On January 9, 2017, the first Monday after the end of CES, the NASDAQ index hit a record high in the case of the Dow and S&P. Is this the starting point for a new round of global technology companies? Still the culmination of this round of rapid development? It deserves everyone's attention. Huaxing Wanbang discussed the commercial nature of the technology industry with everyone based on the release of domestic ICT manufacturers around 2017.
On January 9, 2017, on the first Monday after the end of CES, the NASDAQ index hit a record high in the case of the Dow and S&P down. At the same time, there were a lot of major activities and releases in the domestic ICT industry around 2017. It has attracted the attention of both inside and outside the industry. These are all indicating the development direction of the ICT industry in 2017.
Among these activities, one of the most frequently disseminated and forwarded content is the “Friends of Time†speech by Mr. Luo Zhenyu, a speech that reveals the five major trends in 2017, the first in the opening. The trend is that time will become the ultimate battlefield for business. Inspired by this New Year's speech and recent industry trends, Huaxing Wanbang Management Consulting also came to talk with you about the future trend of the ICT industry.
In the long-term direct participation and in-depth observation of the Internet industry, Mr. Luo put the time that has been widely used in traditional industries as the ultimate battlefield of business in his multi-year speech, indicating that the ICT industry such as the Internet is gradually reducing its demographic dividend. In the case, it is returning to the commercial essence. So, what are the aspects of business that deserve the attention of the ICT industry? Huaxing Wanbang believes that there are four important aspects worthy of attention: profit targets, competitive methods, customer discovery and industry cycles.
Through the integration of information and communication technology and industrial development trends, Huaxing Wanbang has initially summarized several important factors related to the above four aspects, which may be worthy of attention in the future technology industry. These include: the goal of innovation is to create higher gross profit and A larger market to achieve better profitability, comprehensive convenience will become a key means of competition, intelligence will bring new white box, and capital accelerates the formation of the industry cycle. Below we make a simple analysis:
First, innovation is for higher gross profit marginWhether it is a promising or innovative technology business, the ultimate goal of business operations is profitability. The prerequisite for better profitability is higher gross margins or the ability to create new market space. Maori is the foundation for a business or a business to develop, so many multinational companies run by professional CEOs will sell the business immediately after a business gross margin is lower than its threshold. Nowadays, the operating costs of ICT companies are getting higher and higher, which has led to the continuous improvement of the gross profit threshold of various industries, prompting the industry to continuously obtain higher gross profit margins for innovation and new business.
Let's take a look at Huawei's latest assessment requirements for the consumer products business. Yu Chengdong, CEO of Huawei's consumer business, admits an open secret that the Group's goal of assessing Huawei's consumer business from 2017 is no longer to pursue development scale, but terminal profit margin. This shows that although the gross margin of the communication terminal business cannot of course be compared with the communication infrastructure and ICT services, only a large scale without sufficient profit is not a long-term development.
Similarly, for Lenovo, after its announcement into the smart device market, the Moto Z modular mobile phone has quickly achieved 1.75 million sales results and entered the smart city and manufacturing technology services industry, and launched the adoption of Amazon at CES. Alexa voice control system's home intelligence assistant and other related products, Lenovo Group's stocks listed in Hong Kong immediately increased significantly, and the stock price continued to rise for many days. This shows that domestic and foreign capital is full of expectations for Lenovo to enter the new market with higher gross profit based on PC.
"So, from the recent actions of the two largest ICT companies in the country, everyone has heard enough stories about the crazy expansion of profits or the high market value of burning a lot of money, and found that ICT companies will eventually have the same Follow the business rules of 'making money is the last word'." Liu Zhaohui, chief analyst of Huaxing Wanbang Special Co., said. “Obviously, the value of technology companies lies in the higher gross margins and new markets that innovation brings, and its core business capability is to turn innovation into cash.â€
Second, comprehensive convenience has become a key means of competitionAmong all the means of competition, price is the first means of competition is an unstoppable commercial rule. Today, with the increase in the income of the whole people and the development of technology, another important means of competition has become more and more important, and even has become crucial. This is the comprehensive convenience provided to customers, including the product itself as a customer. Increased efficiency and ease of operation, as well as ease of purchase and service.
Humanity observation: one or two more steps, less than half of users. The comparison of the number of passengers in the two elevators reflects the value of convenience; so whether it is the button and UI of the product, or the webpage of information and product purchase, the goal of product definition is first and foremost simpler and more convenient.
A case of convenience that may determine the outcome of competition this year is the Internet of Things connection standard. The new camp of Intel, Huawei and a number of operators entered the Internet of Things field with high-profile NB-IoT in 2016, prompting many people to ask questions. How will the “traditional†Bluetooth, ZigBee, Thread and Wi-Fi camps be parried? In fact, it is very simple. It is possible to use ZigBee and Bluetooth to turn on the lights and door locks. Do you have to go back to the local area after the carrier's base station to the data center? What if the public network communication is not smooth? Therefore, convenience is the answer to many questions.
The success of WeChat also verifies the judgment that Convenience is Core Competence. In addition to the price factor, WeChat users benefit from its super convenience. It not only wins the competition in the traditional business of communication carriers, but also stands out from the comparison with other Internet applications. To this day, many price-insensitive professionals also use WeChat, which means that they bring new convenience in communication.
The changes brought about by the convenience of convenience have not only occurred in the Internet and consumer products, but also in the chip industry that has been acting as a behind-the-scenes hero. Take Silicon Labs, a leading chip vendor in the Internet of Things industry, for example. Its new multi-protocol, multi-band Wireless Gecko SoC supports multiple wireless standards such as Bluetooth, Thread, ZigBee and proprietary protocols on the same SoC platform. Sub-GHz to multiple frequency bands of 2.4 GHz can help developers achieve simpler designs, lower BOM costs and faster time to market. This is a full expression of the convenience of professionals.
“In today's intelligent era, if innovation leads to more complex operating menus, then such innovations can only be recognized in a very limited professional market, and even professionals are hoping for a simpler product. And tools." Chen Hua, a senior analyst at Beijing Huaxing Wanbang Management Consulting Co., Ltd. said. "Whether it is hardware or software, service or chip, it is a key competitiveness to provide comprehensive convenience, and even become a super-competitive weapon like WeChat."
Third, intelligently promote the advent of the new white box eraAs we talked about in the previous trend, the technologies that bring a variety of simple and convenient technologies are on the rise, and the support behind them will be intelligent. The further development of intelligence will promote the society into the new carrier era and will change the sales customers or distribution channels of products or services. This motivates product and service providers to define their own business processes. One of the first factors to determine is which platform to “trust†to provide products or services that are better than the white-box computers that were popular in the IT industry. product. The business community will enter the "new white box era" more comprehensively.
A typical feature of the new white-box era is that most shipments of many goods will be sold to platforms based on the Internet of Things, cloud and big data, while selling to individual consumers is only a small niche market. The recent popular bicycles have already reflected this trend. It takes hundreds of thousands of dollars to buy a bicycle, and it costs enough to share the bicycle for several years, and there is no need to worry about theft and destruction of the car. Or move the bicycle up and down in the elevator without worrying about the bicycle chain and tire failure.
Of course, in addition to bicycles, all aspects of food, clothing, and housing will be purchased and distributed by new operators and service providers based on Internet of Things and cloud services. If you purchase LeTV members or content, you can get TV and mobile phone for free or at a low price. If you buy organic rice, you can get a special rice cooker for free or at a low price. Even the defrosting and air purification equipment that everyone has snapped up during this time may be obtained free of charge from professional mites in the future. These companies will learn about the equipment usage and indoor air conditions from the networked air purification equipment, and more timely. Providing a filter replacement or replacing a more suitable device, the price difference between purchasing this service and separately purchasing the product will become smaller and smaller.
"Intelligence will bring about a change in the social business model of white boxing, and smart device manufacturers should pay attention to and cope with this trend," said Hu Xia, senior analyst at Huaxing Wanbang. “We think there are three ways to deal with it: first, to be the most efficient design and manufacturer, to provide the most cost-effective products for global service providers; secondly to differentiate the product suppliers, to compete for the middle and upper high-end of the market pyramid. The customer; third, like Lenovo's Moto Z mobile phone, develops a modular product that takes the product as the platform."
Fourth, capital forces accelerate the industry cycleThe industry cycle is an important part of the business nature, but for China's ICT industry, in the past 30 years, due to the rapid growth of the domestic economy and the country's opening up and other reform dividends, as well as the Internet and other new generation information technology The innovation dividend, although experiencing the challenges of the Asian financial crisis, the Internet bubble burst, the subprime crisis, the European crisis and the Brexit, is relatively less affected by the industry cycle. However, as more and more capital is mobilized, the impact of future industry cycles will increase.
For the ICT industry, the cyclicality of many areas consists of its own technological evolution cycle and economic environment cycle. Common technology evolution cycles include the evolution of technology nodes in integrated circuit manufacturing, Intel-Microsoft upgrades for processors and operating systems for PCs and servers, and standards organizations such as 3GPP, which are comprised of carriers and manufacturers. The second generation (2G) to the fifth generation (5G) upgrades and so on. Every technology and standard upgrade brings higher performance or new features, attracting new customers and bringing new market opportunities and higher gross margins to the manufacturers.
The cyclical changes in the economic environment include the cyclical changes in the macro economy and the cyclical changes in the microeconomics of the industry. The cyclical changes brought about by the global economy and the regional economy of a country or region are beyond the scope of this paper, but the microscopic in the ICT industry. The cyclical changes in the economy deserve the attention of the industry. There are two reasons behind this: First, the industry integration is getting higher and higher, the market measures of leading manufacturers have more and more influence on the evolution of the industry; the second is the social capital to ICT. The industry's attention and investment are getting higher and higher, which will accelerate the technological evolution of the industry and the changes in supply and demand, and promote changes in the industry cycle.
On December 30, 2016, on the last working day of the year, the two major integrated circuit projects with domestic investment of tens of billions and 100 billion yuan held the groundbreaking ceremony on the same day. On the same day, the Yangtze River Storage Project, located in the Future Science and Technology City of Wuhan East Lake High-tech Zone, held a groundbreaking ceremony with a planned investment of US$24 billion. On the same day, Huali Microelectronics’ 12-inch advanced process IC production line construction project with a total investment of 38.7 billion yuan was The Pudong Kangqiao Industrial Zone officially started construction.
Therefore, from the above analysis and case studies, as domestic government capital and commercial capital attach importance to the ICT industry and invest heavily, the technology and economic cycle in many areas of the ICT industry will be affected, and it will bring to the industry. New cyclical changes. Of course, to face the industry cycle, it is necessary to estimate the industry cycle in advance, and use technology or commercial means to cross the cycle in order to achieve better development.
to sum upFor the ICT industry, where innovation is fundamental, in addition to developing the best technologies and products, it is now necessary to look up the way to explore the nature of business. This process is a combination of technological innovation and the pace of social development, or the combination of technological innovation and people's fundamental needs, not only the combination of technology and market demand. This is a process of technological innovation and a process of optimizing business models and product definitions with strategic marketing. It is also the direction of Huaxing Wanbang and its customers.
Finally, Huaxing Wanbang sincerely hopes that all friends will achieve greater development in 2017!
Research author: Beijing Huaxing Wanbang Management Consulting Co., Ltd.
Author: Contributing chief analyst Liu Zhaohui, senior analyst Chen Hao and Hu Xia, associate analyst MCA
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