Electric giants are starting to show a strong interest in smart hardware

From the beginning of 2014, the electric business giants began to show a keen interest in smart hardware, and then led a round of support frenzy. Since the introduction of jd+ from Jingdong, Ali and Suningyun merchants have also announced a high-profile follow-up, have to invest a huge amount of resources-including funds, channels, technology, brand promotion, supply chain and user data analysis, to support partners to launch their own smart hardware.

If you stand in the traditional electric business perspective, although a variety of predictive smart hardware is a large scale of the market, but the current stage of these smart hardware sales increase, for these large-volume electric companies, is bucket. However, if you stand on the Internet's point of view, the meaning of smart hardware becomes extremely important.

Prior to the traditional retail, as well as the initial electricity quotient, to gain growth, the only way is to control costs, improve operational efficiency, sell more things. Because they can not have strong contact with customers, only rely on the price of the oldest, most effective tool to maintain the attraction of customers, but also with the help of continuous marketing campaign to maintain the customer's attention.

However, the emergence of intelligent hardware, to the original simple sales relationship has added an important layer of data interaction coating, so that the first time the electric business enterprise has a sustainable large-scale and customers to maintain contact channels. From this point of view, smart hardware is an important customer interaction portal in the future.

Therefore, the power of the electric giants of the smart hardware to spare no effort to support, is not to win the future market share of the problem, but to change the way to gain market share of strategic measures. Because the face of the future highly uncertain market, the so-called quality products, high market share, effective implementation and management of excellence have become a false appearance, compared with the current huge market share, investors are more concerned about how to win the market means. This is like branding, although brands can bring a long-term competitive advantage, but the key is not the popularity of the brand, but it can affect the behavior of consumers.

Buffett's most important theoretical contribution to the investment community is not his "snowball", but the "moat theory", which in his view only those enterprises with a broad economic moat, the value of long-term investment.

Comparing the 4 features of the economic moat, we know how important smart hardware is to the future of the electric business:

An intangible asset owned by an enterprise, such as a brand, patent or legal license, which allows the enterprise to sell products or services that the competitor cannot emulate;

Second, the enterprise sells the product or the service lets the customer be difficult to give up, this forms one kind to let the enterprise have the pricing power the customer conversion cost;

Third, some lucky companies can also benefit from the network effect, that is, as the number of users increased, the value of their products or services are also improving. It is a very powerful economic moat that can keep competitors out of the door for a long time;

Four, some enterprises through the process, geographical location, operating scale or unique assets to form cost advantages, which allows them to sell products or services at a lower price than competitors.

There are two key points here-switching costs and network effects. Compared with software, the cost of hardware replacement is much higher. and the same platform under the intelligent hardware information sharing and even interoperability, will direct the smart hardware business model switch to the LEGO mode-even if only a piece of the smallest Lego building blocks of sales, are expanding the LEGO network and system, make it more powerful. Imagine how tempting it would be to be able to manage and manipulate all the smart appliances at home in a simple management interface, and these smart appliances can do some interaction and collaboration before.

Jing Dong's jd+ has already stepped out of this step, downloading an app or landing directly on the Web page through the Jingdong account, you can view, manage, or even manipulate your own jd+ all smart devices in the cloud.

This is not only a user experience progress, it is a smart hardware cloud operating system and standard posture, the electrical business is likely to rely on a small intelligent water cups and smart light bulb successful sales and experience, to win a home smart home electrical sales orders and the future continued to provide the life of the high possibility of ontology services, Because it's possible that future smart refrigerators will connect to your fruit and vegetable channels.

Such logic, so that the future of the electricity business competition, from a single product of the contest, into a family of the entire application system, the failure of a sale may mean the loss of a family a long period of control and contact.

Based on this judgment, the future of the electric business giants in the smart hardware competition in the fierce and brutal, think of some people shudder.

In the final analysis, the current competition for smart hardware by the electric giants is to be able to put their traditional channels, funds, data and operational advantages, into the future of the Internet on the user and data control, to free themselves from the physical product trading model, in turn, to information sharing or contact users based on the formation of network effects, Bring a very strong competitive advantage to form a new moat.

Wen/Liu Jinming