Dial back the time to five years, in the Wu Xiaobo channel at the time of broadcasting a program "ten years and twenty people", Ding Lei, founder of NetEase, said that "the past ten years there are all kinds of winds, in fact, many are a demon wind". He believes that in the absence of a clear business model, there is no need to catch the wind.

However, five years later, with the arrival of the "AI+" big model era, this time NetEase and Ding Lei seem to figure it out. Its NetEase Yudao not only recently took the lead in launching the country's first vertical large model in the field of education, "Ziyi", but also released six innovative applications based on the "Ziyi" large model development. -Virtual Human Speaking Coach ......

Obviously, in the case of "double-decrease" shadow is still there, the same camp of education enterprises NetEase Youdao, seems to be the main live e-commerce with New Oriental (Oriental Selection), embarked on a very different, technology to break the growth route.

As an entry point, this article will focus on the following three issues, to develop further analysis:

1. Netease Yudao why do you want to make a big model?

2. NetEase has the possibility of figuring out what business model of the big model?

3. NetEase Yudao's big model technology route vs. New Oriental's e-commerce content route, what are the advantages and disadvantages?

What are the advantages and disadvantages of "What the Son Said", the colorful title of "Selling Goods" for NetEase Yudao?

Why does NetEase want to be a big model?

The answer is simple: transformation. It is mainly reflected in two aspects:

First, the utilitarian point is to realize the software driven hardware "sell goods".

From the market feedback in the past two years, although the landing of the double-decrease policy almost wiped out the entire K12 education industry from the supply side, but parents' educational anxiety has not disappeared, the user demand side of the market still need to continue to provide compliance and can assist in the learning of educational channels or tools, that is, the requirements of NetEase Yudao supply-side reforms.

From the "elimination of supply" to the supply-side reform, seemingly contradictory, in fact, the times and the market forced the education industry from the "people teaching" to the "material education" transformation of the beginning, in fact, is the development of educational Intelligent hardware.

In this regard, intelligent hardware is also the key to resist market fluctuations after the fall of the double-decrease policy of NetEaseYouDao, and at the same time, it is also recognized by CEO Zhou Feng many times and vigorously promote the strategic transformation of the business. For example, in the four growth pillars strategy of transformation set by Zhou Feng in 2021, intelligent learning hardware is in the first place. In the same year, according to the eye of the sky APP, the total revenue of Youdao was 4 billion yuan, an increase of 58.9% compared with 2020. Among them, the net revenue of intelligent hardware was 980 million yuan, an increase of 81.6% year on year, which strongly improved the overall performance of NetEase Yodao in that year.

But the problem is, as more and more by the double reduction policy hit the education business, also down the field to force the smart hardware, NetEase's "second growth curve" business appeared to slow down, or even the growth rate of the decline in the situation.

In 2022, NetEase had a total revenue of 5.013 billion yuan, a year-on-year increase of 24.8%. Among them, the year-on-year growth rate of smart hardware business revenue reached 28%, although much higher than other businesses, but compared to the 82% growth rate in the same period of 2021, it is obvious that there is some lack of energy.

Into the first quarter of this year, NetEase has in the intelligent hardware business revenue scale directly instead of rising, the growth rate is a year-on-year decline of about 16%.

In this case, netease have road must find, can re-activate the education intelligent hardware this new growth engine of science and technology fuel. There is no doubt that the AI model, which is hot nowadays and is regarded by countless people as the most suitable for the educational scene, is the best "selling" prize for Youdao.

The fact is also true, in the "said" conference, NetEase Youdao side made it clear that the "said" development of six innovative applications, will be the first to carry in August officially launched AI learning machine X20 flagship new products, Youdao Dictionary pen flagship new products. The big model to assist the hardware "sell goods" is obvious.

Of course, back to the business perspective, the Internet Jianghu noticed that NetEase has a large model of the launch may also not just to sell hardware, more strategic market defense considerations.

Because as early as May 6 this year, KU Xunfei released the "Starfire cognitive" big model. On that day, Liu Qingfeng, chairman of KU Xunfei, said that the T20 series of learning machines in the language, mathematics, English and other subjects on the big model application landing. Immediately after the 618 promotion more than a month later, KD Xunfe's AI learning product sales led the industry, KD Xunfe AI learning machine series won the sales champion of the learning machine category on both Jingdong and Tmall platforms.

Obviously, in this "I have, you do not have" large model function, efficiency and experience are not equal, even if NetEase has the first mover advantage of intelligent hardware and the resource advantage of educational content, but students and parents are afraid to choose to turn around and embrace AI.

And what is the essence of the big model? Still software.

Once on the ground, it has a very low marginal expansion cost. So if with the open source of Starfire Cognition (in fact, it has chosen to open the interface), when the big model becomes the standard application function of educational intelligent hardware, how should NetEase Yudao, which is not chasing the wind and mouth, respond?

So in other words, the big model is now the development of educational intelligent hardware life and death war, even if NetEase Yudao more Buddhist, it is impossible to put aside.

Second, the profound point is to transform and survive.

This is actually not difficult to understand. Whether it is to develop educational intelligent hardware or large model, it is essentially for transformation and survival.

However, when the lofty AI model meets "selling goods", we can't help but ask, NetEase is actually trying to transform into what company?

• From the revenue structure seems to be an education company, learning or course services segment has always been the core revenue pillar of NetEase Yudao, even in 2022, Yudao's learning services business accounted for more than 60% of total revenue.

• But from the point of view of various technology publicity and the launch of large models, and seems to be a technology company, the scale of R & D investment has also been rising.

*However, in terms of expenses and underlying business logic, NetEase Yodao looks more like it wants to become a "hardware" retail company.

The most direct manifestation of this is that in the past three years, NetEase Yodao's marketing expenses have been close to or more than half of the total revenue, not only crushing the R&D expenses, and even more than the marketing investment in those years of education and training. And recently NetEase Yudao also invited "Rampage" Gao Ye endorsement Yudao Dictionary pen, rare to become a brand specifically for educational hardware products signed spokesman.

In fact, if Netease Yudao determined to take the retail route, although in the short term, may also need to make up for the product outside the online and offline channel layout, brand marketing and promotion of soft and hard power, which is a heavy investment project. But the good point is that when the channel market is established, Netease Yudao will quickly enter the blood stage, which for many years are "not profitable" Yudao, seems to be a good way out ......

From 2C to 2B, how to go on the road of commercialization of education models?

Through the Netease Yudao and KU Xunfei two for the big model of the landing application, we can summarize the current stage of education big model of the two business models:

The first is to make the big model become software, become a functional appendage of intelligent hardware, just like every year, the cell phone, home appliance industry launched a variety of intelligent applications, AI remote control and other application gimmicks, the fundamental purpose is still to pull the hardware, the weight of the hardware itself, to be far greater than the AI value of the big model itself.

The second is the 2B buying and selling of big model software or capabilities.

In this regard, KU Xunfei has opened the interface of the Starfire cognitive big model, the seven dimensions of the ability to 200+ small assistant corresponding ability to developers, and support for rapid integration of multi-terminal access, support for private deployment, and the majority of developers to build an ecosystem, and gradually realize the commercialization of the big model of the technology of the landing application.

The education market can also take this opportunity to use Spark Cognition as a technology center or application springboard to launch a variety of intelligent education scenarios for school classroom, 2B solutions.

That is, the big model as a teaching aid, to assist teachers to use in class.

Although the current announcement to enter the market in this area of the big model players are not many, but the application of large models of education, in essence, with the national advocacy of the vigorous development of digital, information-based education is basically the same.

So for the B-end market, the government and schools to provide scientific and technological services to help informatization of education and the digital construction of educational resources industry players are not a few. For example, Good Future has also launched a new brand of beauty school to provide a complete live broadcast, teaching and research, AI system solutions for the education industry.

In fact, if NetEase has the "son said" they can be in the big model into the campus to assist teaching in the hearts of the people, then this is equivalent to the brand in the subtle completion of the front marketing, driven by the education of the classroom smart hardware market seems to be not in the words ......

Technology route VS content route, who is the ideal type of education enterprise transformation?

In fact, the pursuit of smart hardware and big models by major education enterprises can be summarized in one sentence: "The world is all about profit, and the world is all about profit".

However, this is not derogatory, but a kind of sigh of relief for NetEase and other educational enterprises. Because after this sentence, there is often an easy to be ignored "the king of a thousand rides, ten thousand families of the waiting, the king of a hundred rooms, still have a problem with poverty, not to mention the people of the people's household".

From the financial data point of view, in the first quarter of this year, NetEase has a total revenue of 1.163 billion yuan, a year-on-year decline of 3%, ending the momentum of the previous consecutive quarters of rise. At the same time, the net profit of -204 million yuan, plummeted more than 100% year-on-year, the increase in losses further enhancement.

Then look at the "good future", as of February 28, 2021, the good future of the total revenue is still in the 4.496 billion yuan, but by February 28, 2023, the good future of the revenue will shrink significantly to 1.02 billion yuan.

As for New Oriental (Oriental Selection), because it has seized the transformational wind of live e-commerce, the performance of the last year or so has been quite bright, but before that it was also under pressure.

There is no doubt that survival is the top priority of education companies. It is precisely for this reason that NetEase has explored two transformation routes that are quite informative:

One is the technical route represented by NetEase and Good Future, which mainly focuses on educational intelligent hardware and intelligent education solutions;

The other is the content route represented by New Oriental, although the transition into live e-commerce, but essentially still do content, only the knowledge scene from the classroom transferred to the live room, the core core competitiveness is still the teacher IP.

So the two routes, who is better and who is worse? It is difficult to distinguish between victory and defeat.

On the one hand, NetEase has the road, whether it is to do intelligent hardware, big model or intelligent education solutions, can fully rely on the past accumulation of educational resources data advantage, which is the most core competitive barriers to have the road.

But the disadvantage lies in the existence of regulatory risk, that is, the safety of large model content production is open to question. In the past, it was "human teaching", although there may be teaching errors, but the overall control, but let the AI alone to face the children "object teaching", the AI production of content safety and correctness becomes critical. Because education is a very serious thing, and data training is not enough AI is very good at a serious nonsense.

For example, as early as 2021, Xinhua News Agency's "Xinhua Viewpoint" has investigated and found that NetEase Yudao Dictionary pen frequently appeared in the spelling, phonetic symbols, translation and other content errors. And after this year's college entrance exams, all the big models were pulled out of the college entrance exam question paper to do a whole, but the results let a person greatly disappointed ......

On the other hand, the Oriental Selection's content route, the advantages and disadvantages are as obvious as the popularity and profitability is very fast, but there is a risk that the anchor's personal departure will affect the overall stability of the enterprise. After all, people are the biggest uncertainty in the business world.

Oriental selection seems to realize this, began to choose to concentrate on building "Oriental selection" account matrix, rather than pouring traffic to a particular anchor, that is, "do not do people".

In addition, Oriental Selection also has the vulnerability of the live broadcasting business is too dependent on the Jieyin platform, and is in a passive position in the traffic ecology, which may also be the key incentive to build its own APP. Just so, it exacerbates the uncertainty of the future of Oriental Selection ......