Red and black of educational hardware

The previous education hardware was basically a circle of people, relying on the ever-changing way of playing, relying on advertising marketing and offline channel construction, to carve up this not huge track.

As online education companies enter the market, the demand for the market is being stimulated, the old forces of educational hardware are disintegrating, and the new "barbarians" are accelerating the reshuffle of the market.

Wen | You Yong

Ed. Zhou Luping

01

The game is the protagonist

In 1994, Su Yunjin, who was doing agricultural machinery business in Yongshun, Xiangxi, bought back a small bully learning machine that was popular throughout the country from the counter in the mall. Two years ago, he quit his iron rice bowl in the archives and went to the sea to go into business, and he finally had some more money on hand.

This is his gift to his son Su Hua. Su Hua had just turned 12 years old and was about to transition from primary school to junior high school. In the small city of Xiangxi, where educational resources are scarce, Jackie Chan's phrase "Jackie Chan's little bully" hit the soft hearts of countless parents.

Unlike most people who regard the learning machine as a game machine, Su Hua is smart when he is young, and after playing the game for a while, Su Hua, who feels a little tired, finds that there are programming functions in it when he looks through the instructions of Little Bully. He immediately asked his father to buy programming textbooks and taught himself on the little bully. After a year of self-study, the future founder of Kuaishou typed out the first line of code of his life on the Little Bully learning machine.

Duan Yongping, the leader of Little Bully, probably did not expect that this product that made him famous in a war would really be used for learning and even programming.

Duan Yongping was also in the system before, and after graduating from Zhejiang University, he was assigned to the Beijing Electronic Tube Factory. He went to the sea earlier than Su Hua's father, came alone from dusty Beijing to Guangdong, where beautiful children are everywhere, and ran to a small factory with an annual loss of 2 million yuan to apply for a job as a factory director. This small factory first made electrical appliances, and later made game consoles thanks to Nintendo in Japan. In the 80s of last century, the "red and white game console" released by Nintendo swept the world, but imported red and white machines are expensive, and those who can afford them are either rich or expensive.

The demand is strong, but the supply is not smooth, which leaves Duan Yongping with enough time difference. Duan Yongping organized the team to make a copycat version, the genuine copy sold more than a thousand, he only sold two or three hundred, in that era when copyright and patent awareness was still very weak, Nintendo also had no temper. In a few years, Xiaobawang, a company on the verge of bankruptcy, relied on game consoles to transform, and the company's assets reached hundreds of millions of yuan.

But if you have been adhering to the product positioning of the game console, the little bully is estimated to soon become the target of parents. Video games were tantamount to flood beasts in those days, nicknamed "electronic heroin", which belonged to the sugar-coated cannonballs of capitalism. Even around 2000, the state issued a document banning the import of games, which was not completely abolished until 2014.

Duan Yongping was very clever, he added a keyboard and learning cartridge to the original game console, used the TV as a display, and then labeled it as a computer learning machine. A game console that parents hate has become a learning machine that parents flock to. On the outer packaging of that year, the label that Little Bully put on himself was a Chinese and English computer learning machine, which allowed you to practice computer typing and never mentioned the word game. There is even a line below, which reads: Special recommendation of the National Primary and Secondary School Computer Education Research Center.

In fact, in addition to learning machines, there are later educational hardware such as repeaters, electronic dictionaries, and reading pens, all of which have entertainment and even game attributes. In that era of lack of entertainment, all electronic products had the potential to become game consoles.

The computer learning machine directly became a red and white game console, and "Contra" and "Super Mario" became popular. The original intention of the repeater was to practice spoken English, but the result was basically taken to listen to the song, and the young users became fans of Lin Junjie and Jay Chou. Popular electronic dictionaries such as Wenquxing and Haoji Star also have some simple games built-in.

Anyone who has used Wenquxing should know that there is a role-playing game called "Altar of Heroes". The roughness of this game is unimaginable to people at the moment, it has no cool graphics, no manipulation, and even all text to play the game. But at the time, it was a mess, and because it had a learning function, it could be legitimately brought to the classroom by students.

As one of Wenquxing's competitors, backgammon is also this routine. Games such as "Voldemort", "Magic Tower" and "Three Kingdoms Overlord" were popular games in the BBK electronic dictionary. In the end, it was found that these electronic dictionaries were remembered not for how powerful they were or how much they improved their academic performance, but for how fun the games were.

Manufacturers also know that sales have two sets of words, and parents are all around learning and improving grades. In the atmosphere of "no matter how poor you are, you can't be poor in education", such a reason is irrefutable. In the face of children, and attracted by some games carried inside, after all, although it is parents who pay, the word of mouth of children is the key to the durability of a product.

At that time, "Family Electronics" magazine said very bluntly: some parents mistakenly believed in the one-sided propaganda on the advertisement, and regarded the purchase of computer learning machines as an important content of family education, but they did not know that computer learning machines were nothing more than an improvement of the original game console, and its main function was still an entertainment tool.

02

Small business in small circles

For more than 20 years, the circle of educational hardware has actually been small. Little Bully is a veritable Whampoa Military Academy. In addition to the most well-known Duan Yongping, Huang Yihe of BBK Education Group is Duan Yongping's colleague, and Jin Zhijiang is Duan Yongping's subordinate. Qin Shuguang of Shulang was previously the head of the planning and investigation department of the little bully. Zhang Yunan, who founded Haoji Star with Du Guoying, is the person in charge of production of Xiaobawang.

An exception is Tang Guo, who is a senior student in the physics department of Tsinghua University, and the predecessor of the Youxue school is Noah Zhou. It is not difficult to find that it is basically a small circle of people playing, and the rivers and lakes are not the fighting and killing that everyone imagines.

Unfortunately, the "endless fun" little bully itself did not develop well, tossed for many years and did not get rid of the label of the early years, and finally filed for bankruptcy in 2020. However, the little bully can also be regarded as a deducing of what is called gathering is a fire, scattering the sky full of stars.

The early methods and routines of these companies are very similar, basically the same as the little bully of the year - engage in marketing and fight channels, while opening up the marketing business road through bombardment advertising, while fully rolling out offline channels, and densely deploying outlets in shopping malls, supermarkets, bookstores and so on.

Duan Yongping was the first group of people to eat traffic dividends. As early as the 90s of last century, it spent 400,000 yuan to hold a prize competition on CCTV, and the slogan shouted was "have a little bully, play a 10,000 yuan household", and for a while the little bully was famous and sales were gratifying.

From "Jackie Chan, Little Bully", to "Learn the Sea of Noah Boat", and then to "Where will not point where". Behind these slogans that many people remember are huge marketing and advertising investments. From CCTV to major provincial satellite TV, from TV shopping to offline billboards, it is basically a full range of coverage by sea, land and air.

Du Guoying even used the marketing methods of health care products that year, and through the start-up capital of 1 million yuan, Haoji Star quickly achieved sales of 2.5 billion yuan in two years.

At the beginning, it was the marketing model of newspaper + bookstore counter, and the cooperation with Xinhua Bookstore brought traffic and was easier to get the trust of parents. Later, with Acorn International Cooperation, a complete marketing routine was formed: newspaper deep persuasion + satellite TV direct sales + CCTV brand pull, three levels of linkage.

As early as 2004, a person named "Cheng Mingjun" was picked out by the media. He frequently appeared in the advertisements of Hao Kee Star, showing up to tell about his various dreams after using Hao Kee Star. The media found that Cheng Mingjun was from Sichuan for a while, Ningbo for a while, and Shanghainese the next. Wherever Hao Ji Xing's advertisement hits, he is where he is. The theme of the advertisement is the same: "high school dream, college dream, job search dream, dream of going abroad——— English, crush how many hopes to become a dragon dream".

This scene is not unfamiliar, a few years ago, there was also an ancestral old Chinese medicine doctor named Liu Hongbin, with an amiable old Chinese medicine doctor face, appeared in various David vision, one will be a Miao doctor family, one will be a Tibetan medicine heir, the other will become a Mongolian medical expert, all kinds of identities switch freely, give various drugs a platform, and finally be counterfeited by netizens. It has to be said that in education, health and other tracks, creating anxiety and setting up successful models is often the simplest and most effective marketing method.

In that era of information asymmetry, parents who want to become a dragon basically do not look at the curative effect, but only look at advertisements. This was also determined by the characteristics of educational electronic products at that time. The threshold for these products is very low, the fish and dragons are mixed, and brand and advertising have become the only choice for consumers.

In addition to advertising and marketing, another key to the competition at that time was channel construction. In the era of underdeveloped e-commerce, high-quality offline channels are very strong, even now.

More than 85% of Yoshulang's products are sold through offline dealers, and the top dealers are also boss relatives, a bit similar to the OV of the mobile phone circle, and manufacturers and channels hold shares in each other. This kind of interest relationship allows the channel to be very firmly tied to the manufacturer.

Therefore, educational electronic products have been criticized for a long time as high prices and low matches, labeled as profiteering. For example, the cost price of E90 in Haojixing that year was 220 yuan, the retail price was 1180 yuan, and there were three-level dealers in provinces, cities and counties in the middle, and each layer had huge profits.

However, despite the excitement and overwhelming advertising, the business of education hardware is actually not large, the sales volume of each sub-category is stable at millions of units per year, and the overall market size is also about 10 billion, and it will just exceed 50 billion by 2023. And for a long time, it was basically a competition between BBK, Yoshulang, Haoji Xing, and Youxue.

In contrast, the size of the entire education and training market is as high as one trillion, and the smart home market now has a scale of 700 billion yuan.

03

A new pattern under double minus

If it were not for the "double reduction", many companies would not take education hardware as the main direction of attack.

Popular online education companies such as Ape Tutoring, Homework Help, and Gaotu have received a large amount of venture capital in previous years, and in 2020 alone, the financing amount of China's K12 online education industry in the primary market exceeded 50 billion yuan. The number of employees in these companies is generally 30,000 or 40,000 at its peak.

Hot money poured in, and business wars were raging. At that time, the online education war was not inferior to the group buying war, taxi war, and takeaway war of that year. In the craziest period, ape tutoring could burn 30 million yuan in advertising fees a day on the information flow platform. The elevator room is full of advertisements for online education companies, and Jiang Nanchun of Focus Media can laugh out loud hiding under the covers.

The market demand for educational hardware has been tepid for so many years, and the best-selling categories are in the millions every year. Moreover, the hardware and the education training and platform, the logic is not the same, the hardware research and development cycle is long, the risk is high, and the profit is thin. These online education platforms have raised so much money that hardware alone cannot support such high valuations.

But the biggest variable appeared in July 2021, the "double reduction" policy landed, the business logic has undergone major changes, and the space on which these online education and training companies rely has basically disappeared.

Double minus has a big impact on several leading online education companies. New Oriental took all the brand new desks and chairs for charity, and Yu Minhong choked up for a while. Gao Tu originally had more than a dozen offices in Beijing, but now only one remains, and founder Chen Xiangdong has grayed most of his hair in a year.

It's hard to pass, it's hard to pass. Everyone began to cross the sea in search of a second growth curve.

At that time, there were basically three routes: the first was to transform into quality education, vocational education and adult education, and this track switch logically made sense, after all, it was still in the teaching and training track, typical is the high road; The second is to engage in live broadcast and bring goods, these teachers are high-quality assets, can naturally teach can also sell goods, New Oriental Online is the most successful one, good future has also made attempts; The third way is to do educational hardware, which is also the most common transformation route.

The K12 education and training market is gone, but parents' demand for high-quality educational resources is still there. Educational hardware that was not good at or valued before became the hope of the whole village.

In the words of Lu Yun, vice president of Tencent Education, "For the transformed K12 education enterprise, whether this business is a long-term business or not, it is a good business in the short term." "Moreover, although the underlying logic of doing hardware and doing training are different, they both have one thing in common - easy to monetize, training is prepayment, and C-end hardware is also sold to collect one."

Market demand has also begun to stimulate, and driven by the demand for online classes superimposed on the "double reduction" policy, the sales of learning tablets have increased tenfold, and major brands have been in tight supply. At that time, in order to solve the problem of cutting off the supply of dictionary pen chips, several executives flew to Shenzhen and drank three times a day with the supplier, just to make the other party believe that Youdao "will not die, will not bounce tickets".

In fact, it is not too late for online education platforms to start doing hardware, and they have been involved in it around 2017, but they are basically playing tickets, and they will stop at tasting. Chen Xiangdong said very honestly, "Gaotu has been making digital products for the past seven or eight years, but because the online live class business is too big and obscured, and now the main track cannot be done, so it has to invest resources here." ”

Homework help also made hardware around 2017, when the Meow Wrong Question Printer was acquired, which is a thermal printer with a body similar to Polaroid, which is very popular with students. But after all, it is only a niche category, and it is difficult to support the hardware ambitions of the job gang. The learning machine of the homework gang is also officially established after the double reduction.

Today, Homework Gang is also the one that has launched the most hardware categories among these companies. From printers, flashcards, children's watches, smart desks and chairs to smart writing pens, learning tablets, smart learning lights, children's eye protection devices, etc., we will attack in an all-round way.

Ape Counseling has also made many attempts, including investing in down jackets, coffee shops and confinement centers, and making cultural and creative ice cream. Before the launch of the learning training machine in 2023, Zebra, a children's brand under Ape Tutoring, also made printers, finger readers, and Chinese pinyin recognition readers, which are categories with very low unit prices and simple functions. Ape Intelligence, a subsidiary of Ape Tutoring, has also made intelligent exercise books.

What really makes a sound in the education hardware track is iFLYTEK, Baidu Xiaodu and NetEase Youdao, which previously had no K12 online education baggage.

iFLYTEK is one of the earliest in it, iFLYTEK started with voice technology, the previous education business was mainly To B and To G, and in 2016 began to make translation machines for business people. Later, he entered the learning tablet. Today, iFLYTEK's education business has become the company's fastest growing business segment.

Baidu's approach to hardware has always been relatively clear: first seize the market at a low price, and then consider the subsequent user stratification or commercial monetization. In the words of Li Yanhong, "If you sell too much, you can't afford to change it." "In the past, selling Xiaodu smart speakers was like this, and later Xiaodu's smart screen at home was also this strategy, and Xiaodu learning tablet still continued this strategy.

It is precisely by relying on the price advantage that Xiaodu entered the learning tablet in 2021, and has achieved the first place in the shipment volume of learning tablet in the first half of 2023.

NetEase Youdao belongs to Seon lost horses. Youdao also wanted to get a cup of K12 live class soup a few years ago, but whether it was doing one-on-one or doing large classes, Youdao was not in the first camp. In 2020, only one-third of the long-term paying students of Youdao large classes were ape tutoring and homework help. Ding Lei, who picks the door, has never had the habit of spending money lavishly, and other companies burn capital money, but Youdao basically spends NetEase's money.

And some of Youdao's hardware had already achieved small results at that time. Youdao's pioneering dictionary pen category launched its first generation in 2017. When the second generation product was launched two years later, Youdao Dictionary Pen's revenue on hardware quickly surpassed Youdao Dictionary's advertising revenue, becoming the second largest revenue outside of courses.

In the past, Ding Lei had to sell his Weiyang pork wherever he went, and later Ding Lei's favorite became Youdao dictionary pen. In 2019, Youdao was listed in the United States, and Ding Lei, who was in a good mood, announced that he would give away Youdao dictionary pens for free to English teachers across the country. A month later, Ding Lei returned to his alma mater, Zhejiang Fenghua Middle School, to attend the new campus move-in ceremony, and his alma mater was still waiting for him to donate some money, so he announced that he would send a dictionary pen to each of the teachers and students of the school.

This is Ding Lei's usual style, face must be given, but the loss can not eat more. Therefore, there is a way that has always been stable, but the impact is the least when the double is reduced. In 2021, Youdao's total revenue increased by 58.9% year-on-year, while the year-on-year growth rate of smart hardware reached 81.6%.

Of course, unlike the homogeneous competition more than a decade ago, each company is now developing new learning categories to differentiate the competition. In addition to the learning machine that is basically being done, Youdao's star products are dictionary pens, homework helps have printers and AI learning tables, ape tutoring is learning machines, ByteDance and Good Future have made AI learning lights, and Xiaodu even made learning mobile phones.

In 2020, BBK, Youxue and Yoshulang can account for half of the learning tablet market, but with the entry of these new forces, the original education hardware pattern is being broken. In the first five months of 2023, the ranking of learning machine share on JD.com's e-commerce platform is Xiaodu, iFLYTEK, Haojixing and BBK. With the entry of brands such as ape tutoring and homework help, the battle situation is still undecided.

04

The giant war in the age of AI

The outside world has been criticized that education hardware is low and expensive. Compared with ordinary tablets, the configuration of student tablets is often one or two generations behind, but the price is far ahead.

In fact, ordinary tablets have many commercial monetization paths, in addition to the hardware itself, you can also have built-in apps, advertising and Internet services can make money, and educational hardware is mainly learning, using a closed system, which is equivalent to selling hardware at the same time, but also selling the courses inside to students at one time. Even before, many companies bought courses and gave hardware.

To a certain extent, educational hardware does not sell hardware, but the resources inside. As a result, content has become a very central part of consumers' measurement of educational hardware. Good Future is a very typical example, in February this year, Good Future officially released the first learning machine, which is much later than several others, but still sells well. One of the keys is that Hao Future has added learning content, learning methods and learning services to the hardware. With the reputation accumulated in the offline teaching and training market that year, many parents of chicken dolls recognize this signboard, especially in the mathematics training that started in the future.

Back then, electronic dictionary manufacturers often faced the dilemma of being sued by textbook companies and publishing houses. Among them, Beijing Renai Education Research Institute alone has fought more than 100 lawsuits with learning machine manufacturers such as Haojixing. In July 2006 alone, the Beijing Intermediate People's Court accepted more than 60 cases of electronic dictionary infringement. Anhui Lujiang Consumer Association issued Warning No. 1 to remind consumers to pay attention to the piracy and asynchronization of learning machines.

Compared with traditional education hardware manufacturers, today's online education companies not only have strong financial resources, spend a lot of money to buy content, major publishing houses are willing to cooperate with them, and online education companies themselves also have deep content accumulation.

More difficult days are still to come, as the educational hardware itself does not have much room for games, now everyone has played the label of AI and even large models, emphasizing precision learning and personalized learning, and has entered the stage of real learning effects.

This is also the direction advocated by online education platforms, which are not only abundant in funds, but also accumulate a large number of users and data, which lays the foundation for the application of AI and large models.

Youdao launched the "Ziyue" large model and developed six application scenarios based on this. Hao Wei has developed the mathematical large model MathGPT, which takes the problem-solving and lecture algorithms in the field of mathematics as the core. iFLYTEK has a large model of Spark, and Xiaodu has the blessing of Baidu's Wen Xin big model.

In front of the large model, what Ebbinghaus forgetting curve, what five-dimensional memory method, it seems somewhat primitive. The premise of accurate learning is to fully understand and analyze the student's situation, and then recommend targeted content, and the large model has natural advantages in oral practice, composition correction, interactive lectures, etc., which makes up for the embarrassment that the intelligent education hardware is not intelligent enough.

The upgrading of competitive means has made traditional education hardware manufacturers with little R&D investment every year more uncomfortable. Yoshulang and Youxue have already shown signs of falling behind. These two companies basically rely on learning tablets in a single category and are promoted by strong channels. In the first half of 2023, Yoshulang achieved revenue of 126 million yuan, a year-on-year decrease of 51.5%. The market share of Youxue and BBK has also declined year after year.

In fact, Shulang has made many attempts, including student mobile phones, electronic shopping malls, etc., but after tossing around, he has not succeeded. Later, I felt that I should focus on familiar areas of education, from recorded classes to popular double-teacher live classes. However, compared with other online education platforms with deep pockets, the little money earned by Shulang on hardware cannot withstand the burning speed of online education. With the landing of the double reduction policy, Yoshulang's online education business also had to be abandoned.

The education hardware market has maintained a high growth rate in recent years, and the "Personal Consumer Education Intelligent Hardware Development Report" released by the Internet Society of China shows that the market size of personal consumer education intelligent hardware in the mainland will reach 50 billion yuan this year, and the compound annual growth rate from 2019 to 2026 will reach 15.14%.

What used to be a small fight has now evolved into a contest of comprehensive strength. For the old education hardware manufacturers, the strength of advertising and marketing is not as good as that of Internet manufacturers with deep pockets, and the barriers of channels are also smoothed out little by little with the enrichment of sales channels. This group of "barbarians" in online education will bring about a big reshuffle in the competitive landscape.