Printers, learning machines, desk lamps, flashcards: online education giants, rushing to the new battlefield of intelligent hardware

Per reporter: Li Lei Per editor: Xiao Ruidong

It has been 277 days since the official implementation of the "double reduction" policy, and former online education companies have quietly implemented business transformation.

On April 20, Homework Gang announced the launch of the Meow Machine Learning Printer F1, officially entering the printer market. At a time when many people's impression of this company is still stuck in the online education industry giant, Homework Gang has intensively released a number of smart hardware products, including electronic flashcards, smart writing pens, etc. The launch of learning printer products has added a new fulcrum to its education hardware business.

Not only homework help, since the second half of last year, whether it is the former online education giant or various large factories, they have made many layouts in the field of education hardware. A new "battlefield" has been formed, can it support the transformation dream of the giants?

Jobs help upgrade hardware business

Since the end of last year, homework help has been frequently operating on educational hardware. First launched a number of products such as learning pens and learning lights, not long ago, the 100-yuan intelligent hardware meow machine electronic flashcard was launched, cutting into the word learning market. Just when the industry was rumored to be establishing a learning printer division within the homework gang, the company recently announced the launch of the meow machine learning printer F1, officially entering the printer market.

Among the players who are committed to educating hardware, Homework Gang is the first to announce its entry into the printer market, but this is not actually a product that turned out. As early as 2017, homework help launched the wrong question printer meow machine P1 with wrong question finishing and printing as the main selling point, and has now listed six models of products. The introduction of the learning printer is actually the meow meow machine that has completed the upgrade from wrong question printing to learning printing.

In fact, when deciding which hardware product to start with, which specific business, each company's play and choice is different, which of course is determined by the genes of the team and the product. In the face of traditional printer giants, the homework gang also knows very well where its advantages are.

The company's relevant business leaders introduced to the "Daily Economic News" that the printed business line has always existed within the operation gang, the entire hardware business includes product research and development, supply chain, marketing, customer service, sales, etc., more than 80% of the core team is from the first-line manufacturers, and over the years in the supply chain capabilities and partners have also had a relatively deep accumulation.

"Our biggest feature is the data advantage, content advantage, and insight and understanding of users accumulated over the years." The above-mentioned person in charge said.

Behind these new businesses, a big ship of online education is changing course.

Players poured into capital to be calm

Fifi's daughter is in the fourth grade of elementary school this year. When her daughter was a child, Fifi bought her a story machine, a reading machine, and a smart watch, and as the child grew up, she bought a learning machine, a smart tablet, and a printer with wrong questions. Thousands of dollars of products, she bought it without mercy. After the official implementation of the "double reduction" policy, Fifi found that the demand for education hardware seems to be greater, and recently is choosing a smart learning lamp for her daughter.

In the view of Yao Yufei, a partner of Duo Whale Capital, the market that was vacant after the "double reduction" and the competitive awareness of many parents have given the space and soil for educational intelligent hardware products, which is also the primary reason for the rapid development of this market.

Secondly, although all communication media are electronic, the Ministry of Education's "five managements" require the strengthening of the management of primary and secondary school students' mobile phones, and alternative products such as learning lamps have emerged.

Third, the leading level of domestic education technology is also a necessary condition to support the development of intelligent hardware products, and different types of educational intelligent hardware products have been produced under the integration of a number of technologies.

In addition, in the past few years, there have been some explosive education hardware products to achieve good revenue growth, for a large number of education enterprises that need financing and pan-education enterprises with certain growth pressure is a good direction, after the "double reduction" many teaching institutions themselves also need certain alternative products and new directions.

Another Shanghai VC source also told every reporter that the "double reduction" has brought a very big impact to the off-campus training industry, but the demand of parents for quality education has not decreased, and education hardware products have ushered in a wave of development opportunities.

However, the person admitted that the current track is still in a relatively rudimentary, highly dispersed state, and most of the investment institutions are also in a wait-and-see state. According to the "2022 China Education Intelligent Hardware Industry Report" (hereinafter referred to as the "Report") released by the Duo Whale Education Research Institute in February this year, a total of 44 financings occurred in the education intelligent hardware market in 2021, and the number of financing and the overall scale of financing have shrunk relative to 2020, and they tend to be calm.

The new "battlefield" of education hardware

Although capital is still cautious about education smart hardware, it is obviously difficult to stop the enthusiasm of players.

It's not just the homework help that's working hard. Just a month ago, Good Future announced the latest transformation progress and entered the second stage of entrepreneurship, and non-education and training businesses such as technology services, intelligent hardware and life sciences will be its future key businesses. At the same time, the former leading online education company has set up a number of subsidiaries, including software development, technical services, intelligent hardware and other fields.

Another giant ape tutoring also began to act last year, and its multiple education brands intensively launched educational intelligent hardware, and the product forms are also very diverse, including Zebra's logical thinking learning machine, AI finger reading machine, A4 printer and intelligent exercise book for small ape search questions.

In the eyes of many industry insiders, in the past, education hardware was usually regarded as a low-cost traffic entrance for online education companies. At that time, some early enterprises had already obtained dividends by laying out intelligent hardware, such as the intelligent learning lights launched by ByteDance's vigorous education, and the wrong printer meow machine of the homework gang, which became representative products in their respective segments.

After the "double reduction" policy landed, the role of hardware products has been more than this, but shoulders the task of transforming the "vanguard" of various online education giants. The person in charge of the above-mentioned operation help related business also said that the future hardware business will have more room for imagination.

In addition to education enterprises, there are also traditional hardware manufacturers represented by BBK and Shushulang in this market, as well as internet manufacturers represented by ByteDance and Ali. With the rapid development of the education hardware industry and the diversification of products, the competition between companies is also becoming increasingly fierce.

Quality content may be key

Is education hardware a lucrative business? Maybe let's look at a few data first.

According to iFLYTEK's 2021 annual report, among its main business, the highest gross profit margin is education products and services, which can reach 51.66%, and the proportion of the main business continues to increase. In the e-commerce "618" activity that year, the sales of learning products represented by iFLYTEK AI learning machines increased by 706% year-on-year. The increase in revenue from education products and services has played an important role in boosting the company's overall revenue.

The financial report data of another listed company, NetEase Youdao, also shows that intelligent learning hardware has become a major focus of the company's business transformation at this stage. In the fourth quarter of 2021, net income from NetEase Youdao's smart hardware increased by 33.9% year-on-year to 318 million yuan. Smart hardware gross margin fell to 30.8% from 39.5% in the year-ago quarter, primarily due to the promotion of the previous generation of low-margin products.

Yao Yufei analyzed that hardware products have a decreasing effect, and the lower the cost when the shipment is larger. "Therefore, through the agency channel direct sales or e-commerce sales, SMS platform sales and other models, in fact, but also let some companies have a hit, resulting in relatively lucrative profits." As far as I know, the gross profit margin is generally between 50% and 70%. "And this gross profit margin is already comparable to the level of K12 products of many online education companies."

Because of this, whether from the perspective of future business direction or profit margins, education hardware is a good choice.

As for whether smart hardware can carry the banner of the transformation of online education giants, Yao Yufei frankly said that it is too early to talk about this issue. "It's definitely hard to transform, but it's one of the ways to do it, and you can see that everyone is actively exploring it at the moment."

So the question arises: Who will be the fastest runner in this increasingly crowded track?

The "2022 China Education Intelligent Hardware Industry Report" pointed out that K12 education intelligent hardware is a business ecology of content, software and hardware collaboration. Under the business logic of mobile Internet and Internet of Things, the profit point of education intelligent hardware gradually extends from the hardware itself to supporting content and value-added services.

Some senior industry insiders also said that hardware is essentially a channel business, brand differences are not large, and the core problem of hardware products is still content and user stickiness. In other words, having quality content may be the key to standing out in the future.