The development trend of tools such as Alipay and Meitu

The following is an outline of this article:

1. What is a tool product?

1. What are the specific categories of tool products?

2. Specific classification and representative of tool products

2. Dilemma of tool products

1. The root cause of this situation;

2. The current commercial status of the tool product;

3. Development trends of tool products and business exploration trends;

3. Recent Development of Typical Tool Products

1. Why Alipay will die if it is not messed up

2. Wang Xiaochuan ’s concept of “tool building service scenarios” behind Sogou Input Method ’s launch of smart search

3. Why do a large number of tool products such as UC Browser and Moji Weather focus on content and information?

4. Why has Meitu, which went public a few days ago, been promoting itself as “more than just a tool”?

5. Why do Keep , Dayima , etc. choose the community and e-commerce business paths? What are the prerequisites?

4. How the awareness of paying for music, video and content industries can improve the environment and specific measures

5. Information overload in the tool product field

1. What is a tool?

1. What are the specific categories of tool products?

First of all, I have to correct your concept. We often hear or even talk about tool products, but few people may think about this question: What exactly is a tool product?

Zhang Xiaolong said WeChat is a tool, many people say Baidu is a tool, and some even say the entire Internet is a tool. In fact, what they said is correct. The scope of tools can be very large, but the scope of our discussion this time is obviously not that grand, so I must tell you what tools are before the communication, or determine the scope of our discussion this time.

Theoretically, all Internet products are tools, whether they are browsers , e-commerce, social networking , games , etc. As long as you want to add the word "tool" at the end, users will accept it.

However, with the development of the Internet, more accurate words have emerged to describe and represent the characteristics of each sub-sector. For example, QQ and WeChat are social tools, Taobao and JD are e-commerce tools, NetEase News and Toutiao are information tools, and so on. Gradually, when people discuss these products, they no longer add "tool" at the end, but only say "social", "e-commerce", "community", and "news". This can better summarize the characteristics of the field, so that users can immediately understand what this thing does after seeing it.

As it has developed to this day, when we say "Taobao is a tool" or "WeChat is a tool", it feels inaccurate, but when we say "Meitu is a tool" or "Moji Weather is a tool", it feels very natural. In the process of receiving information, we have completed the initial classification of Internet products: WeChat is social, Taobao is e-commerce, NetEase News is media, and so on.

So what is Meitu in the minds of users? What is Ink Weather?

You’ll find that in the process of officially defining these products, there’s no choice but to end them with “picture repair tool” or “weather app” to make them more understandable to the public. These fields are too small and do not have the ability to conduct market education to let the public know that "photo repair" and "weather" are Internet fields of the same level as "e-commerce" and "social networking", and can only be collectively classified as "tools."

Such a rough classification without clear standards certainly has huge problems, and the conclusions drawn based on such classification are naturally unreliable. I try to define "pure tool product" based on my understanding.

(1) Tool products solve a single need

Let’s think about it: What exactly do users want to achieve through WeChat (the granularity needs to be broken down, and we can’t just say “communicate with people”)?

It could be contacting relatives, colleagues, or friends. If it is further broken down into "specific contacts", there will be many scenarios, and the needs behind them are extremely complex.

However, tool products such as Meitu and Moji Weather are different: the effects expected by all users of these products are extremely similar or consistent.

Meitu users expect pictures to be more beautiful, Moji users just want to know weather information. Even though PS has relatively more complex functions, users use it for the same reasons.

(2) Tool products have a single usage scenario

This is actually related to "single demand": because if the problem to be solved is single, there are only a few optimal paths to achieve it, so the usage scenarios are also very single.

Then you may wonder why I would "repeat it".

In fact, this mainly excludes O2O . Take home massage as an example: the effect that users want to achieve for home massage is actually the same, which is to ask someone to give themselves a massage. Right, at this time, the needs of users are the same, but the usage scenarios are very complicated: for example, team massage, personal massage, massage at home, massage in the company, and the most important thing is that the service provider is uncertain. If there is no stable relationship chain, the usage scenario obtained by multiplying the two will be extremely complicated.

To sum it up in simple terms: there is only one standard for a pure tool product, which is to "resolve the conflict between users and usage scenarios." For example, Meitu solves the contradiction between "users and image beautification", and Moji Weather solves the contradiction between "users' inability to measure the weather".

Except for pure tool products, other Internet products are all connecting "users with services, content, and people."

Social products such as WeChat "connect users and people", but because there are too many "people" and "connection scenarios", they do not meet the needs and are not limited to a single usage scenario; Baidu connects "people and content", but because there is too much "content", it is not a tool product; Didi connects "people and services", so it is not a tool product either (since the concept of service is particularly broad, browsers and other products are also considered this type, it depends on how you view service).

We can see that Internet products other than tool products have transcended the scope of tool products and become a relatively large category because they link too many objects or solve too many scenarios. Other tool products such as weather applications, photography products, schedules, calendars, etc. solve very simple needs and have a single usage scenario, making them typical pure tool products.

2. Specific classification and representative of tool products

Our subsequent discussion will all be about the tool products within the scope I just defined. We often hear many Internet analysts talk about the following common problems when they talk about tool products:

1. The opening frequency is too low;
2. Viscosity is too low
3. Excessive substitutability;
4. There is no mature business model .

But this statement is not rigorous. In fact, many tool products are very good. I personally classify the entire tool product into four categories:

(1) The first category is tools that have successfully extended service scenarios, represented by Alipay and Sogou Input Method.

Before Alipay launched Yu'ebao and the credit system, it met my definition of "solving the contradiction between users and usage scenarios". The opportunity for its emergence was to allow people to make online payments more conveniently.

However, since the launch of Yu'e Bao and Sesame Credit , Alipay has successfully linked "people and services". Online personal financial management and the grassroots credit system of society are blank again, so Alipay has easily occupied the subsequent imagination space with its huge advantages, thus creating the current valuation of more than 60 billion US dollars.

You can recall the scene when Yu'ebao first came out: millions of users naturally accepted a payment tool to provide financial services to everyone. Thinking from this perspective, many tool products can try to vertically extend appropriate services to enhance their own value and achieve commercialization.

Another example is Sogou Input Method.

In fact, the concept of scene service was first proposed by Wang Xiaochuan. At the Geek Park conference, he summarized the painful lessons he learned from Sogou Input Method: If a tool product wants to succeed, it must switch from a tool to a service. To make it easier to understand, let me give you an example:

He believes that wrenches in the Internet age cannot just be used to "tighten screws". In specific usage scenarios, construction workers may complain that wrenches are too abrasive to their hands (assuming there are no gloves on the market). At this time, wrenches can be made into gloves based on user needs and specific usage scenarios to better meet user usage scenarios. Sogou Browser and Smart Search are both based on this idea, and then they are connected together using Sogou Input Method.

Let’s put aside the controversy regarding user experience for now. I personally agree with his philosophy, but that doesn’t mean I agree with everything he does. We’ll talk about the reasons later.

Alipay and Sogou Input Method are both representatives of tool products that are successfully connected to services, and both have achieved huge success. This is the first-class classification in the tool product field.

(2) The second category is tool products that attract a group of users with distinct characteristics, such as Meitu and Keep.

Tool products such as Meitu and Keep are very lucky because their users have extremely distinct characteristics. All you have to do is gather a group of people with distinct characteristics, and then think about using the brand awareness established by existing tools to provide the services that this group of people needs, and you will easily find a way to make a profit.

The group characteristics of Meitu users are very obvious: young and female. Then we can see that all their current exploration directions are centered around these two factors: beauty phones for women, flash chat for young people, and live streaming .

I guess that in the future, Meitu will explore ways to make women more beautiful and start business of beauty salons and cosmetics. I'm not kidding. This is what Meitu is exploring right now. With a huge user base, matching brand awareness, and funding, Meitu is the most suitable Internet company to run beauty salons and cosmetics businesses.

The characteristics of Keep's user group are: fitness. In fact, Keep is very lucky. With the help of the traffic dividend of mobile Internet, it has successfully become the online synonym for the entire fitness industry in the mobile era. Then it naturally extended to content, courses, e-commerce, and social networking. It would have been easier for Keep to survive and develop if it had initially been launched as a tool than if it had been launched as content, courses, e-commerce, or social, and it later almost became a synonym for the entire fitness field. This is very rare. In the future, the majority of market share and profits in all aspects of the entire fitness field on the mobile Internet will belong to Keep.

Of course, the group characteristics cannot be too general or too useless. For example, the user group characteristics of tools like Aunt Flo are obviously useless. There are too few services and products that can be successfully extended, and the commercialization space is limited.

(3) The third category is tools such as Dropbox that have successfully entered the enterprise service field

As a personal network disk tool for C, Dropbox has now released Paper for file management and collaboration. There are also representatives in this field in China. A few years ago, I didn’t notice tools with both To B and To C functions. Now this trend is becoming more and more obvious. For example, Youdao Cloud Notes, Cloud Spreadsheets, Golden Data, and of course our Daily Affairs.

From our personal experience, serving enterprises to increase revenue is better than using simple To C tools. Of course, this is also relative. To be honest, although the service environment for Chinese enterprises is improving rapidly, the foundation is too poor and the current situation is not optimistic.

(4) Apart from the above three categories, other tool products belong to the fourth category

Moji Weather belongs to this category. It has too few extended scenarios, and its market size and profit margin are still small. If it had entered the air purifier market with a service concept in the early stage, its status would definitely be better than it is now.

But at that time, they might use weather data and be particularly concerned about weather data, but being able to break through thinking and provide follow-up services really requires a lot of courage and technical accumulation. They have always been thinking about providing air detection services like Air Fruit.

Above I have talked about a bunch of relatively boring theories and my own understanding, the purpose of which is to offset the public opinion influence that everyone has received on the tool products in the past. You may have read the analysis of the tool product field outside. Internet analysts always express the same idea in their articles: in the era of mobile Internet, since the business model of tool products has not been proven by examples, it seems that they are all scams.

In fact, this is not the case. There are actually many excellent cases in tool products. WiFi Master Key is a very good representative, and I am also optimistic about its future development.

2. Dilemma of tool products

1. The root cause of this situation

There is a reason why analysts are pessimistic about tool products. I have listed the reasons why analysts are pessimistic above, which are all objective problems with tool products. However, the objects of comparison for analysts are social products, entertainment products, and information products. Under this comparison mode, tool products certainly cannot have an advantage. I tried to analyze where the tool products are inferior to other products:

(1) Low barriers to entry result in a large number of competitors in the market

The needs solved by tool products are very simple and the user pain points are strong. Then when an opportunity arises, thousands of entrepreneurs and large companies often rush in. This leads to serious homogeneity, because there are often only a few paths to solve a pain point. For example, to solve the problem of checking the weather, no matter how innovative you are or how impressive your work is, the fundamental problem you need to solve is still to tell users the weather conditions. Every tool product has gone through fierce competition to become a leader in the field.

(2) Viscosity is too low

The user migration cost of most tool products is very low. If users are unhappy, they will immediately switch to a new one. They are unable to form their own account system or establish competitive barriers.

For example, calendar, weather, cleaning, etc., users can change them at any time, and the cost is very low.

Baidu is the most difficult to establish an account system among BAT because it has the strongest tool attributes. User search behavior does not require an account at all, but social relationships like Tencent and shopping relationships like Taobao both require an account system and personal data as a basis.

However, not every tool product has a low migration cost. For example, notes, schedules, accounting, etc., these tool products that can accumulate user information have very high migration costs.

However, users now have a lot of requirements. Many note-taking products, such as Evernote, provide users with one-click export and one-click entry functions, which actually reduces the migration cost of their products. In fact, companies are reluctant to implement these two functions. The better you do it, the happier users will feel.

But there is no way, the entire industry is pursuing user experience, and if you are not a user, you will be criticized.

(3) Commercialization is hindered

Above I mentioned that tool products are divided into four categories, which is actually the direction that tool products are currently exploring in commercialization. The unsuccessful commercialization of tool products is indeed a common phenomenon, whether it is Cheetah Mobile, which is listed in the United States, Meitu, which is listed in Hong Kong, or Moji Weather, which has disclosed its IPO.

They all have over 100 million users and tens of millions of monthly active users, but their market capitalizations are very low compared to Tencent, Taobao, Baidu, and Momo. The value of a single user is significantly lower than that of BAT, not to mention comparing the value of a single user with hot industries such as live streaming and O2O.

The value of a single user is too low, which is also an important reason why Internet analysts criticize tool products: in the Internet industry, the concept formed by industry insiders is that having users equals having traffic, and having traffic equals making money. So when this logic does not apply to tool products, everyone thinks it is a scam.

Tool products do not have high advertising value like news and other content areas, nor are they as pioneering as social products such as WeChat and Momo, and they are even less commercially valuable than e-commerce websites such as Taobao and JD. Now we can basically draw a conclusion: in the field of tool products, profitability is not necessarily positively correlated with the number of users.

In other words, the larger the number of users, it does not mean that you can earn more money proportionally.

In summary, tool products are viewed negatively for three reasons:

1. Low threshold
2. User churn is easy
3. No proven business model

2. Commercialization status of tool products

Next, let’s take a look at the current commercialization status of tool products.

As long as you analyze the financial reports of typical tool product listed companies such as Cheetah, you can see that the current way for tool products to make large-scale profits mainly relies on: advertising.

Cheetah makes money by connecting to Facebook 's advertising system.

Considering that some listeners may not be very familiar with the advertising system, I will briefly talk about the advertising industry.

Advertising has always been the mainstay monetization path in the Internet business model. Almost every large Internet company has an advertising business, and even many small and medium-sized Internet companies and individual developers rely entirely on advertising for profits.

Large Internet companies such as Tencent, Alibaba, Baidu, Facebook, Google, etc. all have their own advertising systems, and have also established their own teams to sell their own advertising services.

However, small and medium-sized enterprises do not have this strength. They do not have the ability to build their own teams or find agencies to sell advertising business, so they need to participate in the advertising platforms developed by large Internet companies and monetize traffic through advertising alliances .

The most famous advertising platform in China is definitely Baidu Alliance , and abroad it is the advertising platform developed by Google and Facebook. The model is that small and medium-sized enterprises sell traffic through advertising platforms, and then monetize from the advertising platforms.

This model is also continuing in the mobile Internet era. Large companies such as Baidu, Tencent, 360, etc. have targeted advertising platforms to facilitate developers to monetize.

Cheetah sells traffic on Facebook's advertising platform and earns advertising fees because its main users are overseas.

Of course, Cheetah also sells advertising through its own operations and by recruiting agents.

Some time ago, according to the listing application disclosed by Moji Weather, their main profit model is advertising, and the proportion is so large that it can be called the only profit model.

Cheetah Mobile's third quarter financial report for 2016 showed that advertising and related business revenue was 986.4 million yuan, accounting for 82% of total revenue. This also shows the importance of advertising to the monetization of tool products.

In addition to advertising monetization, tool products have another more direct monetization channel: value-added services. Of course, there are other ways to monetize, such as Cheetah's software licensing revenue, network security revenue, Meitu's smart hardware revenue, and so on.

However, these monetization paths have some twists and turns and are not suitable for every tool product.

At this point you probably understand: At present, before tool products have developed a universal commercial monetization path, advertising is simply the mainstay and the lifeline of cash flow.

Advertising revenue is so important for tool products, but tool products are inherently less competitive than social products and information products:

The amount of advertising revenue depends entirely on effective traffic. Effective traffic is a matter of the advertising industry and cannot be discussed in detail. We can simplify it to the following: traffic is the product of "number of users and user usage time." Although tool products have a number of users who do not belong to social or content, the frequency and duration of use by users vary greatly.

You may spend one hour a day reading the news, during which time the news app can show you several ads. However, for many tool products, you may only use them once every three days, for one minute each time, and they will show you at most one ad.

Moreover, people have the lowest tolerance for tool products and will replace them immediately if they are not satisfied with them.

3. Development trend of tool products and business exploration trend

This is the current commercialization status of tool products. When acquiring users at low cost, there are various pitfalls when monetizing them later. Countless people have seen this problem, so companies that originally focused on tool products are also seeking change. Next, let’s talk about the current development trends and business explorations of these typical companies.

(1) The first development trend is to expand product boundaries and to link content, people, and

For example, my aunt created a community. I once saw a discussion on Zhihu asking: Do all tool products need to have a community? However, many tool products do have community functions, including Meitu and Keep.

The most direct purpose of building a community is to increase user usage frequency, user usage time and user stickiness, because these three indicators can directly affect commercial value.

We also wanted to build a community before, but it is impossible to do it without sufficient traffic. It is more difficult to acquire users by building a community than by building a tool.

Of course, there are many tools for creating content, such as numerous stock trading tools, and Moji Weather.

The purpose of creating content is to increase the frequency, duration and stickiness of users, which of course can directly increase the value of advertising.

Everyone can see through this at a glance.

However, people may have prejudices and think that tool products create communities and content just to get more advertising and make more money. How should I put it? I can only say that some of them are not for this purpose, but users really have this need.

Before we started building a community, it was because some users wanted a communication forum on the topic of self-improvement. I originally wanted to find one in Douban groups or Tieba, but it was difficult to customize it according to my own ideas through a third party, so we opened a community. For a while, we also launched a self-improvement group points competition function, which was to bring people together to supervise each other and improve themselves.

When we first started, it was not for commercialization. It was just that user demand was there, so it was not difficult for us.

At the same time, many previously famous stock trading tool software also have information and are still popular among users.

So I thought later: If you act according to the real needs of users and provide a better experience than the current Internet services, it will be popular. But if you are only focused on adding community and content for commercial purposes, it will only harm the user experience. Ink Weather is a typical example.

(2) The second development trend is to go deeper into user scenarios and link services

Alipay’s Yu’ebao, a financial management service provided to users, is very popular among users. Another controversial example is the smart search of Sogou Input Method.

I know that everyone may have a lot of opinions about the many tool products that are not doing their job properly, and I don’t completely agree with many bad attempts, but you might as well think about a question: What is the meaning of the existence of tool products?

Is it to make everyone's life more convenient? Does it allow everyone to have a better and faster experience in resolving scene conflicts?

If everyone agrees with this point, then it would be appropriate for the tool product to delve into specific usage scenarios, and then think vertically about the specific scenarios to find room for optimization.

People may argue: I only hire you to do this one thing well, and I will choose others for other troubles.

It’s right to think so, but would you reject Yu’e Bao? When you need to look up specific company information when trading stocks, wouldn’t it greatly improve the user experience if the stock trading tool directly provides you with aggregated content?

So at least in my opinion, if we really follow the real needs of users, then providing targeted services and improving user experience should be welcomed by users and they will also be able to get corresponding benefits. What people dislike are those tools that provide random functions and abuse the user experience. If you insist on adding social networking to the calendar, it will not meet user expectations.

(3) The third development trend is to go abroad

It seems to be a trend for Internet companies to move overseas now, and everyone is talking about it. In fact, the way Chinese Internet companies go overseas nowadays mostly starts with tool products, and wealthy companies like Alibaba and Tencent directly invest in and buy companies. Baidu's international business unit has developed a series of tool products.

Cheetah Mobile and former 360 vice president Li Tao also successfully expanded overseas with a series of tools. Compared with other countries, China's Internet is indeed very powerful.

But the development trend I am talking about today is different from the overseas expansion strategy of large companies. From what I have observed, the overseas expansion of tool products can be said to be forced by the harsh environment in China.

Tool products that use user payments as their main means of profit are now almost all targeting overseas markets. For example, Tomato Potato, a large proportion of their paying members come from overseas.

Of course, there are also tool products that go overseas and still follow the logic of "users equal traffic, traffic equals money". The purpose of going overseas is to acquire users and then add advertising to make profits.

(4) The fourth development trend is to enter the To B market

Teams such as Weizhi Notes, Youdao Cloud Notes, Dropbox, etc. all have business models of enterprise services, and they also have products that span the To B and To C markets from the beginning, such as Cloud Spreadsheet, Graphite, and of course our Rishiqing, etc.

Among the tool products, there is a relatively special category: for example, the file processing system represented by the notes is needed not only by individuals but also by teams; for example, the team collaboration system represented by the schedule is also suitable for individuals and teams, as well as research tools, security products, and so on.

We can see that many traditional tool product companies have expanded into enterprise businesses.

In fact, the Chinese corporate market is not easy to do business in either, but that’s another topic. Compared with pure To C, these products that extend into enterprise services are doing better.

(5) The fifth development trend is to get involved in hardware

The "second half of the Internet" proposed by Wang Xing some time ago was very popular. In the past, pure online companies did optimize the efficiency and information flow in all aspects of society. However, at this point, if the Internet continues to develop, it must penetrate into all walks of life, rather than simply providing online services.

As far as tool products are concerned, many companies are now trying to get involved in hardware to try to realize their monetization path. The most typical one is the beauty phone released by Meitu, and of course there is also the weather fruit released by Moji Weather, but the shipment volume is very small.

In fact, this logic is very common in the field of enterprise services. In our field of enterprise services, there is a position with a long history called: User Success Manager. Not only do we need to sell software, but we also need to provide a series of extended services such as training so that corporate users can use it successfully. The philosophy of this position is to help corporate customers succeed and then allow corporate users to contribute value to the company in the long run.

There is also a logic behind tool products getting involved in hardware: when online user demands are almost met, then look to see if there are any unmet needs offline.

The purpose of enterprise services is to make corporate customers successful, and the purpose of tool products is to make users happier and then explore profit models.

3. Recent Development of Typical Tool Products

I just talked about the current status of the entire tool product and current attempts from a broad perspective. Now let's analyze each well-known product in detail:

1. Why Alipay will die if it is not messed up

I wrote this title not to be alarmist or to justify Alipay. If you want to understand why Alipay is constantly trying to engage in social networking, you must first understand what its or Ant Financial’s vision is.

It is not just a simple payment tool, it also wants to be the cornerstone of the entire social credit system. With the consumption details and asset status of each user, he can provide a series of financial services such as risk control and credit.

In fact, products such as Ant Huabei and Sesame Credit are all phased products made for this long-term vision. If they can build a good credit system for the entire society, the prospects will be very broad.

If you understand this, you will understand why Alipay must compete head-on with WeChat Pay. To C payment services are the cornerstone of its vision.

At the same time, I don’t think Alipay has no chance of winning. If you have been to Wuhan, you will know that Alipay has an absolute advantage in Wuhan’s offline payment scenarios. WeChat Pay is strong in the high frequency and user base of social payment scenarios. It depends on whether Alipay can win the offline payment battle.

In addition, Ant Financial is now valued at more than 60 billion US dollars. If you don’t have an application with more than 100 million daily active users, it will be difficult to support such a high valuation.

From the competition between Alipay and WeChat Pay, I think everyone can see the flaw of a tool product: social products such as WeChat now make people feel very smooth in any usage scenarios, but tool products often encounter user resistance in the process of extension.

So I often say that tool products are born with original sin, and this original sin is user cognition. Users will limit tool products to a fixed scenario.

2. Wang Xiaochuan’s concept of “tool building service scenarios” behind Sogou Input Method’s launch of smart search

I mentioned earlier that Sogou Input Method launched smart search. Wang Xiaochuan’s fundamental idea is that “a tool cannot just be a tool, it must be a service.”

This experience is of course obtained from the case of Sogou Input Method. Wang Xiaochuan once said: A product like Sogou Input Method, which has a huge number of users and good stickiness and activity, has a very mismatched commercial value created in the past.

Of course, I also mentioned my attitude before: if the tool product can provide a better experience than existing Internet products based on real user needs, then users will be able to accept it smoothly.

The reason why Wang Xiaochuan has been extending service scenarios is based on this concept.

I also see that many people oppose Sogou’s approach, but perhaps because we are both entrepreneurs in this field, I can better understand Wang Xiaochuan’s motives.

To be honest: if you have users but cannot monetize them, it would be better to sacrifice part of the user experience to enhance monetization capabilities.

3. Why do a large number of tool products such as UC Browser and Moji Weather focus on content and information?

As mentioned before, Moji Weather is designed to increase user usage frequency, user usage time and user stickiness, and further enhance commercial value.

UC Browser actually does not meet the definition of a tool product that I just mentioned, but it can still be discussed. Mobile browsers are now seeking changes. If you have paid attention to the mainstream domestic browsers, they are basically starting to create their own and unique content.

UC Browser and QQ Browser have become more information-based, and Baidu Browser has even added live streaming.

The situation that browsers face is content fragmentation in the mobile Internet era. Everyone is using independent apps instead of browsers. In the PC era, browsers were the entrance to the entire Internet. In the mobile Internet era, browsers have become dispensable and have to face competition from mobile phone manufacturers' built-in browsers. Therefore, if they do not transform and build their own content, it will become increasingly difficult for them to survive.

4. Why has Meitu, which went public a few days ago, been promoting itself as “more than just a tool”?

Let’s focus on beautiful pictures.

After Meitu went public, I looked at their financial reports and was actually quite surprised: I really didn't expect that the mobile phone segment accounted for such a high proportion of Meitu's profits. In 2015, 95% of its revenue came from hardware. My original guess was that advertising revenue should account for the largest proportion.

Then I read the relevant media reports and industry analysis, and I felt something was not right. While they were telling the facts, they were also leading the readers into a trap:

1. The reason why Meitu's market value can reach HK$36 billion is definitely not due to its mobile phone revenue. Its mobile phone shipments are less than one million, and its revenue scale is only 800 million. How can it be derived from hardware?
2. Meitu is an internet company. Its core asset is its 446 million monthly active users. This is what supports its valuation. The capital market measures its valuations according to the internet company valuation model.

The media still doesn’t understand why Meitu is involved in hardware and mobile phone manufacturing. Its logic is incomplete and it rarely considers revenue. The reason why Meitu makes mobile phones is more based on users: if Meitu users are labeled, "female" and "love beauty" are definitely the most eye-catching labels.

You can think about these two labels carefully, and then we might as well list the attempts made by Meitu over the years in combination with reality:

1. Tools turn to community;
2. Released Meitu mobile phone;
3. Do Meipai and get involved in video content;
4. Do flash chats and try to be social.

I can say with certainty that Meitu’s attempts are definitely not limited to this. It may have tried beauty, e-commerce, and gaming businesses, but these four directions are only known to the outside world. It may have tried the others and then temporarily abandoned them (see, Meitu will definitely have more commercial attempts in the future).

The outside world cannot know exactly the circumstances of Meitu’s attempts at new businesses, but what is certain is that Meitu itself tests new businesses with the mentality of “who knows which forest has the birds?”

The reason is very simple: Meitu is a leader in the "beautification tool" segment. It has no reference and can only try new businesses and commercialization paths on its own. Since there has never been a product with such a large number of users and obvious user characteristics to refer to in history, Meitu can only try all its commercialization paths on its own.

As for why only hardware is trying to generate revenue, the reason is very simple: they accidentally hit the bird. If you really want to listen to Zheng Jing's analysis, it is: Meitu has such a large number of users and brand premium, and it has successfully tried to release part of its value and monetize it by charging for hardware.

In the future, Meitu may continue to strengthen and optimize this business path, but the logic of "hardware profitability" is definitely not the main theme. Otherwise, the value of Meitu's huge user base will not be fully released. More importantly, it will not be able to support its valuation. Therefore, in the next few years, Meitu will still be trying to find a way around, such as launching Meipai and getting involved in live streaming.

Kai-Fu Lee said in an interview with the media:

"Meitu should not be viewed simply as a photo editing tool."

This sentence can be understood in two ways:

1. Meitu Group now owns Meitu Mobile, Meipai, and Shanliao. It is definitely more than just a tool, just like Tencent is more than WeChat and QQ.
2. Although the Meitu brand is well-known to users for its Meitu XiuXiu app , the brand is no longer just a tool but has many other meanings, such as social networking, live streaming, games, mobile phones, etc.

Although the understanding of these two aspects may seem similar, the logic is different: if understood from the perspective of Meitu Group, then all of Meitu's current product lines and new businesses will be split up, Meipai is just Meipai, a live streaming application, and Shanliao is just Shanliao, a social product. If you understand this way, then Meitu Group's valuation is "adding the valuations of each product line", which will not be favored in the capital market.

If you understand it from a brand perspective, then Meitu has infinite inclusion. Relying on brand advantages and user scale, you can try a lot of new businesses and business models, so that the market can recognize the "Mitu brand's transformation from tools to social, live broadcast, etc.", and has very strong risk resistance and business prospects.

Teacher Kai-Fu Lee must be the latter logic, just like QQ is not just a communication tool now, it also includes QQ music, QQ games, etc. In the future, Meitu will continue to launch new businesses according to the development path of QQ, such as Meitu games, Meitu beauty, etc.

In fact, this point revealed by Kai-Fu Lee is very important. This can basically show the path of commercialization of beauty pictures in the future. Then, everyone divides the chats from the age characteristics, and divides the beautiful pictures mobile phones from the gender characteristics to the beautiful women. List the feature labels such as "beautiful women" and "beautiful women" to check their specific lives and guess what aspects of the commercialization of beauty pictures in the future.

5. Why do Keep, aunt, etc. choose the business path of community and e-commerce? What are the conditions required first?

The first condition is: the user group has distinct characteristics.

Keep users are fitness, and aunt users are women. When the group is distinct, they will have common topics and then exchange needs, so they set up a community and then do e-commerce for commercialization.

This logic is that simple. Therefore, the more your user group characteristics in the tool product focus on the targeted services you can provide, the more valuable it is, and of course it will be easier to commercialize.

4. Payment awareness driven by the music, video and content industries to improve the environment and specific measures

The online payment environment in China is actually very poor. Before I started live, I chatted with the developer of Time Block, Mr. Anne . She told me one thing:

The time block was officially recommended by AppStore. It was the first place on the first page of AppStore, with more than 3 million views, and only 300 downloads were brought. The price was 12 yuan at that time.

Not to mention that there is a rampant pirated software on the Chinese Internet.

To be fair, the reason for the current dilemma does not entirely come from users, but also from practitioners and social backgrounds.

The reason for social background is very simple, it is poverty and bad atmosphere. This reason has nothing to do with the theme, so I won’t go into details.

Practitioners are both profiters and victims of the free model. The rapid development of China's Internet is closely related to the free model. Tool-based products have also flourished due to the prosperity of the general background, and they can acquire users at a relatively low cost in the traffic dividend. This is what practitioners should be grateful for.

However, the consequence of the rapid development of the Internet and the rampant free model is that users should all have free Internet services, and payment is actually immoral. Can you imagine that we were still "condespair" when we first asked users to try to pay?

This concept is so deeply rooted in people’s hearts!

Today's tool-type product practitioners are somewhat kidnapped by this trend: they have to do this, and if the rules are violated, there is only a dead end.

Just like the Internet music industry has been terrible by Baidu's pirated resources, the entire music industry is now compensating for the consequences of the rampant piracy of the Baidu era. Otaku can think about the starting point of being pirated online articles.

However, China's online payment environment is indeed improving.

For example, the number of paid members announced by major video websites is continuing to rise. I see that the online music industry is also constantly exploring the payment model, and Zhihu, Weibo, and official accounts are all praised.

Chinese users have begun to accept payment for online content . When this payment awareness truly becomes mainstream, it will also have a positive impact on paying for online services. So I will become more and more optimistic about the future charging environment for tool products.

Just before live, I looked at the daily payment data, and our individual users' willingness to pay is significantly increasing. Moreover, while communicating with users, I can also feel the improvement of the attitude towards payment.

This was something I didn’t dare to think about a few years ago. When I said you would charge a fee a few years ago, the user would definitely turn around and leave.

5. Information overload in the tool product field

I once talked to Mr. Li Jun, the founder of Weizhi Notes, and I asked him what he thought about the current situation and he told me: Information is overloaded.

This is the first time I heard of this point of view, and I have been thinking about it all the time. The more I think about it, the more interesting it becomes. I wrote down my thoughts during this period.

What are the characteristics of information overload?

We define information overload from the perspective of time consumption, so information overload means that people cannot consume the information produced within 24 hours a day. The speed of information production far exceeds the speed of information consumption.

The information here does not refer to it in general, but is directly related to you and the information you care about, such as entertainment, politics, majors, workplace, academics, etc. The information within these ranges is closely related to your life, but because its production speed is too fast, you cannot consume it at all, so the argument of "information overload" has always been popular.

In addition to entertainment content such as movies, TV series, variety shows, etc., in fact, information in many fields is also overloaded, such as the current homogeneous websites, such as similar Taobao sellers with increasingly fierce competition. When the choice is seriously out of range, it is even more difficult for us to make decisions, which is also an information overload.

From this, it is inferred that tool products actually have the characteristics of information overload: too many works are produced, far beyond the consumption range of normal users, and the range of users' tastes is constant, which leads to a collective decline in the entire tool products.

To put it bluntly, the total number of users in the mobile Internet era tends to be constant. Assuming that each user has to use 3 tool products, the best market state is that 100 tool products divide the market, but now 1,000 tool products divide the market.

The proliferation of tool products may not necessarily lead to fierce competition scenarios, because many tools are not competitive, but they will affect users' perception of the entire tool product field and lead to an overall decline in the entire market.

In addition to the overall perspective, I actually have a certain feeling about this view in my personal practice: Although the theme of daily life is a tool, behind it is the time management concept of "GTD+ important four quadrants" and the self-improvement concept of "PDCA".

However, in addition to GTD and important four quadrants, the concept of time management also includes tomato working method, time consumption records, eating the frog, etc. There are also many tools derived from these concepts, such as tomato potatoes, time blocks, etc. that are distributed to the audience member codes this time. When users choose a tool, they also mean that they have chosen a time management concept, not to mention a time management tool that has cross-border and has no clear concept.

Time management and self-improvement are open topics, with thousands of solutions and concepts, and users really can’t take care of so much time concept. This is also a typical scenario for information overload in the field of tool products.

Of course, this is Teacher Li Jun’s point of view, and this point of view applies to a certain range. For example, the personal notes market made by Teacher Li cannot explain all the phenomena. For example, why is Meitu, which occupies an absolute monopoly position in the field of "picture beautification", so difficult to make a profit?

Thank you for reading, hope you didn't waste your time.

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The author of this article @Wang Kai was compiled and published by (Qinggua Media). Please indicate the author's information and source when reprinting!