After the bubble, the iceberg and fire of smart hardware

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As the passion of smart hardware entrepreneurs gradually cools, the smart hardware of OEMs and traditional manufacturers who had been sitting on the sidelines has gradually come into the public eye. After the bubble, entrepreneurship has subsided, institutions have emerged, and another pattern is taking shape in the field of smart hardware.

Soon after arriving in Shenzhen, I discovered that the passion in the air of this place, known as the hardware Hollywood, was obviously gone. You could say that entrepreneurs have become more rational and willing to settle down and think about something, but I think more of the helplessness after the setback. Looking back, whether it was investors, entrepreneurs or the media, in 2013 and early 2014, everyone was as crazy about smart hardware as the Internet bubble in 2000. All the hot money, all the enthusiasm of entrepreneurs and the media were pouring in this direction, but more than a year later, the bubble burst.

Misfit, Maikai, Yunyue, Picooc... are considered companies that have received money and made good products, while other once-famous smart hardware products may not have such a good time. What I learned is that some have made prototypes but cannot be mass-produced, and some have been mass-produced but the yield rate is less than 50%, or there is a problem with the hardware, or the algorithm is too inaccurate. I met Mr. Cheng Tianzong once, and he told me that when he was wearing a well-known bracelet, it showed intense exercise when he shook his hands, but he was resting when he was exercising vigorously. Although many wearable products claim to have accurate algorithms, you really don’t know who to believe. Sometimes I use a pair of watches to slide my hands to measure my heart rate and breathing, and the results of each measurement are different.

On the hardware side, the real fatal blow to entrepreneurs is production! Those who have studied abroad or come from Kyoto have infinite superiority over their status and regard factories as bumpkins, thinking that they want others to play with them by relying on their shining status, the factory does not talk about whether it is fun or not, what they want is orders! Smart hardware is a new thing for factories. There will be uncertainty and uncontrollability in the process of exploration. Although these two factors are often accompanied by innovation, factories pursue the stability of income. Especially for small factories, they need to survive and feed workers. Maybe at the beginning, it will be curious to try it because it thinks everyone is making smart hardware. But when this toy affects its normal income, it will abandon it without hesitation. A one-time deal of hundreds of pieces will make them painful. If they can't see your future clearly, they won't play with you. Even if they are willing to play with you, they may not have the strength to make good products. In this world of appearance, no matter how much connotation there is, it will eventually look at the face. Products with poor appearance will never win the favor of consumers.

So some people put their hopes on Foxconn, thinking that they can rest assured with the endorsement of a big company. Look at Tuman and Ehang, and you should know what's going on. For such a big company, smart hardware is not its main business. It may just be to put a tentacles in front and explore the frontier. It does this just because it doesn't want to be left behind by the times, that's all. It will not concentrate good resources to support you in doing this, so startups are completely in an unequal state in the process of cooperating with it and have no say. The smart watch made by a certain company is so different from the design that it recently plans to set up a production line in Yizhuang to produce it itself, while the yield rate of another company is not satisfactory. Foxconn will not be humble to pay attention to such a small team.

When the students who were charging into battle vomited blood, most of the onlookers who were eager to try retreated reflexively. Shang Song, the founder of TechSpace, said, "There is a river between those who try and those who wait and see. The current situation is that some of the tryers have suffered from head injuries, and those who want to start a business on the sidelines dare not cross the river." The other side is too cold, and people dare not approach. As a result, investors have a sense of anxiety about the lack of projects.

The situation is quite different in that the OEMs and Internet giants that used to sit still are like a waking beast, getting up, shaking their bodies, twisting their necks and preparing to do something big, and all of them are entering the market this year. From the intuitive data, according to Roll Call Time, the proportion of projects they receive now is half startups and half big companies; in Shenzhen’s Huaqiang Cloud Valley, the proportion has risen to 30%, of which OEM giants account for 20% and big companies in transition account for 10%; even on crowdfunding websites where hardware entrepreneurs gather, the proportion has increased to 10%, and the proportion will increase as time goes by. Although these are some partial information, they are enough to give us a glimpse of the whole picture.

The layout of large Internet companies such as BAT, Xiaomi, 360, LeTV, etc. in smart hardware is obvious to all. Let’s not talk about it for now. In fact, there are more listed companies that are not so huge and not so eye-catching, large but unknown traditional companies and OEM factories, which are another huge group that cannot be ignored. Some of them used to be outsourcing companies that help people make hardware solutions, some used to be companies that make enterprise-level CNC products, and some were factories that did OEM for overseas companies. Their products may be temperature control, watches, and smart lights.

For example, Galaxy Wind, which started out as a general router manufacturer and now makes air purifiers; Yifang Digital, which used to make tablets and other digital products and now makes smart watches; Desay, which makes electronic cars and IC designs and now makes smart devices; Shunzhou Technology, which is struggling to enter the smart home industry... Of course, there are also a bunch of OEM factories in Huaqiangbei that you can't even name but have rich hardware experience.

These companies all have a common feature, or weakness. They realize that the previous way of making a fortune by selling products to the market is becoming less and less mainstream. They are eager to build their own brands, but do not know how to build their own reputation and brand. Therefore, some brand and market planning outsourcing companies such as Huaqiang Yungu have emerged. Lian Dianmingshijian announced that it would give up crowdfunding some time ago and prefer packaging and marketing. In addition to relying on the original channels and outsourcing, they have also become keen on participating in various offline and online activities, promoting crowdfunding, and using social platforms such as WeChat and Weibo.

However, the advantage of these factories is that, on the one hand, listed companies and ordinary large traditional enterprises that used to make enterprise-level products have other product revenues to support the development of smart hardware business, and have enough funds to try and make mistakes, so they don’t have to worry about the exhausting issue of survival or death like entrepreneurs. On the other hand, most of these companies have already accumulated experience in the hardware field, are familiar with the industrial chain issues of hardware products, and make fewer mistakes in hardware production. When they woke up, they opened their eyes and followed the direction of the fallen entrepreneurs. They saw the tempting ocean of smart hardware, and the fire of passion burned more and more vigorously.

As the difference between the hot and the cold widens, a new pattern is taking shape, with startups gradually leaving the market, and large companies gradually taking the stage, with the protagonists changing. Unlike many people who think that the smart hardware field is a paradise for entrepreneurs, I think that this field is similar to any other field, and it is the home of large organizations, and it is more cruel to startups. On the Internet, a small company may rely on its strong execution and flexibility to quickly distance itself from the large companies that copied it, and quickly grow into giants, such as Google and Facebook. However, in the field of smart hardware, because the hardware manufacturing cycle itself is long and the demand for various resources is also strong, the two major advantages of startups on the Internet, speed and flexibility, cannot be brought into play at this time, so it is not easy to have opportunities. Of course, I do not object to the view that some companies will have opportunities in the long tail market.

If we really say that this is their paradise, I would rather understand it this way. Organizations like Seeed, Fablab, and Arduino provide various modular tools for some Geeks who like DIY, allowing them to create their own gadgets, such as assembling their own cars, making their own robots, freely changing the lights on the surrounding aircraft, adding cameras, etc. They feel the fun from the DIY process and don’t have to care about survival or sales. Of course, at this time, you are just like other ordinary consumers, a maker, not an entrepreneur.

***I can't help but complain that startups are gradually retreating, but why are there still people who are incubating smart hardware? Maybe they think smart hardware is a trend, but they don't know what to do, but they have to do something.

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