and downstream organizations of the traditional economic chain are reorganized into a circular chain around the platform.

The platform bends the original lengthy industrial chain into a ring, and B-end users directly contact C-end users through the platform, saving all aspects of steps and improving industrial efficiency.

Hikvision and Dahua need such a platform economy model, and SMB also has this potential. So we see that they did.

In its 2019 annual report, Hikvision first described the SMB business in detail, clarified the positioning of the SMB business: industrial Internet, and launched two main line platforms of Hikvision Interconnection and Hikvision Cloud Business.

After Hikvision, in 2020, Dahua also clearly proposed the SMB strategy and launched the cloud business platform for the first time.

Behind the SMB business is an industrial product industry chain.

It is not a transactional, circulation or social Internet platform in the general cognition, in this industrial chain, it involves non-standard links such as design, construction, and acceptance.

It needs a form of non-strong business connection, so that dealers and engineering companies to open up the market, the third and fourth level agents began to sink, forming a low-cost, high-efficiency, high-quality team, Hikvision, Dahua stood behind them to provide technical, program and marketing support, so that it is a win-win way.

At the same time, although many entities in the SMB market, engineering providers, service providers and individual practitioners have fragmented coverage capabilities, the program capabilities need to be improved and updated, business development is difficult to standardize, dealers face complex and iterative product solutions, business learning pressure is high, and operation and management difficulties are high.

Hikvision and Dahua's SMB platform is precisely to take the strengths of the platform economy and make up for the shortcomings of the industrial chain.

Hikvision and Dahua, with products, projects, programs, tools, funds, operation and maintenance and after-sales needs, need three or four level dealers, security practitioners, third-party ecology and small and medium-sized enterprise users' promotion capabilities and localization advantages;

SMB market players have coverage capabilities, fast response speed, wide network of resources, service efficiency and quality, need products, need solutions, and need new profits.

When supply and demand form a closed loop, and then integrate into the cloud, to achieve the Internet front and back end of the procurement, purchase, sales, pre-sale and after-sales one-stop service, it will form our twilight industrial Internet closed loop.

The offline experience store provides users with consulting, surveying, program design, installation, after-sales, evaluation and other services, and provides dispatch, pre-sales, training, certification, cases, information and other services online. Offline experience, online purchase, open up online and offline, link consumers and service providers.

It not only integrates the work of industrial chain partners, but also has the effect of revitalizing channel stores.

There will always be a sea of stars to be seen

What is the performance of this SME business that entered the first and last?

Taking Hikvision as an example, in the first half of 2021, Hikvision SMMG's operating income was 6.174 billion yuan, which can be compared with other two major BGs, and rebounded after the epidemic, with an amazing year-on-year growth rate of 105.80%.

Hikvision once mentioned that the growth rate of SMBG business has always been the largest among the three BGs, with a compound growth rate of more than 20% in the past two years.

They should have taken this step, and they had gone the right way.

In fact, Hikvision and Dahua did not have a big B and a small B before.

SMB was born 2-3 years ago in the organizational structure adjustment, this step, from industry attributes to business attributes, not only to clarify the business context, but also to broaden the way forward.

Horizontally, security is only a sub-industry, with ToG and ToB as the main line, can move towards transportation, manufacturing, parks, factories, medical care, education and other smart IoT fields.

Vertically, we can penetrate the industrial chain, unite more links in the industrial chain, change from one to two, from two to three, to find new business opportunities and sources of income.

SMB is an important city for them to connect the vertical industrial chain and expand the horizontal business scope.

The past 10 years have been the 10 years of crazy growth of the security market. Among them, the construction of channels for the survival of the sea and the great is already strong enough.

But in fact, even if the channel sinks for many years, the double dragon head can only cover the prefectural and municipal level, and some areas to the county level, not to mention townships and villages.

The reason is not other: the segmentation scenarios in the SMB market are extremely fragmented, it is difficult to directly and efficiently cover, and the after-sales, operation and maintenance teams are fully deployed in various counties, townships and towns across the country, pushing one by one, and the cost is extremely high.

In the SMB field, it is not so much about going backwards as it is about moving forward in a different way. To quote a saying: Take a step back, maybe the sea is wide in the sky, the sea of stars. Leifeng networkLeifeng networkLeifeng network