Learning Machines Enter the Era of “Money Grabbing”?

In the past, the slogan for talking pens was “No more worries for moms about their children’s learning.” However, the message for today’s learning machines seems to be “Moms, worry about your wallet first.”

In China’s highly competitive market, learning machine manufacturers have shifted their focus to parents, claiming that they will not give their children low-quality learning devices. As a result, the price of learning machines has skyrocketed, and there is no longer a “most expensive” option, only a “more expensive” one.

In short, it seems that moms have become the scapegoat in this money-grabbing trend.

The Struggle of Tigers and Dragons

Since the late 1980s and early 1990s, Xiaobang learning machine came out, Chinese learning machine has gone through more than 30 years. After more than 30 years of strangulation, China’s learning machine market has shown a pattern of more than one dragon and more tigers.

“One Dragon” is backgammon, while “Many Tigers” include Scholar Lang, Youdao, Excellent Learning World, iFlytek, Xiwo, Xiaodu, Head, etc. According to the data of the world, in 2021, China’s intelligent learning equipment enterprises, backgammon market share of 29%, ranking first, far ahead; It was followed by Shuulang and Youdao, with market shares of 6% and 5% respectively.

Step by Step is a typical representative of traditional learning machine manufacturers. The reason why it can dominate the market in a “one dragon” posture is due to its nearly 30 years of brand cultivation and the comprehensive online and offline channels, especially the full-scale offline sales network. According to the official website of Step by Step, it has over 18,000 terminal sales outlets nationwide and more than 400 4S service experience stores in major cities.

Another major representative of traditional manufacturers is Dushulan. Its advantages are similar to Step by Step, with more than 20 years of brand accumulation and a nationwide distribution network. Dushulan’s prospectus states, “Our distribution network is composed of 132 offline distributors who control 4,523 sales points distributed in 344 cities across the country.” However, unlike Step by Step, Dushulan adopts a strategy of “surrounding cities with rural areas”, and its distribution network is concentrated in third-tier and below cities.

Traditional manufacturers’ advantages have gradually been eroded as internet companies, original education and training enterprises, and technology giants have entered the competition. Their traditional advantages, as mentioned above, mainly come from brand accumulation and offline channels. However, the importance of online sales channels such as live streaming e-commerce is increasing, while brand accumulation may not be seen as having technological attributes due to its long-standing history.

According to the financial report of Dushulang, in the whole year of 2022, its revenue decreased by 25.57% year-on-year, and the after-tax profit of continuous operating business decreased by 94.09% year-on-year. It even suffered losses in the first half of the year, and finally only made a profit of 4.856 million yuan throughout the year. Dushulang attributed this to the repeated outbreak of the pandemic last year and the stricter pandemic control measures, but it is obviously more important to be impacted by competitors.

Learning tablet shipments can also be corroborated. IDC data show that China’s learning tablet market shipments, from Q4 2021 to Q2 2022, the highest share of small degrees, followed by BBK and iFlyTek. Although it is only 9 months to learn the tablet shipment data, but backgammon fell to the second, and reading Lang is not in the first three, it seems to be enough to glimpse one spot.

Xiaodu is the representative of the Internet, the original teaching and training enterprises are also aggressive. Among them, youdao market share ranks third, and the gap with book readers can be ignored. Youdao has been walking on two legs of K12 and intelligent hardware, focusing on the development of intelligent hardware after K12 has been stripped off. At present, its products include dictionary pen, listening power, learning machine, translation king, super dictionary and so on. In 2022, AI learning machines Y10 and X10 have been launched.

According to Tao, its record single-quarter revenue in the fourth quarter of 2022 and profit for the first time in a single quarter were largely due to good sales of learning machines. According to the “Deep Network,” AI learning machine has replaced smart table lamps to become a strategic hardware product. But the problem is that, on the one hand, the previous wanton burning for growth led to serious losses, the first profit in a single quarter mainly by reducing expenses; On the other hand, the quality of its learning machine has been criticized, “iterating two products within three months, allowing the outside world to guess the quality of the first generation of products.”

In addition to youdao, the original teaching and training enterprises, good future, high road, homework help, squirrel AI, boss and so on, have joined the learning machine war. They may have content or technology, but they have not yet played a pivotal role. On the contrary, the independent R & D ability is very weak, the essence is the excellent learning world of the Integrator, occupying 4% of the market share, ranking fourth.

In January 2020, Youxue World submitted a prospectus to the Shenzhen Stock Exchange and withdrew its application for listing about a year later. In its IPO book, Youxue world will be exposed to the soft ribs. According to the daily business report analysis, “Youxue world and other educational tablet computer manufacturers, in essence, are integrated companies, purchasing hardware from upstream display modules and components, memory, main control and supporting chips, structures, batteries, etc., looking for outsourcing factory contract, and then developing part of the learning as the scene of the system and software (content copyright also needs to be purchased), has become an educational tablet computer. In fact, tablets pieced together in this mode can easily cost four or five thousand yuan, which is not at all cheaper than the tablets of top manufacturers such as Apple and Huawei. “

Therefore, the R & D expenses invested by Youxue World have been very small, but it is puzzling that Youxue World compares its R & D expenses with the HKUST iFlytek and the source shares in the prospectus. I suggest you check the mole.

IFLYTEK, which is compared in the IPO book and has the fifth market share, can be called the catfish in the learning machine market. AI learning machine is its first product, no doubt in the learning machine market at that time dropped a nuclear bomb. IFLYTEK AI learning machine focuses on AI precision learning + education big data + examination standards, but the market does not seem to pay much. IFLYTEK recently disclosed that revenue growth in the learning machine business in 2022 did not meet expectations at the beginning of the year.

IFlyTek’s response is to play the role of catfish again, but this time not for technology, but for price.

Rats and Snakes in the Same Den

On February 6, HKUST launched the new AI Learning Machine T20 Pro, which was priced as high as 8999 yuan, a pair of labor and labor to steal money. In contrast, on the same day, “long overdue” Xueersi launched the first tablet smart learning machine, the official flagship store price of 4599 yuan, has been able to say that the price of conscience.

What is $8999 for a Learning Machine? Perhaps it is more intuitive to measure residents’ disposable income. According to the National Bureau of Statistics, in 2022, the per capita disposable income of the national residents was 36,883 yuan, which means that they can only buy a Taiwan after saving for three months.

The Creator is gone, and there are many imitators. “We believe that parents will not give their children low-quality learning equipment,” Youdao said at its earnings conference in February. So, “In terms of learning and practicing machines, the two existing SKUs, namely X10 and Y10, currently cover the mid-market. Su Peng revealed that this year Youdao also plans to launch a learning machine for the high-end market.” In a word, parents are willing to spend money, there is a way to the next learning machine to increase the price.

In fact, even at present, iFLYTEK is not alone. The graphic education studio searched JD.com for “learning machines” and sorted them according to “prices”. The prices of several major brands of learning machines were counted, among which the top 10 prices were as shown in the following figure:

So there is no most expensive, only more expensive price assassins, how can consumers accept? According to iResearch data, in 2022, the price distribution of Chinese people buying learning tablets was the highest in 2001-3000, accounting for 43.4%, followed by 3001-5000 yuan, accounting for 31.4%, and 1001-2000 yuan, accounting for 17.5%, while the price of more than 7500 yuan accounted for only 0.4%.

At the same time, the learning machine is a low-frequency replacement of intelligent hardware, accounting for only 6.4% of the annual replacement. When the price is so high and the product is homogeneous and serious, how many parents are willing to spend a few months saving money to change frequently?

China’s learning machine products, both hardware and software, are far from such a high premium. In the after-sales evaluation of major platforms, the learning machine is full of negative evaluations such as “just brush question machine,” “false AI” and “a large number of wrong answers.” Not committed to building a brand image, not committed to improving the product experience, not committed to polishing the quality of content, only know to raise the price, is tantamount to killing the goose that lays the golden eggs, will eventually be eliminated by consumers.